Petition for Writ of Certiorari — UGI Utilities, Inc. v. Consolidated Edison Edison Co. of New York, Inc. (No. 05-1323)

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IN THE

Supreme Court of the Anited States

UGI UTILITIES, INC...

Petitioner.

Vv.

CONSOLIDATED EDISON COMPANY OF NEW YORK. INC.,

Respondent,

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

PE TIPION FOR A WRITE OF CERTIORARI

G. MICHAEL ELALPENGER JAY N. VARON *

PAUL BARGREN FOLEY & LARDNER LEP

POLEY & LARDNER LLP 3000 K Street, N.W.,

777 Last Wisconsin Avenue Suite S500

Milwaukee, Wisconsin $3202 Washington, D.C. 20007

(414) 271-2400 (202) 672-5300

* Counsel of Record Attorneys for Petitioner

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 WASHINGTON, D.C. 20001

QUESTION PRESENTED

Last Term, in Cooper Industries, Inc. vy. Aviall Services,

Inc., the Court held that private parties may sue other

potentially liable parties for contribution under § 113(f)(1) of

the Comprehensive Environmental Response, Compensation,

and Liability Act of 1980 (CERCLA), as amended by the

Superfund Amendments and Reauthorization Act of 1986, 42

U.S.C. § 9613(H(1), only during or following a CERCLA

abatement or cost recovery action. 543 U.S. 157, 166 (2004).

Cooper Industries acknowledged but left undecided the

important question presented here:

Whether persons potentially liable for cleanup costs,

who have neither been sued under CERCLA nor re-

solved their liability to the government, but who have in-

curred cleanup costs, can recover those costs from other

potentially liable parties under § 107(a)(4)(B), thereby

avoiding § 113(f)’s limitations on contribution claims.

(i)

PARTIES TO THE PROCEEDING BELOW AND

RULE 29.6 STATEMENT

Petitioner, defendant-appellee below, is UGI Utilities, Inc.

(Petitioner or UGI). UGI is wholly owned by UGI Corpo-

ration, a publicly held corporation.

Respondent, plaintiff-appellant below, is Consolidated

Edison Company of New York, Inc. (Con Ed).

TABLE OF CONTENTS

Page

| CORTES TROON FRE Oe ain seveesecencsscncsssascsepnnssiaoanasense i

PARTIES TO THE PROCEEDING BELOW AND

PAPERS SHAE OE PAE PMIIIEE © sacsiscsvensnsstserssvesnrsereveteosanes il

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FRc E OIOY ict setestiesankinninacuasiaciast annem ne |

SE ATU Fisee BROW ike VOD veandasiersistscrcerccarcameanerasabinias 2

5 PUES ksccsshi tide datiannnmiammeian 4

REASONS FOR GRANTING THE PETITION........... 8

I. THE COURT OF APPEALS’ DECISION

CONFLICTS WITH NINE OTHER COURTS

OF APPEALS’ HOLDINGS THAT ARE

WELL FOUNDED IN CERCLA’S TEXT,

STRUCTURE, AND HISTORY .................:.:0.+: 10

A. The Second Circuit’s Decision Conflicts

With Uniform Holdings That PRPs Cannot

ee LAGE © FPO ia siccssiciersinccionneetccancs 10

B. The Court of Appeals’ New Construction

Runs Counter to CERCLA’s Text, Struc-

CNG, BIE TIES sicsaxicasstasinennnes 12

1. CERCLA’s text does not support af-

fording PRPs a § 107(a)(4)(B) contri-

WOMEN CIN oi sciciassiecatannsaens 12

Construing § 107(a)’s cost recovery

provision to provide a mechanism for

allocating liability among PRPs _ is

inconsistent with CERCLA’s | post-

Pe RING iin crncicecineccnieoseln 14

II.

III.

TABLE OF CONTENTS—Continued

3. CERCLA’s legislative history does not

support allowing PRPs a § 107(a)

contribution claim that is not subject to

FCT ak PINES vi sackantussicnete vias aveccneune

C. The Court of Appeals Rejected the Estab-

lished CERCLA Construction to Provide a

Remedy Congress Withheld ..................0.00.

|. The court of appeals broke a ten-circuit

consensus on CERCLA’s post-SARA

construction in order to create an

expansive private cause of action and

promote “voluntary” remediation..........

The court of appeals’ suggestion that

its new § 107(a) remedy is reserved for

“voluntary” PRPs is untenable and

COSEY OO MGUTIMISIET ......5....0.0..00scccc.nes0-0ss

D. The Court of Appeals Acknowledged That

Its Decision Directly Conflicts With the

Ninth Circuit’s Pinal Creek Decision ..........

THE UNITED STATES HAS RENOUNCED

THE COURT OF APPEALS’ DECISION IN

THIS CASE AS “UNPERSUASIVE” AND

“INCONSISTENT WITH CERCLA’S

eh RPMEELEE SR UESIIEES scchssnsxscsensversninenndaqas

ONLY THIS COURT'S RULING ON

WHETHER § 107(a) ALLOWS CONTRIBD-

TION CAN AVOID NATIONWIDE UNCER-

I esi cas cde iaabt ache tas ila tiaaat aca aes ans coke

Page

TABLE OF CONTENTS—Continued

A. Cooper Industries Recognized the Import-

ance of the § 107(a) Issue But Postponed

Its Resolution Until a Case, Like This One,

POCOCTIOG TE IG IY iscsi sscccsnscesssssrecsancoees

B. Some Lower Courts Have Misread Cooper

Industries to Create Substantial Uncer-

tainty Regarding Whether PRPs Can Sue

NN UI ieee ce ek ee ae

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Fe ES Peicitidsscisv caktobesaionewodckeaganedalasiniobniaals

Opinion, U.S. Court of Appeals for the Second Cir-

cult, Consolidated Edison Company v. UGI Util-

ities, Inc., No. 04-2409-cv (September 9, 2005)

FE Te TE earner cent mskencaneeieneenbeteicimmintaiees

Summary Order, U.S. Court of Appeals for the Sec-

ond Circuit, Consolidated Edison Company v.

UGI Utilities, Inc., No. 04-2409-cv (Septem-

ber 9, 2005)

PIE Te hve ncticsdyicccndcbpnsreveds vuaceaatuenes se nacnaiasiibe!

Opinion, U.S. District Court for the Southern Dis-

trict of New York, Consolidated Edison Com-

pany v. UGI Utilities, Inc., No. O01 Civ. 8520

(DC) (March 29, 2004)

Rr I MP incerta esa caciacss so ancsansw Aca lamabecnoogonwnnacs

Oral Disposition (Transcript) before the Honorable

Denny Chin, U.S. District Court for the

Southern District of New York, Consolidated

Edison Company v. UGT Utilities, Inc., No. 01

Civ. 8520(DC) (Nov. 25, 2003), with Stipu-

lation and Order Accepting Amended Tran-

script (96a)

Page

24a

30a

S8a

TABLE OF CONTENTS—Continued

PETE TE \ealispcasnnhsdssckabctvinocasbiiheasiokneunetbaahbaiiesentibie

Judgment, U.S. District Court for the Southern Dis-

trict of New York, Consolidated Edison Com-

pany v. UGI Utilities, Inc., No. 01 Civ. 8520

(DC) (filed March 29, 2005, entered April 1,

2004)

DR RII oilisstsinaja conccenissaddovasasacncinhcnxnctinssmeseswnniies

Order Denying Petition for Rehearing, U.S. Court

of Appeals for the Second Circuit, Consolidated

Edison Company v. UGI Utilities, Inc., No. 04-

2409-cv (January 18, 2006)

Pe NE Stok Gcuiihs tection Monpiniiakdenolainn

42 United States Code § 9607—Liability

IE FE iketasceciis nisin ksi ti onnmdnanaedamainncee

42 United States Code § 9613—Civil proceedings

NITE Wai ih chcoaci teak thbakeuladovedbsieuanstabodecenddaanibcounsaitne

42 United States Code § 9622—Settlements

PI LTE WF Nivlndcsdkisdevicniniancaddhaceia htiboussiicinnnandbiaisbadaetaai

Excerpts from Brief of the Appellee, Atlantic

Research Corp. v. United States, No. 05-3152,

at it-iv, 46-50 (8th Cir. Dec. 6, 2005)

103a

133a

143a

163a

Vil

TABLE OF AUTHORITIES

CASES Page

Adobe Lumber, Inc. v. Taecker, No. CV S02-186

GEB GGH, 2005 WL 1367065 (E.D. Cal. May

i ED bins sukiplehiettcpcteldcceka cen eaclkaeiammianiamtanen ts 28

Aggio v. Aggio, No. C 04-4357 PJH, 2005 WL

2277037 (N.D. Cal. Sept. 19, 2005) .................. 28

Akzo Coatings, Inc. v. Aigner Gorp., 30 F.3d 761

CFs SPD nacinmnrricartncntpneniona 11, 12, 13, 14, 26

AMW Materials Testing, Inc. v. Town of

Babylon, No. 05-0206-CV, 2006 WL 851772

Ce Cae. BHR. ek BP onxccckivvexnesdasncccnsvicaceanaeowenes 20

Bedford Affiliates v. Sills, 156 F.3d 416 (2d Cir.

Oe siisiichincxqtitb BURG adaviassieed cataannaooieerahiacninainics passim

Boarhead Farm Agreement Group v. Advanced

Envt'l Tech. Corp., 381 F. Supp. 2d 427 (E.D.

PA, FN tek iceonsinduntinideccpacadibtuisinesjasbiuiee saunas 28

Centerior Serv. Co. v. Acme Scrap Iron & Metal

_ Corp., 153 F.3d 344 (6th Cir. 1998) ....2, 10, 13, 14, 26

City of Philadelphia v. Stepan Chem. Co., 544 F.

Se. REFS CRLAE. TU, TED hoes ivecaceartensciessnnns 2

Colorado v. ASARCO, Inc., 608 F. Supp. 1484

Ps A I ati anaclinencmocesie dian al ieee 3

Cooper Indus., Inc. v. Aviall Services, Inc., 543

Seats: Sar oe, ee EE clisciceiuinki es ceusturenolameuceaiatis passim

D'Imperio v. United States, 575 F. Supp. 248

Cid: Se aissisviccentncmashieeematieed 3

Dico, Inc. v. Amoco Oil Co., 340 F.3d 525 (8th

Cs Fe chic snicdasnsinertichaeneicabicdasaabtel 11, 14, 26

Ellis v. Gallatin Steel Co., 390 F.3d 461 (6th Cir.

BD kiss vaedcibnntashs cope tncualoaee casa 19

FBI vy. Abramson, 456 U.S. 615 (1982) 000.00... 24

Ferguson v. Arcata Redwood Co., No. C 03-

05632 SI, 2005 WL 1869445 (N.D. Cal. Aug.

Bg MT eidaintseticsdn ata ciate ate 28

Vial

TABLE OF AUTHORITIES—Continued

Key Tronic Corp. v. United States, 511 U.S. 809

EET gaa ae net ees Re Ope 2, 4, 19, 22, 25, 26

Kotrous v. Goss-Jewett Co., No. CIV. S02-1520

FCD JFM, 2005 WL 1417152 (E.D. Cal. June

Nr I ition a raid etsde usdias Dans Lels boigticbieca tent 28

Mardan Corp. v. C.G.C. Music, Ltd., 600. F.

Supp. 1049-(D. Ariz. 1964) ....0........cccecsereecseesens 3

Mercury Mall Assocs., Inc. v. Nick's Mkt., Inc.,

568 F. Supp. 24 513 (E.D. Va. 2005) ..........:..... 28

Metro. Water Reclamation Dist. of Greater

Chicago v. Lake River Corp., 365 F. Supp. 2d

ee Ee BD cites iain esaknsetnes ase hodtiandansatcxnans Zi

New Castle County v. Halliburton NUS Corp.,

TS he £oR Ga" oa ae. yy in passim

NL Indus., Inc. v. Kaplan, 792 F.2d 896 (9th Cir.

SARE or nepemctcry mrp rear on ene rt te een nna ere 20

Pinal Creek Group v. Newmont Mining Corp.,

giegwe Boy 2, 2% Sn. . 2) Been entnnee passim

Pinole Point Props., Inc. v. Bethlehem Steel

Corp., 596 F. Supp. 283 (N.D. Cal. 1984)......... 2

Pneumo Abex Corp. v. High Point, Thomasville

& Denton R.R., 142 F.3d 769 (4th Cir.

Nera reckiaid Cevacdeceasnkceugibarsxennceriies 2, 10, 14, 26

Reading Co., In re, 115 F.3d 1111 (3d Cir. 1997).. 17,24

Redwing Carriers, Inc. v. Saraland Apartments,

94 F.3d 1489 (11th Cir. 1996) ..............0.0...... 11, 14, 26

Ttt Agric. & Nutrition Co. v. Aceto Chem. Co.,

Bee FP. BOR. S57 CEDIA, PISS) cewncccscicranccnce 21

Transtech Indus., Inc. v. A&Z Septic Clean, 798

FS, CONF PREPS. FFE a scoicpsnneconsenriicdvarhones 20

United States v. A&k Materials Co., 578 F. |

FOO Cees Tie. BP kins dcicecnetcicciniannsssa 3

TABLE OF AUTHORITIES—Continued

Page

United States v. Colo. & E.R. Co., 50 F.3d 1530

( EG Ee, Fe each cheetah askdssinscssensse. 11, 14, 26

United States v. Hardage, 982 F.2d 1436 (10th

Cir, FRE cacao AS ada aaasninesisserens ss. 19

United States v. Horne, No. 05-0497 CV W

NKL, 2006 WL 290591 (W.D. Mo. Feb. 6,

PIG a sinksnsats EE Rah aicks disses nsinnaseceens 28

United States v. New Castle County, 642 F.

Supp. EZSS EI Git, Pe atiniiessscssssscsessesssnceeess 3

_ United States v. Ward, No. 83-63-CIV-5, 1984

— WL 15710 (E.D.N.C. May 14, 1984) ....00 2

United Techs. Corp. v. Browning-Ferris Indus.,

D3 F Sal Pe iriiakiaansiscasscsscccassccyess: passim

Viacom, Inc. v. United States, 404 F. Supp. 2d 3

CED TA, Fea ieciincssnssiesscacncssesse 28

Vine Street L.L.C. v. Keeling, 362 F. Supp. 2d

1S CGA, Fa asians vnissssssceseess. 28

STATUTES

28 U.S.C.

SS SE icc ele tastecnsessses sss. 5

§ UDSZ 5.5 cee Ear tikckinrisscessoe. 5

42 USE.

SS SF cadena csiktvacnarsvesssss. passim

Bs Ey Beer So OS ee passim

§ S61 Shae ress cis sessnccneceenenn. 16

DG ire ea I eecathanesntieatvsseninsncsee- 15

DOL aie has iasadsaviarescrsesees. 15

TABLE OF AUTHORITIES—Continued

MISCELLANEOUS Page

Brief for the United States as Amicus Curiae

Supporting Petitioner, Cooper Industries, Inc.

v. Aviall Services, Inc., 543 U.S. 157 (2004)

(No. 02-1192), 2004 WL 354181 «0.0... 9, 22

Brief for the Federal Appellees, E./. DuPont de

Nemours & Co. v. United States, No. 04-2096

CPGE We. FANE Bad, Dt ns iiciviaccecasracvissmniceicinans 9, 22

Brief of the Appellee, Atlantic Research Corp. v.

United States, No. 05+3152 (8th Cir. Dec. 6,

BAPE ksacicchicvnacnniemcctabitensintnatenaaia nae 9, 22, 23, 24

H.R. REP. No. 99-253(1) (1985), reprinted in

1986 UB LAL. ZOIDS, COT x ccesisscecscsicarstarens 17

RESTATEMENT (SECOND) OF TORTS § 886A(1)

FF sis ss cides oielacesa kocak coeadawee ean anna 13

S. Rep. No. 99-11 (1985), reprinted in 2

LEGISLATIVE HISTORY OF THE SUPERFUND

AMENDMENTS AND REAUTHORIZATION ACT OF

es ee isi cdkdiccn drain 17

IN THE

Supreme Court of the Anited States

No.

UGI UTILITIES, INC.,

Petitioner.

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioner, UGI Utilities, Inc., respectfully petitions for a

writ of certiorari to review the judgment of the United States

Court of Appeals for the Second Circuit in this case.

OPINIONS BELOW

she opinion of the court of appeals (Pet. App. la-23a)

addressing the issue raised in this petition is reported at 423

F.3d 90. The court of appeals’ summary order addressing

other issues (Pet. App. 24a-29a) is unreported. One opinion of

the district court (Pet. App. 30a-57a) is reported at 310 F.

Supp. 2d 592. The other (Pet. App. 58a-100a) is unreported.

JURISDICTION

The ‘udgment of the court of appeals was entered on

September 9, 2005. The order denying UGI’s timely petition

for rehearing was entered on January 18, 2006. Pet. App.

102a. The jurisdiction of this Court is invoked under 28

U.S.C. § 1254(1).

STATUTES INVOLVED

Section 107(a) of the Comprehensive Environmental Re-

sponse, Compensation, and Liability Act of 1980 (CERCLA)

makes four categories of persons, commonly referred to as

“potentially responsible parties” or “PRPs,” liable for the

costs of cleaning up hazardous waste sites. 42 U.S.C.

§ 9607(a)(1)-(4).. These PRPs include owners and operators

of tacilities at which hazardous waste is located and past

owners and operators of those facilities. /d. Section 107(a)

makes them liable for, among other things, “all costs of

removal or remedial action incurred by the United States

Government or a State or an Indian tribe” and liable for “any

other necessary costs of response incurred by any other

person consistent with the national contingency plan.” /d. at

§ 9607(a)(4)(A)-(B). Section 107(a) has been uniformly

interpreted to make each PRP strictly liable, jointly and

severally, for these costs.’

As originally enacted, CERCLA did not provide an express

mechanism for a PRP to seek contribution from other PRPs.

See Key Tronic Corp. v. United States, 511 U.S. 809, 816

(1994). Some courts bridged this statutory gap by holding

that § 107 implied that a PRP could sue for contribution, or

' See, e.g., Bedford Affiliates: v. Sills, 156 F.3d 416, 423 (2d Cir. 1998);

Centerior Serv. Co. v. Acme Scrap Iron & Metal Corp., 153 F.3d 344, 348

(6th Cir. 1998); Pneumo Abex Corp. v. High Point, Thomasville & Denton

R.R., 142 F.3d 769, 774, 776 (4th Cir. 1998).

* See, e.g., United States v. Ward, No. 83-63-CIV-5, 1984 WL 15710,

at *4 (E.D.N.C. May 14. 1984) (scope of liability, including liability in

contribution, is to be determined under $107(a)); Pinole Point Props..

Inc. v. Bethlehem Steel Corp., 596 F. Supp. 283, 291 (N.D. Cal. 1984)

(potentially liable party has standing to sue other PRPs under

§ 107(a)(4)(B)); Cr of Philadelphia v. Stepan Chem. Co., 544 F. Supp.

that federal common law afforded PRPs a contribution

claim.’ Other courts concluded that § 107(a) afforded no

right of contribution and provided a private cost recovery

claim only to plaintiffs who were themselves not liable for

the cleanup."

