24 ELR 20494 | Environmental Law Reporter | copyright © 1994 | All rights reserved


Alloy Engineering & Casting Co. v. Elgin, Joliet & Eastern Railway Co.

No. 92 C 410 (N.D. Ill. October 1, 1992)

The court denies a motion to dismiss a request by the current owner of a contaminated site for a declaratory judgment on a prior owner's liability for future response costs under § 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court first holds that an actual case or controversy exists between the current and prior owners of the site. Although the government has not yet brought suit against the current owner, the owner has already incurred some initial cleanup costs and the parties are identifiable. The court next holds that the current owner's admission that it is a potentially responsible party does not bar it from seeking declaratory relief. Finally, the court holds that the current owner has made a prima facie case under CERCLA. The complaint alleged that hazardous substances either originated from the prior owner's nearby property or came to rest on the contaminated land during the period the defendant owned it, and that the current owner incurred response costs in evaluating the contamination and in cleaning up the site.

Counsel for Plaintiff
John W. Hough, David M. Levin
Hough & Cook
200 W. Adams St., Ste. 2905, Chicago IL 60606
(312) 346-7900

Counsel for Defendant
Robert L. Shuftan
Wildman, Harrold, Allen & Dixon
225 W. Wacker Dr., Ste. 3000, Chicago IL 60606
(312) 201-2676

[24 ELR 20494]

Marovich, J.:

Memorandum Opinion and Order

Plaintiff, Alloy Engineering & Casting Company ("Alloy") filed suit against Elgin, Joliet & Eastern Railway Company ("EJ & E") under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9607(a).1 Alloy seeks to see recover response costs incurred at its vacant tract of land ("Land") in Waukegan, Illinois, which it purchased from EJ & E in 1979. In addition, Alloy seeks declaratory judgment regarding its liability for future response costs due to the clean up of the land contaminated with hazardous substances. EJ & E moved to dismiss Alloy's complaint for declaratory relief for failure to state a claim. For the following reason, we deny EJ & E's motion to dismiss.

Background

Alloy purchased a tract of land from EJ & E in 1979. Alloy alleges that the land is contaminated with hazardous substances as that term is defined under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). Alloy alleges the land is contaminated with substances EJ & E may have released from its "facility" which is adjacent to the land, or that EJ & E may have allowed these substances to come to rest on the land. Alloy asserts that it has never utilized the land in any manner nor has operated any facility on the land since it acquired it in 1979 from EJ & E. Because of these hazardous substances, Alloy is now incurring, and will incur in the immediate future, substantial costs to evaluate the contamination and take remedial measures.

Alloy alleges that these actions constitute response actions within the meaning of § 107(a) of CERCLA (42 U.S.C. § 9607(a)), and that EJ & E is strictly liable to Alloy for the costs of these response actions. Alloy seeks a judicial declaration of its rights and legal relations with defendants regarding these past, current, and future costs of response under § 107(a) of CERCLA (42 U.S.C. § 9607(a)).

EJ & E asserts that Alloy's complaint fails to state a claim and should be dismissed because: 1) no actual case or controversy exists between Plaintiff and Defendant; 2) Alloy, as a current owner of the property, is a potentially liable party and therefore cannot bring suit against EJ & E; and 3) the case fails to allege a prima facie case under CERCLA.

Discussion

On December 11, 1980 Congress enacted CERCLA. Congressional intent reflects a determined effort to give the federal government: the tools necessary for prompt and effective response to problems of national magnitude resulting from hazardous waste disposal . . . [and] that those responsible for problems caused by the disposal of chemical poisons bear the cost and the responsibility for remedying the harmful conditions they created. Pinole Point Properties, Inc. v. Bethlehem Steel Corp., 596 F. Supp. 283 [15 ELR 20173] (N.D. Cal. 1984) (citing United States v. Reilly Tar & Chemical Corp., 546 F. Supp. 1100 [12 ELR 20954] (D. Minn. 1982)). Courts have given CERCLA a broad and liberal construction in order not to frustrate the government's ability to promptly and effectively respond to hazardous waste cleanup situations. See United States v. Reilly Tar & Chemical Corp., 546 F. Supp. 1100, 1112 [12 ELR 20954] (D. Minn. 1982); United States v. Wade, 577 F. Supp. 1326 [14 ELR 20096] (E.D. Pa. 1983); Rockwell International Corp. v. IU International Corporation, 702 F. Supp. 1384, 1387 [19 ELR 20908] (N.D. Ill. 1988).

Section 1079(a) assigns liability to certain parties for the release of hazardous substances. "The reach of the liability is extremely broad." Pinole at 286. Liable parties include the owner or operator of a facility, and anyone who accepted hazardous wastes for disposal at the site. These parties are liable for all necessary response costs incurred by any person consistent with the national contingency plan. 42 U.S.C. § 9607(a).

