City of Bangor v. Citizens Communications Company, 532 F.3d 70 (1st Cir. 2008)

In 2002 the City of Bangor ("Bangor") filed a cost recovery suit under the private plaintiff provisions of CERCLA, 42 U.S.C. § 9607 ("CERCLA") and RCRA § 9613(f)(1) ("RCRA") against the defendant arising from contamination at a manufactured gas plant ("Site") that operated in Bangor from approximately 1851 to 1963.  The Defendant, Citizens Communications Company ("Citizens"), sold the Site in 1963 and Bangor took the site by eminent domain in 1978.  The city allegedly incurred $1.125 million in clean up costs related to the discharge of tar and other waste from the Site into the Penobscot River during the plant's operation ("Release").
 
After a bench trial, the Court found Citizens liable under both CERCLA and RCRA, ordered Citizens to pay damages to Bangor, conduct further abatement activities and awarded Bangor its attorney's fees.  The Court also found Bangor partially responsible for the Release.  These parties, along with the State of Maine, submitted a proposed Consent Decree governing the clean up efforts concerning the River. 
 
Prior to the trial, the Court ordered all discovery and proceedings against a number of third-parties allegedly liable to Citizens stayed because such proceedings may not have been required if Citizens was not found liable.  None of these third parties were involved in the proposed Consent Decree.
 
After analyzing the applicable standards for a CERCLA consent decree (procedural fairness, substantive fairness, reasonableness and consistent with the purposes of CERCLA), the Court approved the proposed Consent Decree without the direct input of the third-parties, denying their various motions regarding the Consent Decree.  The third-parties appealed the Court's entry of the Consent Decree.
 
The Appeals Court ruled that the third-parties had standing to challenge the consent decree even though they were not a party to it.  The Appeals Court acknowledged that "[a] nonsettling defendant does not ordinarily have standing to object to a court order approving a partial settlement since the nonsettling defendant is generally not affected by the settlement."  City of Bangor, 532 F.3d at 92 (citations omitted).  The Appeals Court found, however, that the third-parties were in fact potentially affected because of Citizen's outstanding third-party claims pursuant to CERCLA §9613(f)(3)(B).  The Appeals Court stated that "because approval of a consent decree under CERCLA results in contribution protection to the settling party, it also affects the rights of PRPs who are not parties to the decree."  Id. at 93 (citations omitted).  After acknowledging standing, the Appeals Court analyzed the Consent Decree pursuant to the applicable standards and upheld the lower court.
 
The Appeals Court also ruled that a state agency is not entitled to the same level of deference as the EPA when reviewing a CERCLA consent decree.  In the case at issue, the State of Maine was also a party to the Consent Decree and the Appeals Court found that though it was entitled to some deference because of its expertise, it was not entitled to the same deference the court would give to the EPA, though its reasoning was not clearly explained.  Id. at 94. 
 
SIGNIFICANCE: 
 
Non-parties to a CERCLA consent decree have standing to challenge the decree and likely should be heard by the trial court before final approval.  An appellate court will also give less deference to a state agencies approval of a CERCLA consent decree.  These rulings indicate that in order to ensure a consent decree will be upheld on appeal,  settling parties in a CERCLA action need to consider the impact of the decree on third-parties and, in the case of a state agency, whether state agency approval of a consent decree has sufficient basis.


 

THE RHODE ISLAND SUPREME COURT LIMITS THE USE OF PUBLIC NUISANCE ACTIONS IN ENVIRONMENTAL HEALTH CASE

State of Rhode Island v. Lead Industries Association, Inc., 951 A.2d 428 (2008).
 
The Rhode Island State Attorney General sued a number of former lead pigment manufacturers alleging that they created a public nuisance by manufacturing and selling lead paint starting in 1928 that resulted in wide-spread lead exposure to children.  After a lengthy trial, the defendants were found liable for creating a public nuisance.  The defendants appealed and the Rhode Island Supreme Court ("RISC") reversed.
 
Throughout its opinion, the RISC acknowledged that childhood lead poisoning is "the most severe environmental health problem in Rhode Island."  State, 951 A.2d at 437 (citations omitted).  It found, however, that the State could not allege any facts that would support it public nuisance claim because the defendants did not interfere with a public right nor were they in control of the lead pigment at the time of the harm to the children of Rhode Island, both requirements in a public nuisance action.  Accordingly, the Court overturned the verdict in favor of the State and dismissed the action.
 
SIGNIFICANCE:
 
This decision closes a potential floodgate of litigation against product makers that allegedly cause harm to the public health.  Despite the public pressure to the contrary, the RISC refused to expand public nuisance law even in the face of a well known public health problem.
  

THE "CONTINUOUS-TRIGGER" DOCTRINE ADOPTED IN COVERAGE DISPUTE
 
Towns v. Northern Security Insurance Company, 2008 WL 2941568 (Vt. 2008)
 
The plaintiff diverted a substantial amount of solid waste and debris from his waste-hauling business to his residential property ("Site") for use as fill to level a steep embankment between 1972 and 1987.  Subsequent owners contacted the state government and the Plaintiff was cited with operating an illegal landfill and ordered to clean up the property. 
 
The plaintiff initiated litigation against various homeowner's-insurance providers, seeking coverage for the defense and clean up costs incurred in the underlying environmental enforcement action.  The defendant, Northern Security Insurance Company ("Northern"), provided home-owner's policies to the Plaintiff from 1983 to 1987 ("Policies") but denied coverage asserting the policies respective "business pursuit" exclusion, "owned-property" exclusion and by arguing that there was no "occurrence" under the policy.  The trial court found against Northern and held that the Policies provided coverage, but only for the four years that the Policies were in effect and limited Northern's share to the proportion that it was "on the risk," rendering the plaintiff responsible for the remaining damages.  The Vermont Supreme Court ("VSC") upheld the trial court and made several important holdings in the decision.
 
First, although the VSC recognized that the plaintiff was in the waste-hauling business, it found that the waste disposal at the Site was not for financial advantage and that it was primarily for the plaintiff's private use.  Hence, even though the waste originally "arose" from the plaintiff's business and would normally be excluded from home-owner's coverage, under the facts of the case the plaintiff's activities qualified for the "non-business" exception to the exclusion.
 
Second, the VSC ruled that the owned-property exclusion was inapplicable because contamination from the waste had impacted the ground water under the Site.  The VSC adopted the majority view that ground water is not owned by a private individual, which in turn precluded the application of the owned-property exclusion contained in the Policies.
 
Third, the VSC adopted the "continuous-trigger" test when evaluating whether contamination that occurs over several policy periods triggers coverage in an occurrence based policy.  Even though the waste disposal at the Site started and continued more than a decade before Northern's first policy period, the VSC held that the contamination was continuous and at least some of the contamination occurred during the Policies.  Accordingly, Northern was required to provide indemnity and defense for the enforcement action and clean up associated with the Site.
 
With respect to this final holding, the VSC limited Northern's exposure to only those years it was "on the risk."  By doing so, the VSC adopted the majority view and held that the plaintiff was responsible for the percentage of both the defense costs and damages attributable to the years Northern did not provide coverage.
 
SIGNIFICANCE:
 
Vermont has adopted the majority view that ground water contamination does not fall under the own-property exclusion of the typical home-owners policy and it also follows the continuous-trigger test when evaluating coverage for contamination under an occurrence based policy.