In § 113(f) of the Superfund Amendments and Reauthori-

zation Act of 1986 (SARA), Congress provided private

parties with “two express avenues for contribution,” Cooper

Indus., 543 U.S. at 167. First, § 113(f)(1) provides, “Any

person may seek contribution from any other person who is

liable or potentially liable under [§ 107(a)], during or

following any civil action [brought under § 106 or § 107].”

42 U.S.C. § 9613(f)(1). Second, § 113(4)(3)(B) authorizes

parties that settle their liability with the United States or a

state to bring contribution claims against non-settling PRPs:

“A person who has resolved its liability to the United States

or a State for some or all of a response action...in an

administrative or judicially approved settlement may seek

1135, 1143 (E.D. Pa. 1982) (§107(a) “gives a private [responsible] party

the right to recover its response costs from responsible third parties which

it may choose to pursue”).

* See, e.g., United States vy. New Castle County, 642 F. Supp. 1258,

1265 (D. Del. 1986) (holding “Congress empowered the federal courts to

establish a federal common law of contribution under CERCLA,” and also

holding no right of contribution under §107(a4)(B) or § 107(e)):

Colorado v. ASARCO, Inc., 608 F. Supp. 1484, 1490-92 (D. Colo. 1985)

(recognizing nght of contribution in §107 action under federal common

law, which is preserved in §107(e)); United States v. A&F Materials Co.,

578 F. Supp. 1249, 1255 (S.D. Il. 1984) (’Congress intended the courts to

impose common law liability rules [including contribution] on generators

and other entities liable under CERCLA.”).

* See Mardan Corp. v. C.G.C. Music, Ltd., 600 F. Supp. 1049, 1058

(D. Ariz. 1984) (equitable doctrine of unclean hands bars liable party from

recovery of response costs from other PRPs under § 107(a)(4)(B)):

D'Imperio vy. United States, 575 F. Supp. 248, 253 (D.NJ. 1983) (In

order to seek recovery under this section, it is necessary for the plaintiff to

prove that he himself is not liable for these costs.”’).

contribution from any person who is not party to [such] a

settlement.” 42 U.S.C. § 9613(f)(3)(B). PRPs that have not

been sued and have not settled with the government cannot

maintain a § 113 contribution claim. See Cooper Indus. , 543

U.S. at 166.

After SARA, the Court’s dicta have twice touched on

whether an implied § 107(a) contribution claim exists after

Congress added § 113(f). Kev Tronic observed that § 107(a)

may by implication create a private cause of action for some

persons. S11 U.S. at 818 n.11. But last Term the Court

cautioned in Cooper Industries that lower courts’ conclusion

that a contribution right “arose either impliedly from

provisions of the statute, or as a matter of federal common

law .. . was debatable in light of two decisions of this Court

that refused to recognize implied or common-law rights to

contribution in other federal statutes.” 543 U.S. at 162.

Neither Key Tronic nor Cooper Industries, however, resolved

the extent, if any, to which § 107(a) creates a private

contribution remedy distinct from, and potentially incon-

sistent with, the remedy Congress afforded in § 113(f).

Sections 107 and 113 of CERCLA, 42 U.S.C. §§ 9607 &

9613, are set out in the petition appendix (Pet. App. 103a-

142a).

STATEMENT

This case presents the important issue of CERCLA con-

struction that Cooper Industries expressly declined to decide:

whether nine courts of appeals have correctly held that a PRP

may not pursue a CERCLA § 107(a) action against other

PRPs, including as an alternative to a § 113(f) contribution

claim that is otherwise barred. See 543 U.S. at 169.

Although the Second Circuit previously had held that § 113(/

“plainly governs . . . contribution actions,” Bedford Affiliates,

156 F.3d at 424, and that a PRP “could not pursue a § 107(a)

cost recovery claim against [other PRPs],” id. at 423-24, in

this case it answered the question Cooper Industries lett open

by abandoning its prior holding and giving PRPs a § 107(a)

right to recover their cleanup costs from other PRPs.

The court of appeals reasoned that after Cooper Industries

it “no longer makes sense” to view § 113(f)(1) as the sole

means by which PRPs can seek to recover from other PRPs.

Pet. App. 14a. By interpreting CERCLA to provide a

§ 107(a) claim to PRPs that do not meet § 113(f)’s conditions

on contribution claims, the court created a conflict both with

its sister circuits and with the United States’s consistent

interpretation of CERCLA.

1. Con Ed, which owned or operated manufactured gas

plants, is potentially liable for their remediation. Con Ed

owned or operated manufactured gas plants (MGPs) at sites

in the State of New York. New York “directed Con Edison to

investigate and, if necessary, remediate contamination at the

MGP Sites.” C.A. J.A. 11 (First Am. Compl.). But Con Ed,

like Aviall, was never sued under CERCLA. Pet. App. 7a.

In 2002, Con Ed entered into an agreement with New York

to clean up several of these sites. C.A. J.A. 870-907. That

agreement, however, did not resolve Con Ed’s CERCLA

liability to the State. Pet. App. 10a.

Before agreeing with New York that it would clean up the

MGP sites, Con Ed sued UGI for contribution under federal

and state law, invoking the district court’s jurisdiction under

both 28 U.S.C. § 1331 and § 1332. Con Ed alleged that UGI

and its related companies were past owners and operators of

the plants. C.A. J.A. 8-18 (First Am. Compl.). Con Ed’s

only federal law claim invoked § 113(f(1) and requested

“judgment in favor of Con Edison and against UGI for

contribution in an allocation to be determined at trial.’ /d. at

16 (emphasis added).

5 ' : , ‘ ‘

Although Con Ed asserted state law claims, Con Ed abandoned them

on appeal. Con Ed's action against UGI now depends exclusively on the

existence of the Second Circuit’s newly-created § 107(a) PRP claim.

The district court granted UGI summary judgment. Pet.

App. 10la. As to some sites, it held that UGI was not “a

person who is liable or potentially liable under section

[107(a)],” as required by § 113(f), because the evidence did

not support a finding that UGI owned or operated those sites.

Id. at 49a-S7a, 93a-95a. As to other MGP sites, the court hela

that Con Ed had released any CERCLA operator liability

claim. /d. at 94a-95a. Con Ed appeaied.

2. The court of appeals held that Con Ed’s § 113(f)

claim was barred by Cooper Industries but allowed Con

Ed to proceed under § 107(a). While Con Ed’s appeal was

pending, the Court decided Cooper Industries. After ordering

supplemental briefing on whether Cooper Industries deprived

it of subject matter jurisdiction, the court of appeals correctly

concluded that Con Ed’s ability to maintain an action under

§ 113(f) was foreclosed by Cooper Industries’ holding that

§ 113(f)(1) is unavailable to parties that have not been sued

under CERCLA. Pet. App. 7a.

Con Ed acknowledged that Cooper Industries barred its

S$ 113(f(1) claim (C.A. Supp. Reply Br. for Pl.-Appellant at |

n.1), arguing instead that its agreement with New York to

clean up the MGP sites entitled it to sue UGI for contribution

under § 113(f)(3)(B) (Pet. App. 3a, 7a). The court of appeals

rejected this argument, reasoning that the agreement did not

resolve Con Ed’s CERCLA liability to the state, a prere-

quisite to a § 113(f)(3)(B) contribution claim. Pet. App. 10a.

The court of appeals held, however, that “in light of

Cooper Industries, section 107(a) applies to the facts of this

case.” /d. at lla. In particular, the court of appeals thought

footnote 3 of Cooper Industries required it to reexamine the

well-established principle that “actions by partics who might

themselves be liable under section 107(a) were necessarily

actions for contribution, and [were] therefore governed by the

mechanisms set forth in § 113().° /d. at 14a (quotation

omitted). It reasoned that the Court in Cooper Industries

“expressly stated that the section 107(a) cost recovery remedy

and the section 113(f)(1) contribution remedy, though

‘similar at a general level in that they both allow private

parties to recoup costs from other private parties,” are ‘clearly

distinct.”” Jd. (quoting Cooper Indus., 543 U.S. at 163 n.3).

This observation, the court of appeals concluded, in com-

bination with Cooper Industries’ holding “that a section

113(f)(1) action is only available during or following a

specified civil action . . . impelf[led it] to conclude that it no

longer makes sense to view section !13(f)(1) as the means by

which the section 107(a) cost recovery remedy is effected by

parties that would themselves be liable if sued under section

107(a).” /d. According to the court of appeals, once Cooper

Industries held that § 113(f)(1) is unavailable to PRPs who

have not been sued and recognized that § 107(a)’s remedy is

“distinct” from § 113(f)(1)'s contribution remedy, “determin-

ing whether a party in Con Ed’s circumstances may sue under

section 107(a) is easily resolved based on that section’s plain

language.” /d. Turning to the “plain language,” the court of

appeals held that Con Ed is a “person” that incurred “costs

of response”; therefore, § 107(a) authorizes Con Ed’s suit

against UGI to recover those costs. /d. at 15a.

In so holding, the court of appeals rejected other courts of

appeals’ conclusion that CERCLA does not allow private

PRPs to use § 107(a) to recover costs from other PRPs. /d. at

15a-l6a. The court of appeals attempted to distinguish these

precedents by limiting its new § 107(a) remedy to PRPs that

incurred cleanup costs “voluntarily.” /d. at 16a-17a. But the

court recognized that, even as so limited, its holding squarely

conflicts with the Ninth Circuit's holding in Pinal Creek

Group v. Newmont Mining Corp., \18 F.3d 1298 (9th Cir.

1997), that even voluntary PRPs are limited to contribution

claims under § 113(f). The Second Circuit declared, “We

simply and respectfully disagree with the Ninth Circuit’s

holding in Pinal Creek” (Pet. App. 21a), concluding that

Cooper Industries’ statement that § 107(a) and § 113(f) rem-

edies are “clearly distinct,” 543 U.S. at 163 n.3, eviscerates

Pinal Creek's holding (Pet. App. 21a).

After holding that § 107(a) provided a basis for Con Ed’s

action against UGI, the court of appeals in a separate order

reversed in part the district court’s decision granting UGI

summary judgment on the basis of a release executed by Con

Ed’s predecessor-in-interest and remanded for further pro-

ceedings on the merits of that claim under § 107(a). /d.

at 29a.

The court of appeals denicd UGI’s petition for rehearing

and rehearing en banc without comment. /d. at 102a.

REASONS FOR GRANTING THE PETITION

Before the decision below, ten courts of appeals (including

the Second Circuit) had held that § 113(f) provides the sole

federal law mechanism by which private parties can recover

an equitable portion of their incurred cleanup costs from other

PRPs. Creating conflict where none previously existed, the

court of appeals held that PRPs to which Congress refused a

contribution claim under § 113(f) may recover “necessary

response costs incurred voluntarily” from other PRPs under

§ 107(a). Pet. App. 17a.

This conclusion, in addition to creating a conflict with

decisions in every other circuit to address the issue, is wrong

on an important question of federal law because it Is

inconsistent with the text, structure, and history of CERCLA.

First, § 107(a)’s text does not authorize PRP suits and does

not mention contribution; it instead authorizes full recovery

from private parties, jointly and severally. See 42 U.S.C.

§ 9607(a)(4)(B). Section 113(f)(1)'s, text, on the other hand,

expressly authorizes PRPs to bring claims for “contribution”

against other PRPs and authorizes courts to resolve such

claims by allocating liability according to “equitable factors.”

See 42 U.S.C. § 9613(f)(1). Second, Congress's 1986 amend-

ments expressly provided a limited contribution remedy in

§ 113(f) that is structured to promote private party settlements

with the government and that is inconsistent with a private

PRP § 107(a) claim. Third, the legislative history reveals that

§ 113(f) was intended to supersede earlier district court

holdings that § 107(a) implied a contribution claim and to

provide the exclusive CERCLA contribution remedy.

The United States has recently renounced the Second

Circuit’s decision in this case, informing the Eighth Circuit

that the court of appeals’ decision in this case “is contrary to

controlling authority in [the Eighth] Circuit and is unper-

suasive.” Brief of the Appellee at 46, Atlantic Research

Corp. v. United States, No. 05-3152 (8th Cir. Dec. 6, 2005)

(hereinafter U.S. Atl. Research Br.].°. The United States has

repeatedly disagreed with the CERCLA construction adopted

by the court of appeals below. In its amicus brief in Cooper

Industries, the United States championed Pinal Creek’s

conflicting holding that even “voluntary” PRPs are limited

to contribution claims under § 113(f). Brief for the United

States as Amicus Curiae Supporting Petitioner, Cooper

Indus., 543 U.S. 157 (2004) (No. 02-1192), 2004 WL

354181, at *20 n.9 [hereinafter U.S. Cooper Indus. Br.]; see

also Brief for the Federal Appellees, £./. DuPont de Nemours

& Co. v. United States, No. 04-2096 (3d Cir. April 22, 2005)

[hereinafter U.S. DuPont Br.].’ Cooper Industries, moreover,

did not change the United States’s view. The Government

continues to maintain that any attempt “to allow certain PRPs

full recovery under section 107(a)(4)(B) is inconsistent with

* Excerpts from the United States’s Atlantic Research brief are

included in the Appendix to Petition. Pet. App. 163a-170a. The complete

brief is available at http:’/www.ca8.uscourts.gov ‘briefs/0S/1 2 ‘appellee’

053152_ lbr.pdf?A1l=View+Briet.

” On file with, and available from, the United States Court of Appeals

for the Third Circuit.

CERCLA’s settlement scheme and should be rejected.” Pet.

App. 170a (U.S. Ad. Research Br. at 50).

What is more, the court of appeals’ decision embodies a

fundamental misreading of Cooper Industries, which did not

“impel” the lower courts to fashion a § 107(a) remedy for

PRPs that is unfettered by § 113’s constraints. By misreading

Cooper Industries in a way that advances a particular public

policy viewpoint, the court of appeals risks disrupting the

settled CERCLA construction in every other circuit. The

effects have already been seen, as some district courts have

similarly read Cooper Industries to create § 107(a) PRP

claims, even in circuits that previously held that PRPs must

seck contribution under § 113(f). A ruling by the Court is

now needed to avoid substantial uncertainty and costly

litigation across the Nation over PRPs’ ability to recovery

cleanup costs under § 107(a).

I. THE COURT OF APPEALS’ DECISION CON-

FLICTS WITH NINE OTHER COURTS OF

APPEALS’ HOLDINGS THAT ARE WELL

FOUNDED IN CERCLA’S TEXT, STRUCTURE,

AND HISTORY

A. The Second Circuit’s Decision Conflicts With

Uniform Holdings That PRPs Cannot Sue

Under § 107(a)

Before the decision in this case, the courts of appeals had

uniformly held that § 107(a) does not afford PRPs a right of

recovery against other PRPs. Indeed, though not reaching the

issue, Cooper Industries identified decisions from. eight

circuits (including the Second Circuit) that the parties had

accurately cited as holding “that a private party that ts itself a

PRP may not pursue a § 107(a) action against other PRPs for

joint and several liability.” See Cooper Indus., 543 U.S. at

169 (citing Bedford Affiliates, 156 F.3d at 423-24; Centerior

Serv., 153 F.3d at 349-56; Pneumo Abex, 142 F.3d at 776;

Pinal Creek, 118 F.3d at 1301-06; New Castle County v.

Halliburton NUS Corp., 111 F.3d 1116, 1120-24 (3d Cir.

1997); Redwing Carriers, Inc. v. Saraland Apartments, 94

F.3d 1489, 1496 & n.7 (11th Cir. 1996); United States v.

Colo. & E.R. Co., 50 F.3d 1530, 1534-36 (10th Cir. 1995);

United Technologies Corp. v. Browning-Ferris Indus., 33

F.3d 96, 98-103 (Ist Cir. 1994)). In addition, the Seventh and

Eighth Circuits similarly so held in Akzo Coatings, Inc. v.

Aigner Corp., 30 F.3d 761, 764 (7th Cir. 1994), and Dico,

Inc. v. Amoco Oil Co., 340 F.3d 525, 531 (8th Cir. 2003),

respectively. Thus, when the Court decided Cooper Indus-

fries, ten courts of appeals had ruled, contrary to the Second

Circuit’s novel ruling in this case, that PRPs may not main-

tain a contribution claim independent of § 113(f). “Every

court of appeals that has examined this issue,” the Third

Circuit explained before the decision in this case, “has come

to the same conclusion: a section 107 action brought for

recovery of costs may be brought only by innocent parties

that have undertaken clean-ups. An action brought by a

potentially responsible person is by necessity a section 113

action for contribution.” New Castle, 111 F.3d at 1120

(emphasis in original).

As noted, before this case the Second Circuit followed the

same rule. Its Bedford Affiliates decision rejected the

contention that a PRP was entitled to recover under § 107(a).

156 F.3d at 424. Consistent with its sister circuits, Bedford

Affiliates held that “one potentially responsible person can

never recover 100 percent of the response costs from others

similarly situated since it is a joint tortfeasor—and not an

innocent party—that ultimately must bear its pro rata share

of cleanup costs under § 107(a).” /d. Following earlier

decisions of the First and Seventh Circuits, Bedford Affiliates

concluded that an “action to recoup the portion of costs

exceeding a potentially responsible person’s equitable share

of the overall liability... is a quintessential claim for

contribution . . .fand] CERCLA § 113(f) plainly governs

such contribution actions.” /d. (citing, inter alia, United

Techs., 33 F.3d at 100, and Akzo, 30 F.3d at 764).

B. The Court of Appeals’ New Construction Runs

Counter to CERCLA’s Text, Structure, and

History :

1. CERCLA’s text does not support affording PRPs a

§ 107(a)(4)(B) contribution claim. In refusing to adhere to

the previously uniform holdings that § 107(a)’s cost recovery

claim is available only to “innocent” parties (Pet. App. 15a

(refusing to follow United Techs., 33 F.3d at 100)), the court

of appeals reasoned that the “plain language” of § 107(a)

requires a contrary result.

But the court of appeals failed to consider § 107(a)’s text

accurately or fully. stating, “Section 107(a) makes its cost

recovery remedy available, in quite simple language, to any

person that has incurred necessary costs of response.” Pet.

App. 15a (emphasis in original). The § 107(a)(4)(B) touch-

stone, however, is “any other person.” Section 107(a)

provides that the PRPs described 1n subsections 107(a)(1)-(4)

“shall be liable for—(A) all costs of removal or remedial

action incurred by the United States Government or a State or

an Indian tribe ...; [and] (B) any other necessary costs of

response incurred by any ofher person. . .,” 42 U.S.C.

§ 9607(a)(4)(A)-(B) (emphasis added). Reading “any other

person” to exclude PRPs reconciles § 107’s_ text with

Congress’s express contnbution remedy in § 113(f) and with

the overwhelming majority vicw that PRPs cannot sue under

§ 107(a)(4)(B). The Second Circuit simply ignored the “other

person” language.

As courts of appeals had previously concluded, nothing in

§ 107(a)(4)(B)’s text provides an express contribution claim,

i.e., a claim arising “when two or more persons become liable

in tort to the same person for the same harm. . . even though

judgment has not been recovered against all or any of them.”

RESTATEMENT (SECOND) OF TORTS § 886A(1) (1979), cited in

Centerior Serv., 153 F.3d at 350.

Nor can a contribution claim fairly be implied from

§ 107(a)(4)(B), which provides that PRPs shall be liable for

“other costs of response incurred by any other person.”