1) Case or Controversy

EJ & E has moved to dismiss Alloy's complaint for declaratory judgment because it is not ripe for adjudication. When reviewing a grant of a motion to dismiss we must assume the truth of all well-pleaded factual allegations and make all possible inferences in favor of the plaintiff. See Janowsky v. United States, 913 F.2d 393, 395 (7th Cir. 1990); Rogers v. United States, 902 F.2d 1268, 1269 (7th Cir. 1990). A complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Gorski v. Troy, 929 F.2d 1183, 1186 (7th Cir. 1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-6 (1957)).

The Declaratory Judgment Act allows a federal court "[i]n a case of actual controversy within its jurisdiction . . . [to] declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). In determining whether a "controversy" exists under the Declaratory Judgment Act, a court should consider: whether the facts alleged under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant issuance of a declaratory [24 ELR 20495] judgment. Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941). "[The Act] was enacted to afford an added remedy to one who is uncertain or [sic] his rights and who desires an early adjudication without having to wait until he is sued by his adversary." Levin Metals Corp. v. Parr-Richmond Terminal Co., 799 F.2d 1312 [16 ELR 20954] (9th Cir. 1986).

Courts have consistently held that declaratory judgments as to liability for future recovery costs are consistent with CERCLA's purpose of encouraging prompt remedial action. See O'Neil v. Picillo, 682 F. Supp. 706, 730 [18 ELR 20893] (D.R.I. 1988); Southland Corp. v. Ashland Oil Inc., 696 F. Supp. 994, 1003 [19 ELR 20733] (D.N.J. 1988); Rockwell International Corp. v. IU International Corp., 702 F. Supp. 1384 [19 ELR 20908] (N.D. Ill. 1988). The Third Circuit stated: . . . declaratory judgment relief was intended to avoid precisely the "accrual of avoidable damages to one not certain of his rights." Dewey & Almy Chemical Co. v. American Anode, Inc., 137 F.2d 68, 69 (3d Cir.), cert. denied, 320 U.S. 761, 62 S. Ct. 70, 88 L. Ed. 454 (1943). See American Machine & Metals, Inc. v. De Bothezat Impeller Co., 166 F.2d 535 (2d Cir. 1948). A determination of legal obligations would thus strongly affect present behavior, have present consequences and resolve a present dispute. The claim for declaratory relief is a "case or controversy." ACandS, Inc. v. Aetna Casualty and Surety Company, 666 F.2d 819, 823 (3d Cir. 1981).

In facts similar to the case at hand, the plaintiff in Rockwell discovered traces of hazardous substances in a facility it purchased from defendant. After filing a CERCLA action to obtain a declaratory judgment as to defendant's liability for future costs arising from the hazardous waste, the court allowed the relief stating: [T]here is an actual controversy. The Facility contains hazardous wastes . . . [plaintiff] has already incurred some initial costs . . . [and] the parties potentially responsible for future cleanup operations are identifiable. . . . "The absence of government enforcement actions against plaintiff under CERCLA does not render the controversy between the parties remote and hypothetical." Rockwell at 1388 (quoting Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 893 [16 ELR 20754] (9th Cir. 1986)). See also Wickland Oil, 792 F.2d at 887 (similar facts and conclusion); Southland Corp. v. Ashland Oil, Inc., 696 F. Supp. 994 [19 ELR 20733] (D.N.J. 1988); Pinole Point Properties, Inc. v. Bethlehem Steel Corp., 596 F. Supp. 283 [15 ELR 20173] (N.D. Cal. 1984).

In the present case, Alloy has already incurred some initial cleanup costs and the parties are identifiable; we find, therefore, that there is a case or controversy present. Any other interpretation of § 107(a) would thwart the goal of prompt remedial measures for the cleanup of hazardous waste.

2) Alloy as a potentially Liable Party Under CERCLA

EJ & E alleges that Alloy's admission that it is a potentially responsible party subject to liability under § 107(a) of CERCLA bars Alloy from seeking declaratory relief. The language of § 107(a) refers to the liability for response costs "incurred by any other person." 42 U.S.C. § 9607(a). Moreover, § 113(f) provides that "[a]ny person may seek contribution from any other person who is liable under section 9607(a)." 42 U.S.C. § 9613(f)(1). See, e.g., Southland, 696 F. Supp. at 1003; Pinole Point, 596 F. Supp. at 291; Philadelphia v. Stepan Chemical Co., 544 F. Supp. 1135, 1142 [12 ELR 20915] (E.D. Pa. 1982).

In identical language, the defendant in Southland argued that the plaintiff was a potentially responsible party and therefore barred from recovery under § 107(a). The court held that this assertion was "clearly erroneous in light of CERCLA's statutory language to the contrary." Southland Corp. v. Ashland Oil, Inc., 696 F. Supp. 994, 1002-1003 [19 ELR 20733] (D.N.J. 1988). The court further held: [I]t has been conclusively established by the courts that section 107(a) can afford a responsible party the contribution relief it seeks from another responsible party. Sand Springs Home v. Interplastic Corp., 670 F. Supp. 913, 916 [17 ELR 20775] (N.D. Okla. 1987); United States v. New Castle County, 642 F. Supp. at 1265-69. The 1986 SARA amendments, which now expressly provide for contribution under 113(f) for "any person" from "any other person who is liable," buttress this conclusion rather than alter it. Id. at 1003 (quoting Chemical Waste Management v. Armstrong World Industries, 669 F. Supp. 1285, 1291 [18 ELR 20191] (E.D. Pa. 1987)).

