2020 Environmental Real Estate IssuesEPA listed a facility in New Jersey as a Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).  As a past operator of the facility, Compaction Systems Corp. (CSC) was liable under CERCLA for remediation costs incurred by the State and EPA. CSC settled with EPA and the State, paying EPA over $10 million, paying the State over $1 million, and agreeing to pay almost $1 million per year for 30 years for the site’s ongoing maintenance.

CERCLA Contribution Suit
CSC alleged Carter Day Industries (CDI) was also responsible under CERCLA and sued for contribution.  The district (trial level) court dismissed the case, based on a prior settlement CDI made with the State, which released CDI from all claims relating to the site.  CSC appealed to the US Court of Appeals for the Third Circuit, arguing CDI’s settlement with the State did not protect CDI from claims for contribution based on costs incurred by EPA.

Settlement Was Only with the State
The 3rd Circuit agreed with CSC and reversed the district court’s decision.  While CDI’s settlement with the State purported to release all claims “arising out of or related to” the site, the 3rd Circuit determined the agreement was only with the State and did not protect CDI from a contribution claim based on CSC’s payments to the federal government.

CDI had argued the settlement should be interpreted to protect it from private contribution claims, to encourage settlements, even though CDI admitted the settlement would not protect it from a direct claim from EPA.  The 3rd Circuit said CDI’s position would be contrary to other CERCLA policies, including the policy to encourage settlement with both the state and the federal governments in CERCLA cases.

The case is styed NJDEP v. American Thermoplastics and is available https://www2.ca3.uscourts.gov/opinarch/182865p.pdf