Section 107(a)’s cost recovery language has long been

interpreted to make PRPs strictly liable for all cleanup costs

(subject only to the limited defenses in § 107(b)). As several

courts of appeals have explained, because § 107(a) typically

renders defendant-PRPs jointly and severally liable for the

plaintiff's entire cleanup cost, a plaintiff under that section

must be a party entitled to recover all of its costs.” As

the First Circuit explained in an often-cited decision, ac-

tions under § 107(a) are, as Congress describes them in

§ 113(g)(2), “actions for ‘recovery of the costs’ .. . sug-

gest[ing] full recovery; and it is sensible to assume that

Congress intended only innocent parties—not parties who

were themselves liable—to be permitted to recoup the whole

of their expenditures.” United Techs., 33 F.3d at 100.

Because a PRP is potentially liable for its share of those

expenditures, allowing a PRP to hold other PRPs strictly

liable for all of them is nonsensical. For this reason too,

§ 107(a)(4)(B)’s “other persons” language is better read to

refer to persons other than PRPs. |

What is more, § 113’s text: expressly provides for

contribution claims by PRPs. Section 113(f)(L) states that

“la]ny person may seek contribution from any other person

who is liable or potentially liable under section [107(a)].” 42

U.S.C. § 9613(f)(1). As courts of appeals have explained

repeatedly, “a claim by a potentially responsible person is ‘a

* See, e.g.. New Castle, 111 F.3d at 1120 (holding that only innocent

parties can recover under § 107(a)); United Techs., 33 F.3d at 100 (same):

Akzo, 30 F.3d at 764 (a party that is itself lable “has experienced no

injury of the kind that would typically give rise to a direct claim under

section 107(a)").

quintessential claim for contribution.’ New Castle, 111 F.3d

at 1122 (quoting Akzo, 30 F.3d at 764). This too weighs

against finding additional contribution rights in § 107.

And, unlike § 107(a), § 113(f) authorizes courts to allocate

cleanup responsibility among PRPs: “In resolving

contribution claims, the court may allocate response costs

among liable parties using such equitable factors as the court

determines are appropriate.” 42 U.S.C. § 9613(f(1). See

also Redwing Carriers, 94 F.3d at 1513 (§ 1I3(f)’s

contribution claim “is a means of equitably allocating

response costs among responsible or potentially responsible

parties’). Congress further provided in § 113(f) that “[sJuch

[contribution] claims”—presumably all federal claims to

allocate CERCLA liability—‘shall be brought in accordance

with this section.” 42 U.S.C. § 9613(f)\(1) (emphasis added).”

2. Construing § 107(a)’s cost recovery provision to

provide a mechanism for allocating liability among PRPs

is inconsistent with CERCLA’s post-SARA structure.

When Congress amended CERCLA to provide PRPs con-

” See also Dico, 340 F.3d at 531 (“PRPs are limited to actions for

contribution”); Bedford Affiliates, 156 F.3d at 424 (“CERCLA § 113(f)

plainly governs such contribution actions.”); Centerior Serv., 153 F.3d at

350 (“Claims by PRPs, however, secking costs from other PRPs are

necessarily actions for contribution, and are therefore governed by the

mechanisms set forth in § 113(f)."); Pneuwmo Abex, 142 F.3d at 776

(“potentially responsible parties . . . must seek contribution under section

9613"); Pinal Creek, 118 F.3d at 1300 (“Section 113(f) was thus enacted,

explicitly recognizing and regulating contribution claims under

CERCLA.”); New Castle, 111 F.3d at 1122 (“The history and language of

secuon 113 lend support to our conclusion that it, and not section 107, ts

the appropriate mechanism for obtaining a fair allocation of responsibility

between two or more potentially responsible persons.”): Colo. & ELRR..,

S0 F.3d at 1536 (as a matter of law, a CERCLA claim for contribution “is

controlled by § 113(f); United Techs.. 33 F.3d at 103 (action for

contribution falls under § 113): Akzo. 30 F.3d at 764 (claim by one liable

party against others “is governed by section 113(f)").

tribution rights, it placed express limitations on their avail-

ability. These limitations provide incentives for private par-

ties to conduct cleanups that are initiated or monitored by a

government environmental enforcement agency. By allowing

PRPs to recover costs under § 107, the court of appeals per-

mits them to circumvent Congress’s contribution limitations

and thereby undermines incentives to cooperate fully with the

government.

Congress’s principal limitation on contribution claims is

that they must be made either (i) during or following a civil

action under § 107 or § 106 (42 U.S.C. § 9613(f)(1); see also

Cooper Indus., 543 U.S. at 160), or (11) after a person has

resolved its liability to the federal government or to a state

government (42 U.S.C. § 9613(f)(3)(B)). Because govern-

ment entities are the most common § 107(a) plaintiffs, both

conditions promote government involvement in the cleanup.

To encourage PRPs to resolve their liability with the gov-

ernment, Congress, in SARA § 113(f)(2), provided settling

PRPs with immunity from contribution claims, including

“orphan share” liability, 1.c., liability attributable to defunct or

unidentifiable parties. 42 U.S.C. § 9613(f)(2). But SARA’s

immunity applies only to “contnbution” claims. See 42

U.S.C. §§ 9613(f)(2) and 9622(g)(5), (h)(4). Congress. did

not address the § 107(a) cost recovery claim the Second

Circuit has now given PRPs, suggesting it did net recognize

the claim. As a result of the immunity’s limitation, a PRP 1s

presumptively free in-the Second Circuit to sue settling

PRPs—rather than just non-settlers—thereby substantially

undermining Congress’s effort to persuade PRPs to settle.

These disincentives are compounded by the fact that a

§ 107(a) claim offers a greater potential recovery than a

§ 113(f) contribution claim. See New Castle, 111 F.3d at

1123. Whereas § 107(a) provides a claim for all incurred

response costs, § 113(f)’s text requires courts to allocate

response costs among liable parties using “equitable factors,”

42 U.S.C. § 9613(f)(1). A successful § 107(a) plaintiff shifts

the entire cleanup burden jointly and severally to each de-

fendant, rather than, as under § 113(f), achieving an equitable

allocation that also includes the plaintiff's share of the

liability.

These disincentives are not ameliorated by allowing a PRP

to sue under § 107(a) and then allowing the PRP-defendants

to counterclaim for contridution (as the court of appeals

suggests (Pet. App. 15a n.9)). If the PRP-plaintiff has first

resolved its liability to the government, § 113(f)(2) may pre-

clude such claims. And, even if contribution counterclaims

are available, a PRP suing under § 107(a) might end up

recovering substantially more than its equitable share, be-

cause it may be able to shift the burden of proof as well as the

liability for orphan shares.

Congress’s intent to make § 113(f) the exclusive contri-

bution remedy is also evidenced by the different limitations

periods for § 113(f) and § 107(a) claims. The three-year limi-

tations period tor § 113(f) contribution claims commences

upon either entry of judgment against a PRP or the date on

which a PRP resolves its liability with the federal or state

government. 42 U.S.C. § 9613(g)(3). In contrast, the time

for a § 107(a) cost recovery action generally expires either

three years after the completion of removal or six years after

initiation of remediation. 42 U.S.C. § 9613(g)(2).

As one court of appeals has explained, allowing PRPs to

use § 107 would “enable section 107 to swallow section 113.”

New Castle, 111 F.3d at 1123. Potentially responsible per-

sons would quickly abandon § 113 in favor of the “substan-

tially more generous provisions of section 107.” /d. See also

United Techs., 33 F.3d at 101 (allowing PRPs to use § 107(a)

would be to “follow a course that ineluctably produces

judicial nullification of an entire SARA subsection”).

3. CERCLA’s legislative history does not support al-

lowing PRPs a § 107(a) contribution claim that is not

subject to § 113(f)’s limitations. To the extent they are

informative, Congressional committee statements confirm

that § 113(f) was intended to govern all claims among PRPs

involving allocation of cleanup costs. The House Committee

on Energy and Commerce, for example, stated that § 113’s

contribution remedy “clarifies and confirms the right of a

person held jointly and severally liable under CERCLA to

seek contribution from other potentially liable parties, when

the person believes that it has assumed a share of the cleanup

or cost that may be greater than its equitable share under the

circumstances.” H.R. REP. No. 99-253(1), at 79 (1985),

reprinted in 1986 U.S.C.C.A.N. 2835, 2861 (emphasis

added). The Senate Committee on Environment and Public

Works similarly explained that § 113°s goal was to authorize

contribution claims by any person who believed that it had

“assumed a share of the cleanup or cost that may be greater

than its equitable share.” S. REP. No. 99-11, at 44 (1985),

reprinted in 2 LEGISLATIVE HISTORY OF THE SUPERFUND

AMENDMENTS AND REAUTHORIZATION ACT OF 1986, at 636

(1990) (emphasis added).

Courts of appeals that have considered this history have

concluded that in enacting § 113, Congress “sought to cod-

ify the case law,” United Techs., 33° F.3d at 100, and

“replaced the judicially created mght to contribution under

§ 107(a)(4)(B).° In re Reading Co., 11S F.3d TEth, 1119 (3d

Cir. 1997). These courts have concluded from the Con-

gressional record that § 113(f) became “the so/e means for

seeking contribution.” /d. at 1120 (emphasis added). See also

New Castle, 111 F.3d at 1120-22: accord Pinal Creek, 118

F.3d at 1301 (relying on legislative history in support of

conclusion that § 113 qualifies any implied contribution right

in pre-SARA CERCLA).

C. The Court of Appeals Rejected the Established

CERCLA Construction to Provide a Remedy

Congress Withheld

1. The court of appeals broke a ten-circuit consensus

on CERCLA’s post-SARA construction in order to create

an expansive private cause of action and promote

“voluntary” remediation. The court of appeals’ creation of

a § 107(a) ~2P action reveals a fundamental disagreement

with Congress’s policy choice to limit the availability of

contribution, as provided in § 113(f). The court of appeals

presumed that § 113(f)’s requirement that a contribution

claim be commenced “during or following any civil action,”

42 U.S.C. § 9613(f)(1), leaves PRPs that clean up voluntarily

with no remedy if they cannot assert a § 107(a) claim. Pet.

App. Il6a. This result, wrote the court of appeals, “would

undercut one of CERCLA’s main goals, encourag[ing] priv-

ate partics to assume the financial responsibility of cleanup

by allowing them to seek recovery from others.” /d. (quo-

tation omitted).

In adopting this approach, which it characterized as “con-

sistent with the view that courts took of section 107(a) before

section 113(f) was enacted,” id., the court of appeals made no

attempt to reconcile its rule with Congress’s 1986 CERCLA

amendments, including § 113(f)’s text or structure. In par-

ticular, it ignored completely § 113(f)(3)(B), which affords

any PRP that resolves its liability to the government the right

to seek contribution from non-settling PRPs. 42 U.S.C.

§ 9613(1)(3)(B).. And it did not reflect on whether § L13(f)(1)'s

“savings clause” allows PRPs to seck contribution under state

law if they incurred disproportionate cleanup costs.

2. The court of appeals’ suggestion that its new § 107(a)

remedy is reserved for “voluntary” PRPs is untenable and

costly to administer. The court of appeals attempted to

distinguish prior decisions by limiting its new § 107(a) claim

to voluntary PRPs. But its voluntary-versus-involuntary

distinction played no role in those earlier decisions. Each of

them held broadly that any PRP claim against another PRP is

one to allocate responsibility and necessarily sounds in

contribution under § 113(f). See cases cited at n.9, supra.

Nor does CERCLA’s text support the court’s holding that

voluntary PRPs can sue other PRPs under § 107(a)(4)(B), but

involuntary PRPs cannot. The court of appeals attempted to

locate its voluntary limitation in § 107(a)(4)(B) by contending

that only costs incurred voluntarily are “necessary costs of

response” recoverable under that subsection. Pet. App. 18a.

The court did not explain, however, why “voluntarily”

incurred costs should be recoverable as “necessary” costs of

response, but, for example, costs incurred under compulsion

of a government consent decree cannot be so recovered.

Ordinary uses of “necessary” suggest the contrary conclusion:

compulsory costs are necessarily incurred. '"

The court of appeals’ interpretation of “necessary” also

conflicts with Key Tronic’s conclusion that “necessary” costs

are those that “increase[ |] the probability that a cleanup will

be effective and get paid for.”'' S11 U.S. at 820. Key

Tronic, which had entered into a consent decree, could not

have incurred “necessary costs of response” under the

court of appeals’ interpretation of “necessary” to mean

“uncoerced.” The Second Circuit’s equating “necessary

costs” with those voluntarily incurred also conflicts with the

Ninth—Circuit’s holding that cleanup required by a state

See MERRIAM WEBSTER’S COLLEGIATE DICTIONARY 776 (10th ed.

1996) (“1 d: COMPULSORY 2: absolutely needed : REQUIRED”).

'' Courts of appeals have similarly defined “necessary costs of re-

sponse” as those “necessary to the containment and cleanup of hazardous

releases.” United States v. Ilardage, 982 F.2d 1436, 1448 (10th Cir.

1992). To be “necessary,” a cost must simply be “closely tied to an actual

cleanup” of hazardous releases. See, e.g., Ellis v. Gallatin Steel Co., 390

F.3d 461, 482 (6th Cir. 2004).

agency results in “necessary costs of response.” See NL

Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).'°

Additionally, the Second Circuit’s subsequent application

of its new § 107(a) rule demonstrates that it entails a case-by-

case factual inquiry: “Consol. Edison Co. v. UGI Utils.,

Inc. . . . makes relevant . . . whether and to what extent

plaintiffs incurred response costs voluntarily . . . [which] is of

course a question of fact.” AMW Materials Testing, Inc. v.

Town of Babylon, No. 05-206-CV, 2006 WL 851772, at *1

(2d Cir. Mar. 28, 2006) (unpublished summary order). The

Second Circuit’s holding here thus not only disregards a

uniform refusal to permit § 107(a) PRP claims, it replaces

that rule with one allowing such claims based on the unique

facts of particular cases—a substitution that is sure to impose

substantial administrative and litigation costs.

D. The Court of Appeals Acknowledged That Its

Decision Directly Conflicts With the Ninth

Circuit’s Pinal Creek Decision

Even the court of appeals’ voluntary PRP limitation does

not avoid conflict with the Ninth Circuit’s decision in Pinal

Creek. There, the Ninth Circuit considered whether a PRP

that, like Con Ed, had voluntarily incurred response costs

could assert a § 107(a) cost recovery claim against other

PRPs. Pinal Creek, 118 F.3d 1298. The Ninth Circuit,

following earlier decisions of several other courts of appeals,

reasoned that “[b]ecause a// PRPs are liable under the statute,

‘ Confronting similar facts, the New Jersey District Court in 7ranstech

Indus.. Ince. v. A&Z Septic Clean, 798 F. Supp. 1079, 1087 (D.N.J. 1992),

found “facetious at best” the argument that cleanup was “voluntary” when

it was completed under threat of fines or additional orders as Con Ed's

was here. Compare C.A. J.A. 11 (First Am. Compl.) (New York “di-

rected Con Edison to investigate and, if necessary, remediate contamina-

tion at the MGP Sites”).

—_

a claim by one PRP against another PRP necessarily is for

contribution” under § 113(f). /d. at 1301 (emphasis added).

Pinal Creek rejected for two reasons the argument accepted

by the court of appeals in this case that “voluntary” PRPs

should enjoy special § 107(a) status in order to promote

“rapid and voluntary environmental responses by private

parties.” /d. at 1304. First, Pinal Creek rejected the

argument as “based on policy considerations which we cannot

consider in light of the controlling text, structure, and logic of

CERCLA.” /d. Second, Pinal Creek concluded that PRPs

have other incentives for volunteering to clean up, including a

potentially greater ability to control cleanup costs, the desire

to protect ongoing operations, and the likelihood that courts

will consider their cooperation if called on to allocate

responsibility among PRPs under § 113(f)(1). /d. at 1304-05.

Pinal Creek also considered and found unpersuasive the

suggestion, made by the Second Circuit here (Pet. App. 15a at

n.9), that any difficulty created by allowing PRPs to sue

under § 107(a) can be remedied by § 113 counterclaims.

Pinal Creek said that such an “approach would ‘guarantee[ ]

inefficiency, potential duplication, and prolongation of the

litigation process in a CERCLA case.’” 118 F.3d at 1303

(quoting TH Agric. & Nutrition Co. v. Aceto Chem. Co., 884

F. Supp. 357, 361 (E.D. Cal. 1995)).

Acknowledging the conflict with Pinal Creek, the Second

Circuit attempted to dismiss the Ninth Circuit’s holding as

inconsistent with Cooper Industries. Specifically, it con-

strued Cooper Industries’ dictum that § 107(a) and § 113(f)

provide “clearly distinct” remedies as being “at odds with

Pinal Creek[ ]’s view that ‘while § 107 created the right of

contribution, the “machinery” of § 113 governs and regulates

such actions.’” Pet. App. 21a (quoting Pinal Creek, 118 F.3d

at 1302).

But there is no incongruity. Sections 107 and 113 are

distinct in the sense that they provide different types of

remedies—§ 107(a) makes certain parties jointly and sev-

erally liable to innocent parties (mainly governments) for all

cleanup costs, and § 113(f) “creates a mechanism for appor-

tioning that liability among [those] responsible parties,” Pinal

Creek, 118 F.3d at 1302 (quotation omitted). As this Court

has also recognized, those sections’ claims are “overlapping.”

See Key Tronic, 511 U.S. at 816. Section 107(a) defines the

class of persons who may be liable under § 113(f), which, by

its terms, authorizes contribution claims against “any other

person who is liable or potentially liable under section

9607(a) [i.e., § 107(a)] of this title,” 42 U.S.C. § 9613(f)(1).

Il. THE UNITED STATES HAS RENOUNCED

THE COURT OF APPEALS’ DECISION IN

THIS CASE AS “UNPERSUASIVE” AND “IN-

CONSISTENT WITH CERCLA’S SETTLE-

MENT SCHEME”

The United States recently told the Eighth Circuit that the

court of appeals’ decision in this case (i) is “contrary to [the

Eighth Circuit’s decision in] Dico” (Pet. App. 167a (U.S. Atl.

Research Br.)), (it) “conflicts with the First Circuit’s decision

in United Techs. and the Ninth Circuit’s decision in Pinal

Creek” (id. at 168a n.23), and (iti) “is inconsistent with

CERCLA’s settlement scheme and should be rejected” (id. at

170a). As the Government previously informed this Court, it

“endorses the [formerly] uniform conclusion of the courts of

appeals that Section 107(a)(1)-(4)(B) does not provide an

independent basis for a liable person to recover response

costs from another liable person.” U.S. Cooper Indus. Br.,

2004 WL 354181, at *20 n.9; see also U.S. DuPont Br. at 50

(“CERCLA is properly interpreted to require that a private

PRP’s claim against another PRP conform to the Section

113(f) requirements governing contribution.”).

As its recent Atlantic Research brief demonstrates, the

United States continues to read CERCLA in a manner in-

consistent with the reading adopted below. In that brief, the

United States explains that the Second Circuit erred in this

case for three principal reasons.