Alloy currently alleges it "has in the past incurred, now is incurring, and will incur in the immediate future, substantial costs to further evaluate the contamination and take remedial measures." (Plaintiff's Complaint for Declaratory Judgment) Alloy falls squarely within the purpose of CERCLA to seek relief from any person responsible for the contamination and is entitled to a ruling.

3) Prima Facie Case Under CERCLA

In order to establish a prima facie claim for cost recovery under § 107(a)(4)(B) of CERCLA, the plaintiff must allege that: (1) The defendant falls within one of four categories of "covered persons" as defined by § 107(a). (2) There has been a release or threatened release of hazardous substances from the Site. (3) The release has caused the plaintiff to incur costs, and (4) The costs are necessary and consistent with the National Plan. Artesian Water Co. v. Gov't of New Castle County, 659 F. Supp. 1269, 1278-79 [18 ELR 20785] (D. Del. 1987), aff'd, 851 F.2d 643 [18 ELR 21012] (3rd Cir. 1988) (citations omitted). EJ & E asserts that Alloy's complaint is deficient because it fails to allege items (1) that defendant falls into one of the categories of covered persons, and (3) that the release has caused Alloy to incur costs.

a) EJ & E as a Responsible Party

EJ & E Alleges that Alloy has failed to allege that EJ & E fits into any of the statutory defined categories of § 107(a). In particular, EJ & E argues that Alloy does not allege that hazardous substances were disposed of at a facility while EJ & E was the owner or operator.

"[T]hose who actually operate or control a facility that creates an environmental risk can be held liable under CERCLA for the costs of reducing the risk." Edward Hines Lumber Co. v. Vulcan Materials Co., 685 F. Supp. 651, 657 [18 ELR 21223] (N.D. Ill. 1988). Alloy clearly alleges that hazardous substances "have either leached or otherwise originated from [EJ & E's] facilities or suffered or allowed to come to rest on the land during the period that [EJ & E] owned or controlled the Land." (Plaintiff's Complaint P 7) (emphasis added). This allegation is sufficient to meet the requirement under § 107(a)(2) that "any person who at the time of disposal of any hazardous substances were disposed of" shall be liable under CERCLA. We find that Alloy has adequately alleged that EJ & E is a responsible party under § 107(a) of CERCLA.

b) Response Costs Incurred

In order to state a viable CERCLA claim, Alloy must allege that it has incurred response costs. EJ & E maintains that Alloy has not alleged specifically which costs it is now incurring and intends to incur in the future.

Although CERCLA does not define "response cost," it does define "response" as "remove, removal, remedy, and remedial action." 42 U.S.C. § 9601(25). "Removal" is further defined in § 9601(23) as "the cleanup . . . of released hazardous substances from the environment; and "such actions as may be necessary to monitor, assess, and evaluate the release or threat of release of hazardous substances."

In the case at hand, Alloy has alleged in its Complaint that it has incurred "substantial costs to further evaluate the contamination and take remedial measures." (P 8 of Plaintiff's Complaint.) Later in the Complaint, Alloy seeks declaratory judgment for "clean-up of the Land"; (P 12(b) of Plaintiff's Complaint) and for "clean-up costs." (P 12(c) of Plaintiff's Complaint.) We find these allegations are sufficient to allege clean-up costs under CERCLA.

Under CERCLA, a plaintiff need not "particularize the costs" that it incurred. Alloy Briquetting Corp. v. Niagara Vest, Inc., 756 F. Supp. 713, 717 (W.D.N.Y. 1991). An Allegation that plaintiff has incurred and will continue to incur costs sufficiently allege response costs. New York v. General Electric Co., 592 F. Supp. 291, 198 [14 ELR 20719] (N.D.N.Y. 1984). Alloy has alleged two types of response costs under CERCLA: the evaluation of the contamination and the clean-up of the land. Therefore, Alloy has pleaded this prima facie element of a CERCLA claim.

Because it is not true that Alloy "can prove no set of facts in support of [its] claim which would entitle [it] to relief," the complaint survives the motion to dismiss. Gorski, 929 F.2d at 1186. Dismissing Alloy's complaint would frustrate CERCLA's twin objectives of promoting rapid response to hazardous waste situations and placing the financial burden on the appropriate parties. We deny EJ & E's motion to dismiss Alloy's complaint for failure to statea claim.

1. Alloy originally sued USX Corporation (f/k/a United States Steel Corporation) in addition to EJ & E; however, Alloy has voluntarily dismissed USX Corporation from the case.


24 ELR 20494 | Environmental Law Reporter | copyright © 1994 | All rights reserved