First, the United States explained that the Second Circuit

erred by reading Cooper /ndustries’ statement that § 107(a)’s

cost recovery remedy and § 113(f)(1)’s contribution remedy

are “clearly distinct” to require a deviation from the estab-

lished CERCLA construction. In the United States’s view,

the prior courts of appeals’ decisions holding that § 113(f)

provides the sole PRP remedy recognize that the sections

provide “distinct” remedies:

the courts of appeals decisions limiting PRPs to

contribution claims under section 113(f) recognize that

the remedies provided by that provision and section

107(a) are distinct. . . . Nevertheless, those courts held

that, of the two distinct remedies, the appropriate remedy

for allocation claims between PRPs was a contribution

claim governed by section 1 13(f).

Pet. App. 167a.

The United States explained further that the Second

Circuit’s contention that Cooper Industries calls prior deci-

sions into doubt “incorrectly assumes that the courts of

appeals disallowed actions by private PRPs under section

107(a)(4)(B) only because they assumed that a// private PRPs

who hac .:ncurred response costs could use [section] 113(f) to

seek contribution.” /d. at 168a (emphasis in original). As the

United States reads Cooper Industries, it “did nothing to

change the fundamental assumption that underlies the courts

of appeals cases: that claims by private PRPs are necessarily

actions for contribution, which must be brought using the

express limited mechanisms that Congress provided in

section 113(f).” /d. at 168a-69a (emphasis in original).

Second, the United States has argued that the court of

appeals’ decision here “is also wrong because it frustrates the

incentives provided by Congress to encourage PRPs to

promptly settle their liability with EPA or a State.” /d. at

169a. It explains that if the court of appeals’ § 107(a) claim

is available, “[a] PRP that has not been sued under section

106 or 107 would be better off not settling its liability with

EPA or a State so that it could claim to be a ‘volunteer’ and

sue under the ‘substantially more generous provisions of

§ 107(a).” Jd. (quoting Bedford Affiliates, 156 F.3d at 424)

(emphasis in original).

Third, the United States has stated that the Second Circuit

in this case “erred by reading section 107(a)(4)(B) in

isolation,” id., and by adopting a CERCLA “construction

[that] is inconsistent with the contribution protection provided

by section § 113(f)(2),” id. In particular, the United States

understands the court of appeals’ holding to be inconsistent

with § 113’s settlement scheme:

[I]f a PRP were allowed to avoid section 113(f) and seek

reimbursement solely under section 107(a)(4)(B) from a

PRP that had settled earlier, it is at best unclear whether

section 113(f)(2) would afford contribution protection to

the settling party. . . . “[T]hat would throw a proverbial

monkey wrench into the works,” because “[c]onsent

agreements would no longer provide protection, and

settling partics would have to endure additional rounds

of litigation to apportion their losses.”

Id. at 169a-70a (quoting Reading, 115 F.3d at 1119).

That the United States has consistently maintained a

construction of CERCLA that is contrary to the one now

embraced by the court of appeals is a further substantial

reason for granting this petition. Cf FBI v. Abramson, 456

U.S. 615, 621 (1982).

Hl. ONLY THIS COURT’S RULING ON WHETHER

§107(a) ALLOWS CONTRIBUTION CAN

AVOID NATIONWIDE UNCERTAINTY

A. Cooper Industries Recognized the Importance

of the § 107(a) Issue but Postponed Its Reso-

lution Until a Case, Like This One, Presented It

Squarely

Aviall, the voluntary PRP-plaintiff in Cooper Industries,

raised the § 107(a) issue for the first ttme in this Court. The

Court explained that the resolution of this issue “may depend

in part on the relationship between §§ 107 and 113” and that

“[t]hat relationship is a significant issue in its own right.”

543 U.S. at 169. Recognizing that resolving the § 107(a)

issue would require deciding (1) whether numerous courts of

appeals had correctly held that PRPs may not pursue such

actions and (11) whether a PRP “may pursue a § 107 cost

recovery action for some form of liability other than joint and

several,” id. at 169-70, the Court remanded the case without

ruling on that issue.

Justice Ginsburg, joined by Justice Stevens, in dissent,

would have resolved the § 107(a) issue in favor of reading

CERCLA to provide a § 107(a) contribution remedy to PRPs.

In their view, “[f]ederal courts, prior to the enactment of

§ 113(f)(1), had correctly held that PRPs could recover [under

§$ 107] a proportionate share of their costs in actions for

contribution against other PRPs . . . [and] nothing in § 113

retracts that right.” /d. at 174 (Ginsburg, J., dissenting)

(quotation omitted). They supported their conclusion with a

reference to Key Tronic’s dictum that, as they quoted it, § 107

‘unquestionably provides a cause of action for [potentially

responsible persons (PRPs)] to seck recovery of cleanup

costs.” /d. at 172 (quoting Kev Tronic, 511 U.S. at 818

(bracketed text in original)). |

What the Key Tronic dictum actually states, however, is

that “§ 107 unquestionably provides a cause of action for

private parties to seek recovery of cleanup costs.” 511 U.S.

at 818 (emphasis added). Key Tronic does not express a view

on whether private parties who are also PRPs have such a

right. Nor does Key Tronic address whether the “other

persons” who may sue under § 107(a) are only persons who,

unlike PRPs, are “innocent” of any CERCLA liability. The

twelve-year-old Key Tronic predates the decisions in all

circuits holding that PRPs can only sue other PRPs for

contribution under § | 13(f).'° Thus, at least those courts have

concluded that Key Tronic’s dictum does not resolve whether

§ 107(a) permits PRPs to sue for contribution.

B. Some Lower Courts Have Misread Cooper

Industries to Create Substantial Uncertainty

Regarding Whether PRPs Can Sue Under

§ 107(a)

Although the court of appeals here was the first to address

this issue since Cooper Industries, the Third, Seventh, Eighth,

and Ninth Circuits are all currently being asked to revisit their

previous holdings that PRPs cannot recover under § 107(a).""

Perhaps more important, however, is the fact that some

* See, v.g., Dico, 340 F.3d at 530: Bedford Affiliates, 156 F.3d at 424;

Centerior Serv., 153 F.3d at 350; Pneumo Abex, 142 F.3d at 776: Pinal

Creek, 118 F.3d at 1301; New Castle, 111 F.3d at 1122; Redwing

Carriers, 94 F.3d at 1496: Colo. & ELR.R.. 50 F.3d at 1536: United

Techs., 33 F.3d at 103: Akzo, 30 F.3d at 764.

ED DuPont de Nemours & Co. v. United States, No. 04-2096 (3d

Cir. filed April 27, 2004); Metro. Water Reclamation Dist. of Greater

Chicago v. Lake River Corp., No. 05-8016 (7th Cir. leave to appeal

granted July 29, 2005); Atl. Research Corp. v. United States, No. 05-3152

(Sth Cir. filed Aug. 8, 2005) (argued March 16, 2006); City of Rialto v.

U.S. Dep't of Def., No. 05-56749 (9th Cir. filed Nov. 22, 2005): Kotrous

v. Goss-Jewett Co.. No. 06-15162 (9th Cir. leave to appeal granted Jan.

27, 2006).

district courts have concluded that Cooper Industries frees

them from adherence to binding (and previously uniform)

circuit precedent and permits them to hold that PRPs that

cannot avail themselves of § 113(f) may maintain a claim for

contribution under § 107(a).

Some of these courts, like the court of appeals below,

appear motivated by a desire to ensure that PRPs that have

incurred cleanup costs have a contribution remedy even if

they have disqualified themselves from pursuing § 113(f)

contribution claims by failing to meet the conditions on that

claim. Several district courts in circuits that have prohibited

§ 107(a) PRP claims have concluded that Cooper Industries’

“limitation” on § 113(f) contribution claims authorizes ignor-

ing these precedents.

In Metropolitan Water Reclamation District of Greater

Chicago v. Lake River Corp., for example, the District Court

for the Northern District of Illinois considered whether a

plaintiff that was a PRP under § 107(a), because it was “‘an

owner of the contaminated property,” but that voluntarily

undertook cleanup efforts could “seek contribution from other

responsible parties under § 107(a).” 365 F. Supp. 2d 913,

915-16, 918 (N.D. Ili. 2005) (interlocutory appeal pending).

Although the court recognized that “[t]he Seventh Circuit has

yet to allow a claim made by a PRP to go forward on the

basis of an implied right to contribution under § 107(a),”” id.

at 917, the district court ruled that it “agree[d] with the

dissenters in [Cooper Industries v.| Aviall, insofar as they

express a prediction of the result that would occur when the

Court had to decide the question, that if the implied right

existed before § 113(f)(1) was added and the right was not

encompassed by § 113(f)(1), then it must still lie in § 107(a),”

id. at 918.

Metropolitan Water Reclamation District is not alone in

reading Cooper Industries to require a new direction on the

§ 107 issue. Taking a similar view, California district courts

have held—contrary to the Ninth Circuit’s holding in Pinal

Creek and Congress’s § 113 contribution conditions—that

PRPs who clean up voluntarily have a contribution action.

See, e.g., Kotrous v. Goss-Jewett Co., No. CIV. S02-1520

FCD JFM, 2005 WL 1417152, at *3 (E.D. Cal. June 16,

2005) (appeal filed Oct. 21, 2005) (‘a PRP may maintain a

claim for contribution under § 107(a)”); Adobe Lumber, Inc.

v. Taecker, No. CV S02-186 GEB GGH, 2005 WL 136706S,

at *1 (E.D. Cal. May 24, 2005) (concluding that, in the wake

of Cooper Industries, a “§ 107 claim is construed as it was

before the congressional enactment of § 113°’). And, at least

one district court has read broadly the Second Circuit’s

decision in this case to suggest that a § 107(a) contribution

claim is available to any PRP. See United States v. Horne,

No. 05-0497 CV W NKL, 2006 WL 290591, at *7 (W.D. Mo.

Feb. 6, 2006).'°

Other courts, however, have not been persuaded that

Cooper Industries signals a new rule that allows PRPs to

recover their costs under § 107(a). See, e.g., Boarhead Farm

Agreement Group v. Advanced Envtl. Tech. Corp., 381 F.

Supp. 2d 427, 435 (E.D. Pa. 2005); Mercury Mall Assocs.,

Inc. v. Nick’s Mkt, Inc., 368 F. Supp. 2d 513, 519-20 (E.D.

Va. 2005).

See also Viacom, Inc. v. United States, 404 F. Supp. 2d 3, 7 (D.D.C.

2005) (“in light of | Cooper Industries v.| Aviall, a PRP that cannot sue for

contribution for voluntary cleanup costs under § 113(f) may still seek to

recover its costs ina § 107(a) proceeding”); Vine Street L.L.C. v. Keeling,

362 F. Supp. 2d 754, 763 (E.D. Tex. 2005) (“in the situation where a

potentially responsible party cannot meet the specific requirements to

state a claim for contribution under Section 113(f)(1), the Court concludes

that a potentially responsible party can bring a claim under Section

107(a)(4)(B)"); Aggio v. Aggio, No. C 044357 PJH, 2005 WL 2277037,

at *5 (N.D. Cal. Sept. 19, 2005) (after Cooper Industries, “a PRP has an

implied right to seek contribution under § 107(a)"); Ferguson v. Arcata

Redwood Co., No. C 03-05632 SI, 2005 WL 1869445, at *6 (N.D. Cal.

Aug. 5, 2005) (same).

Cooper Industries recognized that the § 107 issue pre-

sented here is one of “importance,” 543 U.S. at 170, and two

Justices would have there resolved the issue, even though it

had not been fully briefed and even though the courts of

appeals were then in agreement that CERCLA does not

provide PRPs a § 107 claim. Since last Term, the issue’s

importance has increased exponentially: PRPs unable to meet

the § 113(f) contribution requirements have argued, in several

instances successfully, that Cooper Industries’ literal reading

of § 113(f) requires turning back the clock to allow a § 107

PRP claim that some courts read into CERCLA before

SARA. By doing so, these courts have rendered uncertain the

answers to important questions facing private PRPs, including

the availability of contribution actions, the scope of con-

tribution liability to other PRPs, and the risks and benefits of

refusing to cooperate with government enforcement agencies

in favor of private cost recovery actions.

Tiie court of appeals’ decision in this case exacerbates the

problem by creating a sharp circuit conflict on the § 107

issue. By basing its erroneous result on a misreading of

Cooper Industries, that decision provides a fertile medium for

continued litigation across the Nation. More, rather than less,

uncertainty will arise, as every other court of appeals 1s asked

to reexamine its rule and adopt the Second Circuit’s unman-

ageable “voluntary PRP” claim. Given the high stakes at risk

in cleanup litigation, partics will be compelled in every case

to preserve the claim until it is finally resolved by the Court.

The issue is squarely presented here. Continued litigation

is unlikely to reveal new considerations not already vetted by

ten courts of appeals and will burden unnecessarily the lower

courts and countless litigants. The Court should resolve the

issue in this case.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

G. MICHAEL HALFENGER JAY N. VARON *

PAUL BARGREN FOLEY & LARDNER LLP

FOLEY & LARDNER LLP 3000 K Street, N.W.,

777 East Wisconsin Avenue Suite 500

Milwaukee, Wisconsin 53202 Washington, D.C. 20007

(414) 271-2400 (202) 672-5300

* Counsel of Record Attorneys for Petitioner

APPENDIX

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term 2004

(Argued: May 20, 2005 Decided: September 9, 2005)

Docket No. 04-2409-cv

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.,

Plaintifj-Appellant,

UGI UTILITIES, INC.,

Defendant-Appellee.

Before:

KATZMANN, HALL, Circuit Judges, and MURTHA, District

Judge. |

The plaintiff-appellant appeals from the district court’s

grant of summary judgment to the defendant-appellee on 1)

certain of the plaintiff-appellant’s claims of operator liability

under CERCLA, and 2) the defendant-appellee’s claim that it

had been released from liability for the plaintiff-appellant’s

other operator liability claims. We conclude in this opinion

that subject matter jurisdiction exists in this matter because

the plaintiff-appellant seeks to recover costs of response

under CERCLA section 107(a), and the action thus arises

under that section. We address the substantive summary

judgment issues in a separate summary order. Accordingly,

we AFFIRM in part and REVERSE in part and remand for

further proceedings.

‘Hon. J. Garvan Murtha, United States District Judge for the District

of Vermont, sitting by designation.

KATZMANN, Circuit Judge.

In this action under the Comprehensive Environmental

Response, Compensation, and Liability Act of 1980

(“CERCLA”), Con Edison (“Con Ed”) secks to be reim-

bursed by UGI Utilities, Inc. (“UGI”) for costs it has incurred

cleaning up certain contaminated sites in Westchester County,

New York. The district court (Chin, J.) granted summary

judgment to UGI on all claims. Consol. Edison Co. of

N.Y., Inc. v. UGT Utils., Inc., 310° F.Supp.2d 592, 610

(S.D.N.Y.2004). In this opinion, we address whether, in light

of a recent Supreme Court decision, Cooper Industries, Inc. v.

Aviall Services, Inc., 125 S.Ct. 577 (2004), subject matter

jurisdiction exists in this case. We conclude that it does

because Con kd’s claims arise under CERCLA. In a

summary order issued simultaneously with this opinion, we

analyze the merits of the district court’s summary judgment

grant. We affirm in part and reverse in part and remand for

further proceedings.

BACKGROUND

This litigation concerns the cleanup of sites in Westchester

County that allegedly were contaminated by operations at

Manufactured Gas Plants, industrial facilities at which gas

was produced from coal, oil, or other energy sources.” In

October 1999, the New York State Department of Environ-

> According to the website of the New York State Department of

Environmental Conservation, in such plants, gas was stored, and then

piped to the surrounding area, where it was used for lighting, cooking, and

heating homes and businesses. Manufactured Gas Plants were first built

before the Civil War, and were generally closed during the first half of the

twentieth century. The plants would generate a variety of contaminants,

including coal tar, an oily liquid created during gas production and

distribution, and purifier waste, generated when cyanide and sulfur were

removed from the manufactured gas. N.Y. State Dep't of Envtl.

Conservation, General Information About MGPs, at https www.dee.

state.ny.us website der mgp inmgp_faq.html#mgp.

mental Conservation (the “Department”’) asked Con Ed for

information about locations at which the company or its

predecessors formerly operated Manufactured Gas Plants.

Con Ed owns or operates many such plants, including ten in

Westchester County, New York (the “Westchester Plants”).°

On August 15, 2002, Con Ed entered into a “Voluntary

Cleanup Agreement” to clean up more than 100 sites at which

Con Edison or its predecessors might have formerly owned or

operated Manufactured Gas Plants. These sites apparently

included the sites of seven of the ten Westchester Plants.*

Prior to entering into this Voluntary Cleanup Agreement,

Con Ed sued UGI seeking to recoup costs Con Ed had

incurred and would incur in cleaning up sites allegedly

contaminated by the ten Westchester Plants. Con Ed repre-

sents that it has already expended in excess of $4 million to

investigate and clean up the sites of the Westchester Plants,

and that the total amount to complete investigation and

cleanup may exceed $100 million. Con Ed alleges that UGI

or its predecessors operated the Westchester Plants, and that

UGI is thus liable for remedial costs under CERCLA, as

well as under New York State Navigation Law and negli-

gence law.

On July 2, 2003, UGI moved for summary judgment on

Con Ed’s claims against it. On November 25, 2003, the

district court heard oral argument, at the conclusion of which

* The Westchester Plants are the Mount Vernon Plant, the New

Rochelle Plant, the Pelham Plant, the Port Chester Plant, the Rye Plant,

the Tarrytown Plant, the White Plains Plant, the Ludlow Street Plant in

Yonkers, the Nepperhan Avenue Plant in Yonkers, and the Woodworth

Avenue Plant in Yonkers.

‘ The plants whose sites were covered in the Voluntary Cleanup

Agreement were the Mount Vernon Plant, the New Rochelle Plant, the

Pelham Plant, the Rye Plant, the Ludlow Street Plant in Yonkers, the

Nepperhan Avenue Plant in Yonkers, and the Woodworth Avenue Plant in

Yonkers.

the court dismissed Con Ed’s veil-piercing claims and state

law claims, as well as all claims relating to the three

Westchester Plants located in Yonkers, based on a release

granted to UGI. After initially reserving judgment on the

operator claims concerning the remaining Westchester Plants,

the district court, on March 29, 2004, granted UGI’s motion

for summary judgment in its entirety, finding that no

reasonable juror could conclude that UGI is subject to oper-

ator liability under CERCLA with respect to the Westchester

Plants not located in Yonkers.

Con Ed appealed on May 4, 2004, arguing that the district

court erred in granting UGI summary judgment on 1) Con

Ed’s CERCLA operator liability claims as to the Westchester

Plants not located in Yonkers, and 2) UGI’s claim that it was

released from liability as to the Westchester Plants located

in Yonkers.

After the parties had completed briefing these issues, but

before oral argument, the Supreme Court issued its decision

in Cooper Industries, Inc. v. Aviall Services, Inc., 125 S.Ct.

577 (2004). In that decision, which we discuss below, the

Court held that a party may only pursue a contribution claim

under CERCLA section 113(f)(1) during or following a civil

action as specified in that section. /d. at 583. Because no

civil action has been filed against Con Ed concerning the sites

of the Westchester Plants, and the First Amended Complaint

states that this action is brought pursuant to section 113(f)(1),

we requested additional briefing on whether subject matter

jurisdiction exists in this action, in light of Cooper Industries.

This court held oral argument on May 20, 2005.

DISCUSSION

A. The CERCLA Cost Recovery and Contribution Framework

CERCLA is a comprehensive federal law governing the

remediation of sites contaminated with pollutants. Two of its

primary goals include “encourag [ing] the timely cleanup of

hazardous waste sites,” and “plac{ing] the cost of that

[cleanup] on those responsible for creating or maintaining the

hazardous condition.” Control Data Corp. v. S.C.S.C. Corp.,

53 F.3d 930, 935-36 (8th Cir.1995) (internal quotations marks

and citations omitted); see also Key Tronic Corp. v. United

States, 511 U.S. 809, 819 n. 13 (1994) (“CERCLA 1s de-

signed to encourage private parties to assume the financial

responsibility of cleanup by allowing them to seek recovery

from others.’”) (quoting FMC Corp. v. Aero Industries, Inc.,

998 F.2d 842, 847 (1993)); H.R. Rep. No. 96-1016(1), at 17

(1980), reprinted in 1980 U.S.C.C.A.N. 6119, 6120 (stating

that CERCLA’s purposes include furthering the recovery of

costs for cleanup of hazardous waste sites “from persons

liable therefor” and inducing those persons “voluntarily to

pursue appropriate environmental response actions”).

In order to achieve these goals, CERCLA, in three separate

and different provisions, authorizes parties to recoup money

spent to clean up and prevent future pollution at contaminated

sites or to reimburse others for cleanup and prevention at

contaminated sites: (1) section 107(a), which permits the

general recovery of cleanup and prevention costs; (2) sec-

tion 113(f)(1), which creates a contribution right for parties

liable or potentially liable under CERCLA; and (3) section

113(f)(3)(B), which creates a contribution right for parties

that have resolved their liability by settlement.

Section 107(a) states that various persons, including the

owner or operator of a facility, may be held liable for, among

other things, “all costs of removal or remedial action incurred

by the United States Government or a State . . . not in-

consistent with the national contingency plan.” 42 U.S.C.

§ 9607(a)(4)(A). Pursuant to this provision, the government

routinely brings suits to obtain reimbursement for the costs—

also known as response costs—of cleaning up and preventing

future contamination at a site. See, e.g., United States v. LTV

Corp., 944 F.2d 997, 999 (2d Cir. 1991). In addition to

permitting these suits by the federal government and the

states, section 107(a) also permits private parties to pursue

such “cost recovery” actions, as it makes specified entities

liable for “any other necessary costs of response incurred by

any other person consistent with the national contingency

plan.” § 9607(a)(4)(B) (emphasis added); see also Key Tronic

Corp.,511 U.S. at 818 (noting that section 107(a) “unques-

tionably provides a cause of action for private parties to seek

recovery of cleanup costs’); Prisco v. A & D Carting Corp.,

168 F.3d 593, 602 (2d Cir.1999) (stating that section 107(a)

“provides a private right of action for the recovery of

[response] costs in certain circumstances”).

Section 113(f)(1) expressly creates a contribution right for

parties liable or potentially liable under CERCLA. It states

that “[a]ny person may seek contribution from any other

person who is liable or potentially liable under [section

107(a) ], during or following any civil action under [section

106] or under [section 107(a) ].° 42 U.S.C. § 9613(f)(1). In

Cooper Industries, the Supreme Court considered whether a

private party who has not been sued under section 106 or

section 107(a) may nevertheless obtain contribution under

section 113(f)(1) from other liable parties. See Cooper

Industries, Inc. v. Aviall Services, Inc., 125 S.Ct. 577, 580

(2004). The Court concluded, as we will discuss further

below, that the “natural meaning” of section 113(f)(1) “is that

contribution may only be sought subject to the specified

conditions, namely, ‘during or following’ a specified civil

action.” Cooper Industries, 125 S.Ct. at 583 (quoting 42

U.S.C. § 9613(f)(1)). Consequently, the Court held that

section 113(f)(1) does not support the suit of a party that has

* CERCLA section 106 states that when the President determines that

“an imminent and substantial endangerment” to the public or the

environment exists, the United States may “secure such relief as may be

necessary to abate such danger or threat.” and grants the federal district

courts jurisdiction to grant such relief. 42 U.S.C. § 9606(a).

not been the subject of judicial or administrative measures to

compel cleanup. /d. at 582, 586.

Finally, section 113(f)(3)(B) creates contribution rights for

settling parties. It provides that “[a] person who has resolved

its liability to the United States or a State for some or all of a

response action or for some or all of the costs of such action

in an administrative or judicially approved settlement may

seek contribution from any person” that has not itself settled

with the United States. 42 U.S.C. § 9613(f)(3)(B).

For subject matter jurisdiction to exist in this case, Con

Ed’s claims must have arisen under one of the above

provisions. See 28 U.S.C. § 1331 (granting the federal dis-

trict courts jurisdiction of “civil actions arising under the...

laws ... of the United States”); see also Barbara v. New York

Stock Exch., 99 F.3d 49, 53 (2d Cir.1996). Con Ed effec-

tively concedes that, in the wake of Cooper Industries, it

cannot bring its suit under section 113(f)(1) because it has not

been sued in a civil action as specified in that section. Con

Ed contends, however, that its claims arise, and that the court,

therefore, has subject matter jurisdiction, under section

113(f)(3)(B). We disagree, but hold that subject matter

jurisdiction exists pursuant to section 107(a).

B. Subject Matter Jurisdiction Does Not Exist Under Section

113(f)(3)(B)

Con Ed argues that its Voluntary Cleanup Agreement with

the Department constitutes a section 113(f)(3)(B) admin-

istrative settlement, that it has, as a result, “resolved its

liability to... a State . . . in an administrative or judicially

approved settlement,” 42 U.S.C. § 9613(f)(3)(B), and that it

should be permitted to pursue a cause of action under this

provision.

We read section 113(f)(3)(B) to create a contribution right

only when liability for CERCLA claims, rather than some

broader category of legal claims. is resolved. This seems

clear because resolution of liability for “response action[s]” 1s

a prerequisite to a section |13(f)(3)(B) suit—and a “response

action” is a CERCLA-specific term describing an action to

clean up a site or minimize the release of contaminants in the

future.° Moreover, the legislative history of the Superfund

Amendments and Reauthorization Act of 1986 (“SARA”),

which enacted section 113, confirms this reading. The report

of the House Committee on Energy and Commerce accom-

panying SARA states that section 113 “clarifies and confirms

the right of a person held jointly and severally liable under

CERCLA to seek contribution from other potentially liable

parties.” H.R.Rep. No. 99-253(1), at 79 (1985) (emphasis

added). The report of the Senate Environment and Public

Works Committee contains similar language. See S. Rep. 99-

11, at 44 (1985). This history makes no mention of any intent

to meddle with the contribution rules governing settlement of

non-CERCLA claims. Accordingly, we believe section

113(f)(3)(B) does not permit contribution actions based on

the resolution of liability for state law—but not CERCLA—

claims. See W.R. Grace & Co. v. Zotos Int'l, Inc., 98-CV-

838S(F) 2005 U.S. Dist. LEXIS 8755, at *23 (W.D.N.Y.

May 3, 2005) (“Just as a party must be sued under CERCLA

before it can maintain a section 113(f)(1) contribution claim,

it must settle CERCLA liability before it can maintain a claim

under section 113(f)(3).”).

° CERCLA defines the term “response” to mean “remove, removal,

remedy, and remedial action” and all “enforcement activities related

thereto.” 42 U.S.C. § 9601(25). “The terms ‘remove’ or ‘removal’ means

[inter alia} the cleanup or removal of released hazardous substances from

the environment.” /d. § 9601(23). The terms “remedy” or “remedial

action” mean inter alia “those actions consistent with permanent remedy

taken instead of or in addition to removal actions . . . to prevent or

minimize the release of hazardous substances.” /d. § 9601(24).

We also note that the term “response action” is used throughout

the statute. See. eg. id §§ 96O1(20K EVD). 9601(22), 9605( 10),

9607(1 2 )(A).

The operative question in deciding whether Con Ed's

claims arise under section 113(f)(3)(B), then, is whether

Con Ed resolved its CERCLA liability before bringing suit

against UGI.

In the Voluntary Cleanup Agreement, the Department

promised that if Con Ed cleaned up the properties specified in

the agreement according to the agreement's terms, the De-

partment would furnish Con Ed with a Release and Covenant

Not to Sue. The Release and Covenant Not to Sue states that

the Department “releases, covenants not to sue, and shall

forebear from bringing any action, proceeding, or suit pur-

suant to the [New York] Environmental Conservation Law,

the Navigation Law or the State Finance Law, and from

referring to the Attorney General any claim for recovery of

costs incurred by the Department . . . for the further inves-

tigation and remediation of the Site, based upon the release

or threatened release of Covered Contamination.” This lan-

guage makes clear, contrary to Con Ed’s contentions, that the

only liability that might some day be resolved under the

Voluntary Cleanup Agreement is liability for state law--not

CERCLA—claims. ’

To be sure, the Voluntary Cleanup Agreement does refer to

CERCLA in its “Reservation of Rights” section. There, the

agreement states:

]

Except for the Department’s right to take any inves-

tigatory or remedial action deemed necessary as a result

of a significant threat resulting from the Existing Con-

tamination or to exercise summary abatement powers,

” At oral argument, Con Ed argued that even if the releases from

hability under the Environmental Conservation Law, the Navigation Law,

and the State Finance Law do not serve to release Con Ed from CERCLA

liability, the more general promise not to refer claims for recovery of costs

to the state’s Attorney General does. The promise not to-refer does

nothing. however, to resolve Con Ed's lability for CERCLA claims.

10a

the Department shall not take any enforcement action

under [Environmental Conservation Law] Article 27,

Title 13, under CERCLA, under the [Navigation Law],

or under comparable statutory or common law theories

of remedial liability with respect to the Existing

Contamination, to the extent that such contamination is

being addressed under the Agreement, against Volunteer

or Volunteer’s grantees, successors or assigns during the

implementation of this Agreement, provided such party

is in compliance with the terms and provisions of this

Agreement, including without limitation the require-

ments of all Work Plans and amendments thereto.

Hlowever, this language cannot be construed to have resolved

Con Ed’s CERCLA liability. In fact, the exception

enunciated at the beginning of this section of the agreement—

which reserves the Department’s right to take action under

CERCLA “deemed necessary as a result of a significant

..reat resulting from the Existing Contamination or to exer

cise summary abatement powers’—leaves open the possi-

bility that the Department might still seek to hold Con Ed

liable under CERCLA. Moreover, to the extent that this

language affords Con Ed any protection at all, that protection

only lasts “during the implementation of this Agreement,”

i.e., while Con Ed is cleaning up the designated sites. Once

the cleanup is completed, the Department will apparently

regain the rights relinquished in this section of the agreement,

and grant Con Ed only the releases specified in the Retease

and Covenant Not to Sue. This language, therefore, does not

in any way suggest that Con Ed resolved its liability to the

Department under CERCLA.

For these reasons, we conclude that Con Ed may not

pursue its action under section 113(f)(3)(B).

lla

C. Subject Matter Jurisdiction Does Exist Under Section

107(a)

We believe, however, that Con Ed may pursue its suit

under section 107(a) because, in light of Cooper Industries,

Con Ed’s costs to clean up the sites of the Westchester Plants

are “costs of response” within the meaning of that section.

After CERCLA’s enactment in 1980 but before section

113(f)(1) was enacted, certain courts held that section 107(a)

permitted certain private parties that, if sued, would be held

liable under section 107(a)—often called “potentially re-

sponsible persons,” or “PRPs”—to sue other parties to re-

cover response costs incurred voluntarily.” See Wickland Oil

Terminals v. Asarco, Inc., 792 F.2d 887, 890-92 (9th

Cir.1986); Pinole Point Props., Inc. v. Bethlehem Steel

Corp., 596 F.Supp. 283, 290-91 (N.D. Cal.1984); City of

Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135,

1143 (E.D.Pa.1982). Section 107(a) does not, however, grant

to parties against whom liability has been imposed any

express right to sue other parties for contribution, which

Black's defines as “[t]he right that gives one of several

persons who are liable on a common debt the ability to

recover ratably from each of the others.” Black's Law

Dictionary 352 (8th ed. 2004); see also United Techs. Corp.

v. Browning-Ferris Indus., 33 F.3d 96, 99 (Ist Cir.1994)

(defining contribution as “a claim by and between jointly and

severally liable parties for an appropriate division of the

* This opinion generally eschews the terms “potentially responsible

person” and “PRP,” which do not appear anywhere in the text of either

CERCLA section 107 or section 113(f). The terms strike us as vague and

imprecise because, when no action has been filed nor fact-finding

conducted, any person is conceivably a responsible party under CERCLA.

Moreover, we believe the term may be read to confer on a party that has

not been held liable a legal status that it should not bear. We believe our

alternative designation a party that, if sued, would be held liable under

section 107(a) -is more precise.

l2a

payment one of them has been compelled to make.”) (internal

quotation marks and citation omitted). Despite the omission

of express contribution language, certain courts had held,

before the enactment of section 113(f)(1), that CERCLA did

in fact establish contribution rights. See Sand Springs Home

v. Interplastic Corp., 670 F. Supp. 913, 916-17 (N.D.Okla.

1987) (holding thata CERCLA contribution right existed as a

matter of federal common law); United States v. New Castle

County, 642 F. Supp. 1258, 1262-69 (D.Del.1986) (same);

United States v. Conservation Chemical Co., 619 F. Supp.

162, 227-29 (W.D.Mo.1985) (holding that a CERCLA con-

tribution right was implied in the statute’s language). But see

United States yv. Westinghouse Elec. Corp.,No. IP83-9-C,

1983 U.S. Dist. LEXIS 15850, at *9-*14 (S.D.Ind. June 29,

1983) (declining to find a CERCLA contribution right).

Congress amended CERCLA when it passed SARA in

1986. See generally Pub.L. No. 99-499, 100 Stat. 1613. That

legislation enacted section 113(f)(1), which, as described

supra, creates an express cause of action for contribution. 42

U.S.C. § 9613(f)(1).

After section 113(f)(1)’s enactment, this circuit considered

the relationship between section 107(a) and section 113(f)(1)

in Bedford Affiliates v. Sills, 156 F.3d 416 (2d Cir.1998). In

that case, negotiations between the plaintiff Bedford and the

Department had culminated in two consent orders pursuant to

which Bedford agreed to clean up contamination at a site it

owned. /d. at 421. Bedford then sought recovery in the

district court under both section 107(a) and section 113(f)(1).

Id. at 422. The district court denied Bedford’s section 107(a)

claim but ruled that it was entitled to contribution under

section 113(f)(1). /d. In equitably apportioning responsibility

for the response costs, the district court found that Bedford

was liable for five percent of those costs based on its

ownership of the contaminated site and was thus limited to

recovering only ninety-five percent of what it was seeking.

13a

/d. On appeal, Bedford challenged the district court’s ruling

that it was not entitled to proceed under section 107(a), and,

importantly, it argued that it should be able to recover one

hundred percent of its costs. /d. at 423.

This court obseived that “[t]o bring a derivative action to

recoup the portion of costs exceeding a potentially re-

sponsible person’s equitable share of the overall liability . . .

is a quintessential claim for contribution, where a party seeks

to apportion liability for an injury for which it 1s also directly

liable.” /d. at 424. Concluding that CERCLA § 113(f)

“plainly governs such contribution actions,” this court rea-

soned that the plaintiff “could not pursue a § 107(a) cost

recovery claim against [the defendants] due to its status as a

potentially responsible person.” /d. at 423-24. The court

observed that section 113(f)(1) has a three-year statute of

limitations, whereas section 107(a) has a six-year statute of

limitations, and added that “[w]ere we to permit a potentially

responsible person to elect recovery under either § 107(a) or

§ 113(f)(1), § 113(f/)(1) would be rendered meaningless,”

because “‘[a] recovering liable party would readily abandon a

§ 113(f)(1) suit in favor of the substantially more generous

provisions of § 107(a).”. /d. at 424. Thus, in Bedford

Affiliates, the court proceeded to analyze the plaintiff's claim

only as one for contribution under section 113(f(i). Jd. at

425, 427-30.

Con Ed appears willing to accept that Bedford Affiliates

stands for the proposition that section 107(4) may never

provide a right of action for a party that, if sued, would be

held liable under that section. We disagree, concluding that

the facts of Bedford Affiliates differ from the case before us in

a significant way. Before we explain that difference—and the

reason why we need not revisit Bedford Affiliates’s section

107(a) holding-—we lay out our own understanding of how, in

light of Cooper Industries, section 107(a) applics to the facts

of this case.

l4a

Following the enactment of section 113(f), some courts

concluded that even though any party could seek reim-

bursement for costs under section 107(a), actions by parties

that might themselves be liable under section 107(a) were

“necessarily actions for contribution, and [were] therefore

governed by the mechanisms set forth in § 113(f.” Centerior

Serv. Co. v. Acme Scrap Iron & Metal Corp., 153 F.3d 344,

350 (6th Cir.1998). See also Pinal Creek Group v. Newmont

Mining Corp., 118 F.3d 1298, 1302 (9th Cir.1997) (“[W]hile

§ 107 created the right of contribution, the ‘machinery’ of

§ 113 governs and regulates such actions, providing the de-

tails and explicit recognition that were missing from the text

of § 107.").

In Cooper Industries, however, the Supreme Court ex-

pressly stated that the section 107(a) cost recovery remedy

and the section 113(f)(1) contribution remedy, though

“similar at a general level in that they both allow private

parties to recoup costs from other private parties,” are

“clearly distinct.” /d. at 582 n. 3. Moreover, the Court held in

Cooper Industries that a section 113(f)(i) action is only

available during or following a specified civil action. Cooper

Industries, 125 S.Ct. at 583. This holding impels us to

conclude that it no longer makes sense to view section

113(f(1) as the means by which the section 107(a) cost

recovery remedy is effected by parties that would themselves

be liable if sued under section 107(a). Each of those sections,

107(a) and 113(f)(1), embodies a mechanism for cost recov-

ery available to persons in different procedural circumstances.

Given that section 107(a) ts distinct and independent from

section 113(f(1), and that section 113(f)(1)’s remedies are

not available to a person in the absence of a civil action as

specified in that section, determining whether a party in Con

Ed’s circumstances may sue under section 107(a) is easily

resolved based on that section’s plain language. Section

107(a) makes parties hable for the government’s remedial and

lSa

removal costs and for “any other necessary costs of response

incurred by any other person consistent with the national

contingency plan.” 42 U.S.C. § 9607(a)(4)(B). The only

questions we must answer are whether Con Ed ts a “person”

and whether it has incurred “costs of response.” We have no

doubt that Con Ed is a “person” under CERCLA because it is

a “firm” or “corporation” within the meaning of the act. 42

U.S.C. § 9601(21).. Moreover, Con Ed has incurred and ts

incurring “costs of response,” in that it ts incurring costs of

“removal” and “remedial action,” § 9601(25), at the sites of

the Westchester Plants, and those costs were not imposed on

Con Ed as the result of an administrative or court order or

judgment.

Unlike some other courts, we find no basis for reading into

this language a distinction between so-called “innocent”

parties and parties that, if sued, would be held liable under

section 107(a). See, e.g., United Techs. Corp., 33 F.3d at 100

(“[I]t is sensible to assume that Congress intended only

innocent parties—not parties who were themselves liable—to

be permitted to recoup the whole of their expenditures.”).

Section 107(a) makes its cost recovery remedy available, in

quite simple language, to any person that has incurred nec-

essary costs of response, and nowhere does the plain language

of section 107(a) require that the party seeking necessary

costs of response be innocent of wrongdoing. ’

’ Some might argue that a person who, if sued, would be partly liable

for necessary costs of response may be unjustly enriched if allowed under

secuon 107(a) to recover 100 percent of its costs from other persons. This

fear seems misplaced. While we express no opinion as to the efficacy of

such a procedure, there appears to be no bar precluding a person sued

under section 107(a) from bringing a counterclaim under section 113(f)(1)

for offsetting contribution against the plaintiff volunteer who, if sued,

would be hable under section 107(a). See, e.g., Blasland, Bouck & Lee v.

City of No Miami, 283 F.3d 1286, 1292 (11th Cir. 2002) (observing that

plaintiff, an engineering firm, had sued City asserting CERCLA claims,

and City had counterclaimed for CERCLA contribution), Dent vo Beazer

loa

Moreover, we believe we would be impermissibly discour-

aging voluntary cleanup were we to read section 107(a) to

preclude parties that, if sued, would be held lable under

section 107(a) from recovering necessary response costs.

Were this economic disincentive in place, such parties would

likely wait until they are sued to commence cleaning up any

site for which they are not exclusively responsible because of

their inability to be reimbursed for cleanup expenditures in

the absence of a suit. See Syms v. Olin Corp., 408 F.3d 95,

106 n.8 (2d Cir. 2005) (observing that “the combination of

Cooper Industries and Bedford Affiliates . . . would create a

perverse incentive for PRPs to wait until they are sued before

incurring response costs”).'” This would undercut one of

CERCLA’s main goals, “‘encourag[ing] private parties to

assume the financial responsibility of cleanup by allowing

them to seek recovery from others.”” Key Tronic Corp. v.

United States, 511 U.S. 809, §19 n.13 (1994) (quoting FMC

Corp. v. Aero Indus., Inc., 998 F.2d 842, 847 (1993)).

For these reasons, we hold that section 107(a) permits a

party that has not been sued or made to participate in an

administrative proceeding, but that, if sued, would be held

Materials & Servs., 156 F.3d 523, 527 (4th Cir. 1998) (stating that the

plaintiff had filed claims under section 107(a) and section 113(f)(1), and

that the defendant had filed “generally corresponding CERCLA coun-

terclaims”); Redwing Carriers v. Saraland Apts., 94 F.3d 1489, 1495

(lith Cir. 1996) (stating that the plaintuff had sued the defendants under

sections 107(a) and 113(f), and the defendants had counterclaimed under

section 113(14)).

"In Syms, this court faced the same question we face here: the effect

of Cooper Industries on section 107(a). In that case, Cooper Industries

had been issued after the court had heard oral argument, and the court

elected not to decide the issue but rather to permit the district court to

consider the issue on remand. /d. at 106-07. Here. where Cooper Indus-

iries Was issued well before oral argument, and the parties submitted, at

the court's request, briefs on this purely legal issue, remand ts unnec-

essary and would only delay resolution of this matter.

17a

liable under section 107(a), to recover necessary response

costs incurred voluntarily, not under a court or administrative

. 11

order or judgment.

This holding does not require us to revisit Bedford Affil-

iates because of critical distinctions between that case and

. ¥

this one.

'' This is, of course, consistent with the view that courts took of section

107(a) before section 113(f)(1) was enacted. See Wickland, 792 F.2d at

891-92, Pinole Point Props., Inc., 596 F.Supp. at 290-91, Stepan Chem-

ical Co., 544 F Supp. at 1143.

'- Generally, “this court is bound by a decision of a prior panel unless

and until its rationale is overruled, implicitly or expressly, by the Supreme

Court or this court en banc.” BankBoston, N.A. v. Sokolowski, 205 F.3d

532, 534-35 (2d Cir. 2000) (quotation marks and citation omitted).

Bedford Affiliates's implicit holding that a plaintiff may proceed under

section 113(f)(1) in the absence of a section 106 or 107(a) action has

apparently been superseded by Cooper /ndustries. We have also observed

that we may depart from a prior decision when it merely “has been called

into question by an intervening United States Supreme Court decision.”

Meacham vy. Knolls Atomic Power Lab., 381 F.3d 56, 69 (2d Cir. 2004)

(quotation marks and citation omitted) (vacated on other grounds); see

also Hon. Jon O. Newman, Foreword: In Banc Practices in the Second

Circuit: The Virtues of Restraint, 50 Brook. L. Rev. 365, 370 (1984)

(“An in banc consideration has not been thought necessary, however, to

discard a precedent eroded by an intervening decision of the Supreme

Court.”). Cooper Industries may call into question the rationale of

Bedford Affiliates ’s section 10/(a) holding. Certainly, it no longer makes

sense to argue that permitting a potentially responsible person to sue

under section 107(a) would render section 113(f)(1)'s statute of limita-

tions meaningless because a party proceeding in the absence of a civil

action no longer has the option of suing under section 113(f)(1). See

Bedford Affiliates, 156 F.3d at 424. Consequently, it might be argued

that, in the wake of Cooper Industries, Bedford Affiliates’s section 107(a)

holding can no longer stand. We need only make this determination,

however, if our section 107(a) holding conflicts wna Bedford Affiliates ‘s

section 107(a) holding. Because it does not, we decline to answer the

question whether a three-judge panel of this court may cepart from

Bedford Affiliates ‘s section 107(a) holding.

18a

First, unlike in this case where there has been no adju-

dication of Con Ed’s liability for response costs and no

administrative or judicially approved settlement requiring

Con Ed to incur those expenses, in Bedford Affiliates, the

plaintiff had entered into two consent orders with the

Department, pursuant to which the plaintiff began cleanup

and remedial action. Bedford Affiliates, 156 F.3d at 421.

“An administrative consent order is a final agency order

which is reviewable as if it were the product of a hearing.’”

A.R. v: N.Y. City Dep't of Educ., 407 F.3d 65 n.12 (2d Cir.

2005) (quoting 2 Charles H. Koch, Jr., Administrative Law

and Practice § 5.43, at 155 (2d ed.1997)).

It may be that when a party expends funds for cleanup

solely due to the imposition of liability through a final

administrative order, it has not, in fact, incurred “necessary

costs of response” within the meaning of section 107(a). As

the District Court for the Middle District of North Carolina

stated in United States v. Taylor, 909 F.Supp. 355 (M.D.N.C.

1995), when a party “does not conduct its own cleanup, it has

not incurred recovery costs.” /d. at 365. If a party expends

funds out of obligation under an administrative or court order

or final judgment, its liability may be “similar to that of a tort

feasor’s liability for the doctor’s bills of the injured party.

Payment by the tort feasor does not mean it has incurred

doctor’s bills itself.” /d.; see Michael V. Hernandez, Cost

Recovery or Contribution?: Resolving the Controversy Over

CERCLA Claims Brought by Potentially Responsible Parties,

21 Harv. Envtl. L.Rev. 83, 95-97 (1997) (suggesting that

section 107(a) does not expressly authorize suits secking

costs of liability imposed in a prior recovery action or

settlement).

'* We note, however, that even decisions stating that the imposition of

liability may create expenditures that are not costs of response have

confined their holding te liability imposed through court proceedings.

Taylor held that a party subjected to a court-approved settlement or

19a

Second, the Bedford Affiliates plaintiff, having agreed to

the consent order, put the extent of its liability at issue by

proceeding to seek recovery under both sections 107(a) and

113(f)(1). As noted, under section 113(f), the district court

found that the plaintiff was partially liable for the costs of

response. To rule that in those circumstances Bedford could

have proceeded under section 107(a) to seek recovery of one

hundred percent of the costs, this court would have had to

hold in substance that a party already adjudicated liable for a

portion of the costs of response under section 113(f)(1) could

circumvent that section by recovering under section 107(a)

that portion of the costs attributed to it by the adjudication.

That is, having found that the district court did not abuse its

discretion in attributing to Bedford responsibility for five

percent of the necessary response costs, the court did not have

to reach the question of whether Bedford could proceed under

section 107(a) to recoup those costs.

Here, there have been no consent orders and no proceeding

apportioning necessary costs of response to Con Ed, and these

differences distinguish this case from Bedford Affiliates. In

sum, we read Bedford Affiliates to hold that a party that has

incurred or is incurring expenditures under a consent order

with a government agency and has been found partially liable

under section 113(f)(1) may not seek to recoup those ex-

judgment was limited to the contribution remedy, but also stated that a

party implementing response or remedial activity under an administrative

order incurs “necessary costs of response” under section 107(a). /d. at

363; see New Castle County, 642 F.Supp. at 1262 (“[I]t is not clear that

once a responsible party has been sued his monetary expenditures to abate

an environmental hazard qualify as ‘necessary costs of response’ under

the Act.”) (emphasis added); Hernandez, supra, at 124 (arguing that a

party that cleans up a site under an administrative order should have both

a section 107(a) cost recovery claim and a contribution claim). If

expenditures under an administrative order are costs of response, Bedford

Affiliates would apparently require revisiting. We need not and do not

decide these questions here.

20a

penditures under section 107(a). Our holding here—that a

party that has not been sued or made to participate in an

administrative proceeding, but, if sued, would itself be liable

under section 107(a), may still recover necessary response

costs incurred voluntarily, not under a court or administrative

order or judgment—does not conflict with Bedford Affiliates.

We are, of course, cognizant that the Supreme Court in

Cooper Industries declined to resolve whether a party that

would itself be liable under section 107(a) may bring a

section 107(a) cost recovery action. See Cooper Industries,

125 S.Ct. at 584. But see id. at 588 (Ginsburg, /., dissenting)

(urging the court to permit such parties to proceed under

section 107(a)). This fact does not weigh on one side or the

other in our analysis here. In justifying its refusal to resolve

the question, the Court cited a long list of circuit court

cases—including Bedford Affiliates—stating that so-called

PRPs could not pursue a section 107(a) action. See id. at 585.

All but one of those cases are inapposite for the reason

described supra: they considered plaintiffs that had either

been held liable—or, because they had been sued, might

imminently be heid liable—under an administrative or court

order or judgment. See Centerior Serv., 153 F.3d at 346

(stating that “the EPA issued a unilateral Administrative

Order to the plaintiffs”); Pneumo Abex Corp. v. High Point,

Thomasville & Denton R.R., 142 F.3d 769, 773 (4th Cir.

1998) (stating that the plaintiff “began response activities at

the site pursuant to state and federal EPA orders”); New

Castle County v. Halliburton NUS Corp., 111 F.3d 1116,

1119 (3d Cir. 1997) (stating that the United States had filed

suit against the plaintiff); Redwing Carriers, Inc. v. Saraland

Apartments, 94 F.3d 1489, 1495 (11th Cir. 1996) (stating that

the plaintiff had entered into two consent orders with the

EPA): United States v. Colorado & E. R.R. Co., 50 F.3d

1530, 1533 (10th Cir. 1995) (stating that the party seeking to

assert section 107(a) claims against third-party defendants

had been sued by the ERA): United Techs. Corp. v.

2la

Browning-Ferris Inc., Civil No. 92-0206-B, 1993 U.S. Dist.

LEXIS 19160, at *2-*3 (D.Me. May 27, 1993) (stating that

the United States had filed a civil action under CERCLA

against a predecessor of the plaintiff in United Technologies

Corp. v. Browning-Ferris Industries, Inc., 33 F.3d 96 (1st Cir.

1994), another case cited by the Supreme Court in Cooper

Industries). The only other case cited in this vein in Cooper

Industries is Pinal Creek Group v. Newmont Mining Corp.,

118 F.3d 1298 (9th Cir. 1997). We simply and respectfully

disagree with the Ninth Circuit’s holding in Pinal Creek that

a party that has incurred response costs voluntarily and, if

sued, would be held liable under section 107(a), may only

bring a contribution claim governed by section 113(f)(1). See

id. at 1301-06. In particular, Cooper Industries is at odds

with Pinal Creek Group's view that “while § 107 created the

right of contribution, the ‘machinery’ of § 113 governs and

regulates such actions, providing the details and explicit

recognition that were missing from the text of § 107.” Jd. at

1302. According to Cooper Industries, the two remedies are

“clearly distinct.” 125 S.Ct. at 582 n.3.

Consequently, we conclude that a party in Con Ed's

circumstances may pursue a cost recovery action under

section 107(a).

D. Con Ed's Waiver and Failure-to-Plead Arguments

UGI argues that Con Ed cannot pursue any claim other

than one under section 113(f)(1) because 1) Con Ed has

waived any argument that an alternative provision might

support its suit, and 2) Con Ed failed to assert any basis other

than section 113(f)(1) in its First Amended Complaint.

As to the first assertion, we have discretion to consider an

argument not passed on below where, as here, “‘the issue is

purely legal and there is no need for additional fact-finding.””

Baker vy. Dorfman, 239 F.3d 415, 420-21 (2d Cir. 2000)

(quoting Readco, Inc. v. Marine Midland Bank, 81 F.3d 295,

302 (2d Cir.1996)). UGI’s suggestion that Con Ed waived an

22a

argument supporting subject matter jurisdiction 1s particularly

unpersuasive given that UGI itself declined to press the

argument that the court /acked subject matter jurisdiction over

Con Ed’s claim. UGI, in its appellate opposition brief filed

on September 10, 2004, mentioned Cooper Industries, which

was then pending on appeal to the Supreme Court, but

“assumed arguendo” that the court had subject matter

jurisdiction despite Con Ed’s not having been sued under

section 106 or section 107(a). Apparently hoping that this

court would simply affirm the district court summary judg-

ment grant on the merits, UGI attempted to hold its subject

matter jurisdiction argument in reserve. However, “[t}he

absence of [subject matter] jurisdiction is non-waivable;

before deciding any case we are required to assure ourselves

that the case is properly within our subject matter juris-

diction.” Wynn v. AC Rochester, 273 F.3d 153, 157 (2d Cir.

2001). Even after Cooper Industries was issued in December

of last year, UGI did not submit additional briefing on this

topic for a period of more than four months, only advancing

its subject matter jurisdiction argument when urged by this

court. Having failed to press its argument against subject

matter jurisdiction without court prodding, UGI cannot now

argue that we should refuse based on waiver to consider an

argument in favor of jurisdiction.

UGI’s second argument also lacks merit. As this court

observed in Albert vy. Carovano, 851 F.2d 561 (2d Cir. 1988),

“(t]he failure in a complaint to cite a statute, or to cite the

correct one, in no way affects the merits of a claim,” because

“{fjactual allegations alone are what matters.” /d. at $71 n.3;

see also Northrop v. Hoffman of Simsbury, Inc., 134 F.3d 41,

45-46 (2d Cir. 1997) (citing Albert ). Here, the First

Amended Complaint alleges that Con Ed has incurred and

continues to incur cleanup costs, which were incurred volun-

tarily and not as a result of being held liable under an

23a

administrative or court order or judgment.'* As we have

explained, this suffices for Con Ed to proceed under section

107(a).

CONCLUSION

For these reasons, we conclude that this action arises under

CERCLA section 107(a), and that subject matter jurisdiction

exists. For the reasons discussed in the accompanying

summary order, we affirm in part and reverse in part the

district court’s grant of summary judgment and remand the

case for further proceedings.

'* Indeed, the voluntariness of the costs that Con Ed has incurred is

demonstrated by the fact that the First Amended Complaint identified

these costs, even though it was filed more than six months before Con Ed

entered into the Voluntary Cleanup Agreement.

24a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Docket No. 04-2409-CV

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.,

Plaintiff-Appellant,

¥,

UGI UTILITIES, INC.,

Defendant-Appellee.

Sept. 9, 2005

SUMMARY ORDER

THIS SUMMARY ORDER WILL NOT BE PUBLISHED

IN THE FEDERAL REPORTER AND MAY NOT BE

CITED AS PRECEDENTIAL AUTHORITY TO THIS OR

ANY OTHER COURT, BUT MAY BE CALLED TO THE

ATTENTION OF THIS OR ANY OTHER COURT IN A

SUBSEQUENT STAGE OF THIS CASE, IN A RELATED

CASE, OR IN ANY CASE FOR PURPOSES OF COL-

LATERAL ESTOPPEL OR RES JUDICATA.

At a stated term of the United States Court of Appeals for

the Second Circuit, held at the Thurgood Marshall United

States Courthouse, Foley Square, in the city of New York, on

the 9th day of September, two thousand and five.

PRESENT: KATZMANN, HALL, Circuit Judges, and

MURTHA,! District Judge.

' Hon. J. Garvan Murtha, United States District Judge for the District

of Vermont, sitting by designation.

25a

‘Appeal from the United States District Court for the South-

ern District of New York (Chin, /.).

UPON DUE CONSIDERATION, IT IS HEREBY OR-

DERED, ADJUDGED, AND DECREED that the judgment

of said district court be and it hereby is AFFIRMED in part

and REVERSED in part.

Plaintiff-Appellant Consolidated Edison Company of New

York, Inc., (“Con Ed”) appeals from a grant of summary

judgment to Defendant-Appellee UGI Utilities (“UGI’)

entered on April 1, 2004 in the United States District Court

for the Southern District of New York (Chin, /.). Having

found in an accompanying opinion that Con Ed’s claims

arise under section 107(a) of the Comprehensive Environ-

mental Response, Compensation, and Liability Act of 1980

(“CERCLA”), 42 U.S.C. § 9607(a), and thus subject matter

jurisdiction exists in this matter, we now address the merits.

We assume familiarity with the procedural posture of this

case and with its facts, which are set forth in detail in the

decision of the district court, Consol. Edison Co. of New

York, Inc. v. UGI Utils., Inc., 310 F.Supp.2d 592, 596-602

(S.D.N.Y.2004), and in the opinion accompanying this sum-

mary order, Consol. Edison Co. of New York, Inc. v. UGI

Urtils., Inc., No. 04-2409, 2005 WL 2176072 (2d Cir. filed

Sept. 9, 2005).

After volunteering to clean up certain of its sites in

Westchester County that had been polluted by the operation

of manufactured gas plants (*MGPs”), Con Ed brought suit

against UGI in 2001 seeking to recover a portion of the

cleanup costs.

Con Ed attempts to hold UGI liable, through its corporate

predecessors, for the environmental harm at ten MGPs

occurring from 1887 to 1904. There are four components of

Con Ed’s theory of liability. First, Con Ed alleges that

between 1887 and 1900 UGI operated three sites in Yonk-

26a

ers—on Woodworth Avenue, Ludlow Street, and Nepperhan

Avenue—under three separate leases and was responsible

under CERCLA for the environmental harm done there

during that period (the “Yonkers Claim”). Second, Con Ed

asserts that between approximately 1898 and 1902 UGI was a

CERCLA operator of an MGP in Tarrytown and one in White

Plains that were owned through UGI subsidiaries (the “White

Plains and Tarrytown Claim”). Third, Con Ed asserts that

between 1890 and 1900, Con Ed (through its corporate

predecessor American Gas) was a CERCLA operator of

MGPs in Rye, Mount Vernon, Pelham, Port Chester, and

New Rochelle (the “American Gas Claim’). In 1900 or soon

thereafter, all of these MGPs were purchased by or merged

with the Westchester Lighting Company (“WLC”), a UGI

holding company, and this is the basis for the fourth com-

ponent of Con Ed’s liability claim (the “WLC Claim”). Here

Con Ed asserts that UGI is liable for the environmental harm

at the White Plains and Tarrytown MGPs and tke five

American Gas MGPs from roughly 1900, when most of them

were consolidated under WLC’s control, to 1904, when WLC

was sold to Con Ed.”

UGI moved for summary judgment on all claims, and the

district court granted the motion. Consol. Edison Co. of New

York, Inc., 310 F.Supp.2d at 602-10. On the ~ onkers Claim,

the district court concluded that any liability UGI might have

had was covered by a general release WLC issued to UGI

when WLC purchased the three MGPs and cancelled UGI’s

“ It is not clear from the proceedings below or arguments on appeal

whether Con Ed asserts that from 1900 to 1904 WLC was a CERCLA

operator-—-in addition to the other seven WLC MGPs -of the three

Yonkers MGPs, which WLC acquired in 1900 through purchase of three

holding companies. To the extent Con Ed does assert such a claim, we

conclude that claim must fall to UGI’s summary judgment motion for the

same reasons we find that summary judgment was proper on the WLC

Claim.

24a

operating leases in 1900. See id. at 602. The district court

also granted summary judgment on the remaining claims--the

White Plains and Tarrytown Claim, the American Gas Claim,

and the WLC Claim. It concluded that Con Ed had not

produced enough evidence to allow a reasonable jury to find

that, under the standard for CERCLA operator liability laid

out in United States v. Bestfoods, 524 U.S. 51, 118 S.Ct.

1876, 141 L.Ed.2d 43 (1998), UGI was an operator of these

MGPs. /d. at 602-10.

We review a grant of summarv judgment de novo. Green

Mountain R.R. Corp. v. Vermont, 404 F.3d 638, 639 (2d Cir.

2005). Under section 107(a) of CERCLA, liability attaches

to “any person who at the time of disposal of any hazardous

substance owned or operated any facility at which such haz-

ardous substances were disposed of.” 42 U.S.C. § 9607(a)(2).

Of the two bases for CERCLA liability—owning or operating

a facility—it is the second that concerns us here. To be liable

as an operator of a facility, the Supreme Court has instructed,

a person “must manage, direct, or conduct operations specif-

ically related to pollution, that 1s, operations having to do

with the leakage or disposal of hazardous waste, or decisions

about compliance with environmental regulations.” United

States v. Bestfoods, 524 U.S. 51, 66-67, 118 S.Ct. 1876, 141

L.Ed.2d 43 (1998); see also Commander Oil Corp. v. Barlo

Equip. Corp., 215 F.3d 321, 332 n. 3 (2d Cir.2000).

In considering whether a parent was an “operator” of a

subsidiary’s facility, “norms of corporate behavior (undis-

turbed by any CERCLA provision) are crucial reference

points.” Bestfoods, 524 U.S. at 71, 118 S.Ct. 1876. When

such activities are “consistent with the parent’s investor

status, such as monitoring of the subsidiary’s performance,

supervision of the subsidiary’s finance and capital budget

decisions, and articulation of general policies and proce-

dures,” id. at 72 (quotations and citations omitted), CERCLA

operator liability does not arise. The Court also emphasized

28a

that, “[s]ince courts generally presume that the directors are

wearing their ‘subsidiary hats’ and not their ‘parent hats’

when acting for the subsidiary, it cannot be enough to

establish liability . . . that dual officers and directors made

policy decisions and supervised activities” at the subsidiary’s

facility. /d.at 69-70 (citations omitted).

We conclude, as did the district court, that UGI was

entitled to summary judgment on Con Ed’s White Plains and

Tarrytown Claim, its American Gas Claim, and its WLC

Claim, all of which alleged CERCLA operator liability.

Largely for the reasons identified by the district court,

Consol. Edison Co. of New York, Inc., 310 F.Supp.2d at 606-

10, we conclude that Con Ed has pointed to no evidence that

would allow a reasonable jury to conclude that UGI “manage

[d], direct{ed], or conduct[ed] operations specifically related

to pollution, that is, operations having to do with the leakage

or disposal of hazardous waste, or decisions about com-

pliance with environmental regulations.” Besifoods, 524 U.S.

at 66-67, 118 S.Ct. 1876. Its evidence, in general, consists of

(1) overlapping officers and directors between parent and

subsidiary, (2) close parental control of the subsidiaries’

expenditures, and (3) UGI's enthusiasm for its subsidiaries to

use Its patented gas machinery. No evidence, however, rebuts

the presumption that dual officers and directors can faithfully

serve both parent and subsidiary. No evidence is inconsistent

with UGI’s (or American Gas’s) role as an investor in its

subsidiaries. In other words, no evidence would allow a

reasonable jury to find that the conduct of UGI or American

Gas meets the Besffoods standard on these three claims.

On the Yonkers Claim, we disagree with the district court.

The three identical releases at issue were each part of can-

eellations of the lease agreements under which UGI operated

the MGPs. Each release stated that the lease agreement was

cancelled and that “all claims and demands thereunder . . . by

[Con Ed’s predecessor] against [UGI] under said agreement

29a

are hereby forever released.” In an oral decision, the district

court concluded that “it is a general release,” but “the lan-

guage is broad enough to pick up the pollution claim.”

We look to state law when interpreting agreements shifting

CERCLA liability. See Commander Oil Corp. v. Advance

Food Serv. Equip., 991 F.2d 49, 51 (2d Cir.1993) (inter-

preting CERCLA indemnification agreement). “New York

law requires that a release contain an ‘explicit, unequivocal

statement of a present promise to release defendant from lia-

bility.” Bank of Am. Nat'l. Trust & Sav. Ass'n v. Gillaizeau,

766 F.2d 709, 713 (2d Cir. 1985) (citing Carpenter v.

Machold, 447 N.Y.S.2d 46, 47 (3d Dep’t 1982)). Here, the

language of the release is only unequivocal and explicit in

releasing claims arising under the lease agreements. Con

Ed’s claims, however, arise under CERCLA. We cannot

conclude that the release was an explicit, unequivocal state-

ment releasing all liability, or contingent liability, or

environmental liability. See John S. Bovd Co. v. Boston Gas

Co., 992 F.2d 401, 406 (Ist Cir.1993) (holding that, based on

Massachusetts law, “(t]o transfer CERCLA liability, the

Agreement must contain language broad enough to allow us

to say that the parties intended to transfer either contingent,

environmental liability, or all liability’). Thus, summary

judgment was improper.

Accordingly, the judgment of the district court granting

summary judgment to UGI is hereby AFFIRMED as it

relates to the White Plains and Tarrytown Claim, the Ameri-

can Gas Claim, and the White Plains Claim and REVERSED

as it relates to the Yonkers Claim and REMANDED for

further proceedings.

FOR THE COURT:

Roseann B. MacKechnie, Clerk

30a

APPENDIX C

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

No. 01 Civ. 8520(DC)

CONSOLIDATED EDISON CO. OF NEW YORK, INC..

Plaintiff,

UGI UTILITIES, INC.,

Defendant.

March 29, 2004

OPINION

CHIN, D.J/.

In this case, brought pursuant to the Comprehensive En-

vironmental Response, Compensation and Liability Act

(“CERCLA”), 42 U.S.C. §§ 9601-9675, plaintiff Consoli-

dated Edison Company of New York, Inc. (“Con Ed”) seeks

to hold defendant UGI Utilities, Inc. (“UGI’) liable for

environmental response costs related to soil and groundwater

contamination from manufactured gas plant (“MGP”) activ-

ities undertaken from 1898 to 1904 at sites owned by a

subsidiary and a predecessor of UGI. Defendant moves for

summary judgment pursuant to Fed.R.Civ.P. 56. For the

reasons set forth below, defendant's motion is granted.

STATEMENT OF THE CASE

l. The Facts

For purposes of this motion, the facts are construed in the

light most favorable to Con Ed as the party opposing sum-

mary judgment.

31a

A. The Origins of UGI, 1882-1887

United Gas Improvement Company (“UGIC”) was formed

in June 1882 by a group of Philadelphia business men for the

purpose of “manufacturing gas and gas-making machinery”

based on the patent for a “water gas” process and apparatus,

obtained in April 1882 from inventor Thaddeus S.C. Lowe.

(Def. Exh. 2 at 32, 34-39; Gary Aff., Exh. 4 at UGI 1353;

Gary Aff., Exh. 3 at UGI 5332). Lowe water gas was an

improvement over coal gas because it produced more light at

a lower cost. (Gary Aff., Exh. 4 at UGI 1353). UGIC sought

ways to exploit and use this new technology, including by

purchasing certain existing gas works, establishing or build-

ing new gas works that it would use itself or sell to others,

and entering into agreements to operate certain gas plants in

return for a share of the profits. (Def. Exh. 2 at 32-33; Def.

Exh. 4 at 89; Gary Aff., Exh. 5 at 96).

Under Pennsylvania law, UGIC could not hold stocks in

another corporation. (Gary Aff., Exh. 5 at 96). Accordingly,

in 1887, the owners of UGIC formed a new company called

the Union Company and used it to acquire an old Penn-

sylvania corporate charter with broad powers that included

the right to own other corporations. (Def. Exh. 4 at 89; Gary

Aff., Exh. 5 at 96-97). The name of this new company

was then changed to 7he United Improvement Company

(“TUGIC”). (d.).

B. UGI Acquisitions in New York, 1888-1900

TUGIC, which would later become UGI, purchased all of

the assets of UGIC in 1888 and then used the charter to

acquire gas and electric properties across the United States.

(/d.; Def. Exh. 3 at 62-67).

UGI' acquired ownership interests in the White Plains

Lighting Company and Hudson River Gas & Electric Com-

laren ra “os ;

UGIC, TUGIC, and the currently named UGI are all collectively

referred to herein as “UGI,” unless otherwise indicated.

32a

pany of Tarrytown in 1898 and 1900, respectively. (Gary

Aff., Exh. 29; Exh. 33 at ENV 93, 95; Def. Exh. 9 at 276).

In a January 1900 Board Meeting, UGI President Thomas

Dolan reported that UGI had acquired interests in, inter alia,

New Rochelle Electric Company, Pelham Electric Light and

Power Company, Port Chester Electric Light Company, and

the White Plains Electric Company. (Def. Exh. 6 at 114).

Dolan also reported that UGI had organized a company

known as Westchester Gas and Coke Company, which had

gas franchises in Mount Vernon and New Rochelle. (/d.).

In March 1900, UGI acquired the New York Suburban Gas

Company (“New York Suburban”) from the American Gas

Company (“American Gas’) (Def.Exh. 7), itself a consoli-

dation of utility companies owned by American Gas—the

Eastchester Gas Light Company, the Pelham Gas Light

Company, the Larchmont Gas Company, the Westchester Gas

and Electric Company, and the New Rochelle Gas and Fuel

Company. (Def.Exh. 8). UGI thereby acquired interests in

MGP sites in Mount Vernon, New Rochelle, Pelham, Port

Chester, and Rye.

Each company in which UGI invested had a superintendent

who oversaw the day-to-day activities of the gas plant.

(Macey Dep. at 292-94). UGI developed an audit system

pertaining to its various subsidiaries’ budgets, expenditures,

and best practices. (Def. Exh. 4 at 98).

According to an April 9, 1894 account in the Daily Phil-

adelphia Stockholder describing UG], each UGI subsidiary

“should have a separate and independent organization,

reporting, however, to the head office in [Philadelphia].

. . The local superintendents are thus kept in close

touch with the home office, and they take no important

step which is not specifically authorized. While their

instructions are to purchase in the city where each plant

is located all needful supplies obtainable there. and thus

33a

give to each city the benefit of outlays in part incidental

with the carrying on of the business, supplies, such as

coal, oil, cast iron pipe, etc., are purchased through the

home office, in order that here in the East the company

may secure the benefit of minimum prices. Attached to

the company is a corps of traveling auditors, one of

whom visits each local company every three months and

makes an examination of its operations and reports

thereon to the home office. . . . Not a dollar is outlayed

for its account at any point or for any purpose which is

not first approved at the home office, and there is the

closest scrutiny into each item of expense. . . . Annually

there is a convention of superintendents of the local

companies, presided over by the general superintendent,

at which, besides reports of each as to the operations

of the plant or plants under his control, papers are read

on practical subjects relating to the objects of the

company, etc.”

(Gary Aff., Exh. 6 at 2).

C. Formation and Operation of WLC

1. Formation

In November 1900, UGI organized a new subsidiary to be

called the Westchester Lighting Company (“WLC”). (Def.

Exh. 10 at CE/UGI 6375). WLC was incorporated for the

purpose of “manufacturing and supplying gas for lighting the

streets and public and private buildings or cities, villages and

towns in the State of New York, and for manufacturing and

using electricity for producing light, heat and power... .”

(Def. Exh. 10 at 281). UGI owned more than 80% of WLC’s

total shares. (Def. Exh. 11 at 535).

At their first board meeting on November 9, 1900, WLC’s

nine directors appointed a special committee to “investigate

and make inquiry” into the desirability of acquiring the

various Westchester gas and electric entities owned by UGI.

34a

(Def. Exh. 11 at 295, 297). The committee, with the help of a

gas and electric light business expert, approved the proposed

acquisition and merger. (/d.).

On November 30, 1900, the WLC board acquired and then

merged the companies in which it had obtained interests: the

Pelham Electric Light and Power Company, Port Chester

Electric Lighting Company, Larchmont Electric Light Com-

pany, Eastchester Electric Company, and the Westchester Gas

and Coke Company. (Def. Exh. 11 at 307-13). Accordingly,

WLC became the owner of MGP sites in Rye, Mount Vernon,

Pelham, Port Chester, and New Rochelle.

In February 1901, WLC purchased the Hudson River Gas

and Electric Company and the White Plains Lighting Com-

pany. (/d. at 459-61). In November 1902, WLC merged the

companies into WLC. (/d.). WLC thus became the owner of

MGP sites in Tarrytown and White Plains.

2. Operations

a. Board of Directors

Upon WLC’s creation in 1900, none of the first nine men

listed in the WLC Certificate of Incorporation and selected to

serve on WLC’s board were dual office-holders. (Def. Exh.

11 at 289; Def Exh. 12 at 724). At no time during 1900 to

1904 did UGI directors, officers, or employees constitute a

majority of the directors or officers of WLC. (Def. Exh. 12

at 724-25).

During the first months of the WLC board’s existence, the

directors appointed an executive committee to help manage

the company, elected its president who would serve for the

next four years, and reviewed the strength of cach constit-

uency company before effecting the large-scale merger. (Def.

Exh. 11 at 296-301, 446).

In 1901, three of the nine WLC directors held UGI senior

executive positions. (Def. Exh. 12 at 724). Two of the

35a

other board members—A.M. Young and R.A.C. Smith—had

worked “in conjunction” with UGI to acquire possession of

the New Rochelle Electric Company, Pelham Electric Light

and Power Company, Port Chester Electric Light Company,

Larchmont Electric Light Company, Eastchester Electric

Company, and White Plains Electric Company. (Def. Exh. 6

at 114; Exh. 11 at 446-47).

In 1902 and 1903, four of the eleven WLC directors held

UGI senior executive positions. (/d.). In 1904, four, then

five, of eleven directors held UGI senior executive positions.

(/d.).

From 1900 to 1904, UGI senior executives never held the

positions of WLC president, vice president, or secretary.

(/d.). UGI executives did hold positions as WLC treasurer,

assistant secretary, and managing director. (/d.). Specifically,

UGI’s treasurer Lewis Lillie was elected to assistant secretary

and treasurer of WLC. (Def. Exh. I1 at CE/UGI 12469,

19079). UGI’s general superintendent Walton Clark was

named WLC managing director. (/d. at CE/UGI 19078).

The managing director “shall have the general management

of the business and properties of the company, and shall

perform such other duties as may be imposed upon him by

the board of directors.” (Def. Exh. 11 at CE/UGI 12387).

According to the WLC bylaws, the duties of WLC’s president

included “presid [ing] at all meetings of the board of

directors,” “act[ing] as temporary chairman at and call[ing] to

order all meetings of the stockholders,” “countersign[ing] all

checks, and . . . sign[ing] drafts, notes. certificates of stock,

and all contracts and other instruments, unless otherwise

ordered by the board.” (Def. Exh. 11 at CE/UGI 12385). The

president also “shall, under the control of the directors, have

the general management of the company’s affairs, and shall

perform all duties incidental to his office.” (/d.).

36a

b. WLC Executive Committee

In January 1901, the WLC board of directors appointed an

“executive committee,” which was “in the recess of the Board

[to] have full power to direct and manage the business affairs

of the company in such manner as such committee shall deem

best for the interests of the company in all cases in which

specific directions have not been given by the Board.” (Def.

Exh. 11 at 446). The committee consisted of four members

of the WLC board with the WLC president W.W. Scrugman

serving in an ex-officio capacity. (/d.). Lillie, both UGI’s

treasurer and WLC’s assistant secretary and treasurer, and

Clark, UGI’s general superintendent and WLC’s managing

director, filled two of the five executive committee positions.

(Def. Exh. 11 at 447). The other positions were filled by

board members who were local businessmen but did not hold

management positions at WLC. (/d.).

According to the WLC Executive Committee minutes for

1900 to 1903 WLC made decisions concerning setting

salaries (Def. Exh. 17 at 757-58), approving the sale of

various used equipment and materials (id. at 788), approving

contracts and expenditures for improvements and repairs (id.

at 753), authorizing changes in gas and electric rates and rate

reductions (id. at 742, 750-52, 839), setting electric current

rates (id. at 758), approving the purchase of electric fran-

chises (id. at 755), approving the execution of leases (id.

at 809), and appointing an attorney for legal services. (/d.

at 887).

In January 1901, UGI was named purchasing agent and

consulting engineer for WLC. (Def. Exh. I] at CL/UGI

19076).

c. Superintendents of WLC Facilities

Each of the WLC facilities was directed by its own

superintendent. (Def. Exh. 17 at 757). According to expert

37a

testimony, “the superintendent . . . generally runs the fa-

cility.”. (Macey Dep. at 294).

d. UG/ Managing Committee and Works Committee

From 1900 to 1903, UGI had a Managing Committee and a

Committee on Works (“Works Committee”), which worked

together to monitor UGI’s investments and to ensure that

extensions, property improvements, and certain supply con-

tracts were reviewed and that UGI’s subsidiaries received

UGI’s expert advice when needed. (Def. Exh. 4 at 97-98). In

1903, UGI president Thomas Dolan described UGI’s manage-

ment of the subsidiaries, stating that “the Works Committee

of [UGI] passes favorably upon all property improvements

and extensions, and contracts for supplies, before they are

authorized. This Committee meets every day.” (Gary Aff.,

Exh. 4 at UGI 1488). UGI’s corporate history indicates that

the Works Committee consisted of top UGI executives—

President Dolan, Vice President and General Manager

Samuel Bodine, Vice President and General Counsel Randal

Morgan, General Superintendent Walton Clark, and Treasurer

Louis Lillie. (Def. Exh. 4 at UGI 1488-89). In 1904, both the

managing and works committees were abolished in favor of a

single executive committee. (Def. Exh. 18 at 1061).

e. UGI Advice to WLC

A May 4, 1903 letter to UGI shareholders from UGI presi-

dent Dolan stated that UGI provided “advice” to the com-

panies in which UGI held interests “in the purchase of

supplies, in laying out, construction and operation of plants,

in solving legal and financial problems, in canvassing for new

business and in all the details which make for success in the

management of a manufacturing company selling its wares to

an entire community.” (Def. Exh. 4 at UGI 1489). UGI

offered its “advice,” in part, through the annual meeting of

“the Superintendents and the Commercial Agents of all the

companies .. . in [Philadelphia, UGI’s headquarters,] . . . to

38a

read and discuss carefully prepared papers upon the various

technical and commercial problems of the business in which

they are engaged.” (/d.).

f. Macey Expert Report

Con Ed’s corporate governance expert Jonathan Macey

concludes that “UGI controlled every material aspect of the

operations of [WLC]” and “controlled all of the important

facets of its policies and operations, down to the smallest

details.” (Def. Exh. 1 at 2). Macey further states that UGI

“controlled every aspect of the corporate existence of [WLC]

trom its birth to its corporate death.” (/d. at 6). Macey

points, as illustration, to the UGI executive committee’s

approval throughout 1904 of WLC actions, including em-

ployment decisions, contracts for coal, sales of property, and

purchases of equipment for the MGPs. (/d. at 6-9).

3. Con Ed’s Purchase of WLC

On July 1, 1904, Con Ed entered into an agreement with

UGI to purchase its ownership interest in WLC. (Def. Exh.

20). The WLC board of directors authorized the transaction

on July 8, 1904. (Def. Exh. 11 at 533-624). The agreement

was consummated on October 20, 1904 when WLC’s

stockholders and board of directors granted authorization for

WLC to transfer all of its rights and property to a new Con Ed

subsidiary known as the New York and Westchester Lighting

Company. (Def. Exh. 11). That same day, New York and

Westchester Lighting Company merged into WLC (/d. at

682-83), and Con Ed controlled WLC, with whom it

eventually merged in 1951. (Def. Exh. 21).

LE. American Gas’s Operations, 1890-1900

Prior to UGI’s purchase of New York Suburban from

American Gas in March 1900, American Gas owned the

MGP sites in Mount Vernon, New Rochelle, Pelham, Port

Chester, and Rye. Con Ed alleges that American Gas incurred

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CERCLA liability through its control over its Westchester

County subsidiaries from 1890 to 1900 and that UGI

succeeded to this liability when American Gas merged into

UGI in 1925. (Pl.Surr.1).

1. Dual Officers/Directors

American Gas installed its own corporate officers and

directors as officers and directors of its Westchester County

subsidiaries. (Gary Aff., Exh. 22 at UGI 5-6; Exh. 17 at ENV

22, 24, 25; Exh. 23 at CE/UGI 27296; Exh. 24 at CE/UGI

12361; Def. Exh. 8). In the December 16, 1891 American

Gas Board minutes, American Gas’s Solicitor Thomas Leam-

ing described the annual meeting of Eastchester Gas Comp-

any (“Eastchester Gas”), which owned the Mount Vernon

MGP:

[T]he General Manager, Treasurer and myself went to

New York, held the annual meeting of the company,

adopted a simple form of by-laws, elected directors, and

afterward held a board meeting and elected officers.

Messrs. Carpender, Penford, and Crawley were made

the New York directors with Messrs. [Ramsdale] and

Stroud. Mr. Carpender was elected President, Mr.

[Ramsdale] General Manager, and Mr. Stroud Treasurer

and Sec’y.

(Gary Aff., dated Nov. 24, 2003, Exh. | at UGI 7073).

Carpender was American Gas’s president. Penford and

Crawley were Carpender’s law firm partners and served on

American Gas’s board of directors. Ramsdale was American

Gas’s general manager. Stroud was American Gas’s treas-

urer. (Pl. Surr. 2).

2. Observance of Corporate Separateness

Plaintiff alleges that American Gas failed to observe

“corporate separateness.” (Pl. Surr. 3). According to the

October 26, 1893 minutes, American Gas’s general manager

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Ramsdale, as general manager of the New Rochelle sub-

sidiary, had entered into a construction contract listing

himself as general manager of American Gas, “the contract

showing of course, a profit to the latter company, and he is

thus acting in a double capacity.” (Gary Aff., dated Nov. 23,

2003, Exh. | at UGI 7207). The contract was subsequently

approved by the subsidiary’s board of directors and signed on

behalf of the company by its president. (/d.).

3. American Gas’s Subsidiary Operations

American Gas’s board of directors approved decisions

pertaining to the subsidiaries’ management, including equip-

ment purchases for the MGPs, formation of contracts, and

property extensions. (/d., Exh. 25 at UGI 756).

American Gas’s general manager Ramsdale served as the

general manager for all of the Westchester subsidiaries.

(Gary Aff., Exh. 23 at CE/UGI 27296; Exh. 25). The

superintendent of each MGP reported to Ramsdale and

obtained his approval before taking any action. (/d., Exh. 23

at CE/UGI 27286-87; Exh. 24 at CE/UGI 12360). Ramsdale

regularly visited each MGP to monitor its operations. (/d.,

Exh. 25 at UGI 744-45).

According to the June 17, 1891 American Gas board min-

utes, the company approved the purchase and erection of a

purifier plant at Eastchester Gas Company’s Mount Vernon

MGP. (Gary Aff., dated Nov. 24, 2003, Exh. 1 at UGI 7044).

According to the April 20, 1892 and May 18, 1892 minutes,

American Gas approved the purchase and installation of a

new water gas plant from UGI for the Mount Vernon MGP.

(/d., Exh. 1 at UGI 7104-06). In the April 5, 1892 minutes,

American Gas’s management referred: to the Mount Vernon

MPG as “works operated by [American Gas]. (/d., Exh. 1, at

UGI 7090).

According to the November 15, 1893 minutes, American

(jas decided to reduce the amount of insurance held on the

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New Rochelle Gas Company’s MGP in New Rochelle. (/d.,

Exh. | at UGI 7211). The February 21, 1894 minutes state

that American Gas approved the replacement of the gas

manufacturing apparatus at the New Rochelle MGP with

parts from another American Gas MGP plant. (/d., Exh. | at

UGI 7226-27). Accordiiig to the May 18, 1892 minutes,

American Gas “‘assumed control of the operations of the plant

[at New Rochelle], . . . and made very considerable change.”

(/d., Exh. | at UGI 7106). Specifically, American Gas made

changes to the plant’s oil purchasing agreement. (/d.).

4. American Gas’s Merger into UGT in 1925

American Gas merged into UGI in 1925, leaving UGI as

the surviving company. (Gary Aff., Exh. 21). The “Agree-

ment of Consolidation and Merger” stated that UGI and

American Gas became “one corporation under the name

[UGI] . . . possessing all of the rights, privileges and

franchises theretofore vested in each of them” and “all debts

not of record, duties and liabilities of each of said constituent

corporations shall thenceforth attach to the consolidated

corporation, and may be enforced against it.” (/d., Exh. 21 at

UGI 6976).

F. Environmental Contamination

According to Con Ed’s environmental expert, Robert M.

Karls, the contamination at the Rye, Mount Vernon, Pelham,

and Port Chester MGPs was caused by the releases from

“routine operations” at those facilities occurring during the

intervals from the installation of MGP equipment through the

end of gas production at those sites. (Gary Aff., Exh. 30

at 12, 14, 20, 24).

Con Ed has performed no environmental testing at the

MGP sites in New Rochelle. Rye, and Mount Vernon.

(Wilcken Dep. at 67-68, 115, 128, 188). The extent of

contamination has not been determined at the White Plains

site. (/d. at 150-52). Con Ed has been or will be contributing

42a

to cleanups being performed by successor owners at Port

Chester and Pelham and has conveyed the MGP site and

agreed to pay a fixed sum for environmental liabilities at

Tarrytown. (/d. at 92-94, 159-60, 219). Pursuant to a

Voluntary Cleanup Agreement with the New York State

Department of Environmental Conservation (“NYSDEC”),

Con Ed is required to investigate and remediate all of its

former MGP sites, including those at issue in this action.

(Gary Aff., Exhs. 31, 32). In complying with the Agreement,

Con Ed has spent more than $4 million to investigate and

clean up the MGP sites at issue. (Wilcken Aff. § 3). Con Ed

expects to expend in excess of $100 million to complete the

investigation and remediation of all of the MGP sites at issue.

(Id. € 4).

Il. Prior Proceedings

Con Ed filed the original complaint in this action on

September 20, 2001. Con Ed filed an amended complaint on

March 4, 2002. After discovery, UGI moved for summary

judgment pursuant to Fed.R.Civ.P. 56. The Court heard oral

argument on the motion for summary judgment on November

25, 2003. Ruling from the bench, the Court granted the

motion in part and reserved decision in part. The Court

dismissed all derivative liability claims, predicated on

piercing the corporate veil, including the state law claims, and

all claims with respect to the Yonkers MGP sites. (Tr. 47-

48). The Court reserved decision as to the remaining operator

liability claims with respect to the other seven sites. (/d. 48).

DISCUSSION

1. Applicable Law

A. Summary Judgment Standard

Summary judgment will be granted when “there is no

genuine issue as to any material fact and . . . the moving party

is entitled to a judgment as a matter of law.” Fed.R.Civ.P.

43a

56(c); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 585-87 (1986). Accordingly, the Court’s task is

not to “weigh the evidence and determine the truth of the

matter but to determine whether there is a genuine issue for

trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249

(1986). Summary judgment is inappropriate if, resolving all

ambiguities and drawing all inferences against the moving

party, there exists a dispute about a material fact “such that a

reasonable jury could return a verdict for the nonmoving

party.” /d. 477 U.S. at 248, 106 S.Ct. 2505; see Bay v. Times

Mirror Magazines, Inc., 936 F.2d 112, 116 (2d Cir. 1991). A

factual issue is genuine if it can reasonably be resolved in

favor of either party. Anderson, 477 U.S. at 250, 106 S.Ct.

2505. A fact is material if it can affect the outcome of the

action based on the governing law. /d. at 248.

The party seeking summary judgment must demonstrate

the absence of genuine issues of material fact, and then the

nonmoving party must set forth facts proving that there is a

genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317,

321-24 (1986). To defeat a motion for summary judgment,

the nonmoving party “must do more than simply show that

there is some metaphysical doubt as to the material facts.”

Matsushita, 475 U.S. at S86. The nonmoving party “must

present concrete particulars and cannot succeed with purely

conclusory allegations.” Fitch v. R.J. Reynolds Tobacco Co.,

675 F.Supp. 133, 136 (S.D.N.Y.1987) (internal quotations

omitted). There is no issue for trial unless there exists

sufficient evidence in the record favoring the party opposing

summary judgment to support a jury verdict in that party's

favor. Anderson, 477 U.S. at 249-50. As the Court held in

Anderson, “{i]f the evidence is merely colorable, or is not

significantly probative, summary judgment may be granted.”

Id. (citations omitted). The plaintiff must provide the Court

with some basis to believe that her “version of relevant events

is not fanciful.” Christian Dior-New York, Inc. v. Koret, Inc.,

792 F.2d 34, 38 (2d Cir. 1986) (internal quotations omitted).

44a

B. Operator Liability Pursuant to CERCLA

Liability under CERCLA attaches, inter alia, to “any

person who at the time of disposal of any hazardous sub-

stance owned or operated any facility at-which such hazard-

ous substances were disposed of.” 42 U.S.C. § 9607(a)(2).

An “operator” is “any person . . . operating” the relevant

facility. 42 U.S.C. § 9601(20)(A)(ii).” “[U]nder CERCLA,

an operator is simply someone who directs the working of,

manages, or conducts the affairs of a facility.” United States

v. Bestfoods, 524 U.S. 51, 66-67 (1998).

CERCLA operator liability, however, requires that the

operator’s control over the facility relate to pollution control

or waste disposal. “To sharpen the definition for purposes of

CERCLA’s concer with environmental contamination, an

Operator must manage, direct, or conduct operations spe-

cifically related to pollution, that is, operations having to do

with the leakage or disposal of hazardous waste, or decisions

about compliance with environmental regulations.” Best-

foods, 524 U.S. at 66-67; see also Commander Oil Corp. v.

Barlo Equip. Corp., 215 F.3d 321, 332 n.3 (2d Cir. 2000) (in

holding that operator liability did not apply, noting that, under

facts, defendant could not be said to have “manage[d],

direct[ed], or conduct[ed] operations specifically related to

pollution, that is, operations having to do with the leakage or

disposal of hazardous waste, or decisions about compliance

with environmental regulations”) (quoting Bestfoods, 524

“ “Person” is defined in CERCLA to include corporations and other

business organizations. 42 U.S.C. § 9601(21). “Facility” means: “(A)

any building, structure, installation, equipment, pipe or pipeline (including

any pipe into a sewer or publicly owned treatment works), well, pit, pond,

lagoon, impoundment, ditch, landfill, storage container, motor vehicle,

rolling stock, or aircraft, or (B) any site or area where a hazardous

substance has been deposited, stored, disposed of. or placed, or otherwise

come to be located; but does not include any consumer product in con-

sumer use or any vessel.” 42 U.S.C. § 9601(9).

4Sa

U.S. at 66-67); United States v. Green, 33 F. Supp. 2d 203,

217 (W.D.N.Y. 1998) (holding that defendant could not be

found liable as an operator because of absence of evidence

that he directly participated in the management of facility’s

pollution control operatioms, including decisions pertaining to

the disposal of hazardous substances ind compliance with

environmental regulations ).

Derivative liability cases, which are based on piercing the

corporate veil, are distinct from operator liability cases, in

which the parent’s liabilitty is direct. “[D]erivative liability

cases are to be distinguished from those in which ‘the alleged

wrong can seemingly be traced to the parent through the

conduit of its own personnel and management’ and ‘the

parent is directly a participant in the wrong complained of.’

.. . In such instances, the parent is directly liable for its own

actions.” Bestfoods, 524 U.S. at 64-66, 118 S.Ct. 1876

(quoting Douglas & Shanks, Insulation from Liability

Through Subsidiary Corporations, 39 Yale L.J. 193, 207, 208

(1929)). “CERCLA’s ‘operator’ provision is concerned

primarily with direct liability for one’s own actions.” /d. at

65. “If any such act of operating a corporate subsidiary’s

facility is done on behalf of a parent corporation, the

existence of the parent-subsidiary relationship under state

corporate law is simply irrelevant to the issue of direct

liability.” /d.

Prior to Bestfoods, some circuits applied the “actual cen-

trol” test to determine operator liability, looking to “whether

the parent ‘actually operatted the business of its subsidiary.””

Id. at 68, ((citing United States v. Kavser-Roth Corp., 910

F.2d 24, 27 (Ist Cir. 1990)) (operator liability “requires active

involvement in the affairs of the subsidiary”); Jacksonville

Elec. Auth. v. Bernuth Cowp., 996 F.2d 1107, 1110 (11th Cir.

1993) (parent is liable if it “actually exercised control over, or

was otherwise intimately involved in the operations of, the

[subsidiary] corporation immediately responsible for the

46a

operation of the facility”)); see also City of New York v.

Exxon Corp., 112 B.R. 540, 548 n.9 (S.D.N.Y.1990) (“We

believe that some degree of active participation in and actual

control over the affairs of the subsidiary is necessary”); cf.

State of Idaho v. Bunker Hill Co., 635 F.Supp. 665, 672 (D.

Idaho 1986) (determining whether owner or operator liability

applied based on whether defendant had “‘capacity” to prevent

and abate environmental damage). Morever, some courts

have referred to “owner or operator liability” as one form of

liability, implying the interchangeability of these two distinct

bases. See, e.g., Joslyn Mfg. Co. v. T.L. James & Co., 893

F.2d 80 (Sth Cir. 1990); Bunker Hill, 635 F.Supp. at 672.

The Court in Bestfoods held, however, that the “actual

control” test wrongly combines direct and indirect liability.

Id. at 67. “‘The question is not whether the parent operates

the subsidiary, but rather whether it operates the facility, and

that operation is evidenced by participation in the activities of

the facility, not the subsidiary. Control of the subsidiary, if

extensive enough, gives rise to indirect liability under

piercing doctrine, not direct liability under the statutory lan-

guage.”” /d. at 68, 118 S.Ct. 1876 (citing Lynda J. Oswald,

Bifurcation of the Owner and Operator Analysis under

CERCLA, 72 Wash. U. L.Q. 223, 269 (1994)) and Schiavone

v. Pearce, 79 F.3d 248, 254 (2d Cir. 1996) (“Any liabilities

[the parent] may have as an operator, then, stem directly from

its control over the plant’).

The Supreme Court in Bestfoods contemplated three

scenarios in which operator liability might arise, based on a

parent company’s direct pollution-related action vis-a-vis a

facility. 524 U.S. at 71. First, a parent might be held direcily

liable when “the parent operates the facility in the stead of its

subsidiary or alongside the subsidiary in some sort of joint

venture.” /d.

Second, direct liability might arise when “a dual officer or

director . . . depart[s] so far from the norms of parental

47a

influence exercised through dual officeholding as to serve

the parent, even when ostensibly acting on behalf of the

subsidiary in operating the facility.” /d. Evidence of common

directors or officers between a parent and its subsidiary,

however, is insufficient on its own to expose the parent to

direct liability under CERCLA. American Protein Corp. vy.

AB Volvo, 844 F.2d 56, 57 (2d Cir.), cert. denied, 488 U.S.

852 (1988); see also Kingston Dry Dock Co. v. Lake

Champlain Transp. Co., 31 F.2d 265, 267 (2d Cir. 1929);

Bestfoods, 524 U.S. at 69, 118 S.Ct. 1876. Courts generally

presume that directors “are wearing their ‘subsidiary hats’

and not their ‘parent hats’ when acting for the subsidiary.”

Bestfoods, 524 U.S. at 69 (citing P. Blumberg, Law of

Corporate Groups: Procedural Problems in the Law of Parent

and Subsidiary Corporations § 1.02.1, p. 12 (1983)); United

States v. Jon-T Chemicals, Inc., 768 F.2d 686, 691 (Sth Cir.

1985), cert. denied, 485 U.S. 1014 (1986)). To establish

liability, a plaintiff seeking to establish a parent’s liability

based on common directors or officers must demonstrate that,

despite the general presumption to the contrary, the officers

and directors “were acting in their capacities as [the parent’s]

officers and directors, not as [the subsidiary’s] officers and

directors, when they [made policy decisions and supervised

activities at the facility].” /d. at 70, 118 S.Ct. 1876; see also

Raytheon Constructors, Inc. v. Asarco, Inc., No. 00-1500, 00-

1530, 2003 WL 984623, at *4 (10th Cir. Mar. 11, 2003)

(holding that fact that shareholder’s president acted as

president and board member of subsidiary company was

insufficient for operator liability in absence of evidence that

action was taken in capacity other than as president and board

member of subsidiary).°

~ The Court in Bestfoods elaborated on this point to highlight the dis-

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