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Brownfield Site Purchaser Sues U.S. Government

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Cranbury Brick Yard was first owned by Unexcelled Manufacturing Co. The company made bombs, ammunition, grenade fuses for the U.S. military during World War II and the Korean War. A warehouse at the site containing grenade fuses exploded in 1954 causing serious damage to the site. The military helped clean the site, but unexploded weapons and hazardous materials were left behind. The factory shut down and contamination remained on site.

Cranbury Development Corp.

Cranbury Development Corp. bought the site and thirty years later, the New Jersey Department of EnvironmentalProtection (NJDEP) issued a directive identifying the parties responsible for the site’s contamination. It listed Cranbury Development, Maxxam Group, Inc. (successor to Unexcelled Manufacturing), and the U.S. Navy as responsible parties. NJDEP ordered the three parties to “memorialize their commitment to perform the remediation.” The U.S. Navy refused to participate in the remediation however. NJDEP agreed not to sue Cranbury Development and Maxxam because they agreed to clean the site. The three parties agreed the “Consent Order constituted an administrative settlement within the meaning of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).” The settlement with NJDEP by the two companies gave them the option to sue other polluters for contribution, while providing the benefit of being immunized from claims.

Cranbury Brick Yard

Cranbury Brick Yard, LLC. bought the site from Cranbury Development. It agreed to the site clean plan and replaced Cranbury Development in the Consent Order. In the implementation of the cleanup, contractors punctured a holding tank releasing twenty gallons of petroleum. Cranbury Brick Yard notified NJDEP, that they mixed petroleum-contaminated dirt with clean dirt, and re-buried it on-site. Cranbury Brick Yard claimed it spent $50 million cleaning up the site.Cranbury Brick Yard, LLC, filed for cost-recovery and contribution claims against the United States government, U.S. Department of the Navy, and Department of the Army in September 2019. It settled its potential liability under CERCLA with the New Jersey Department of Environmental Protection (NJDEP) in exchange for contribution immunity. Cranbury Brick Yard settled its potential CERCLA liability with the State of New Jersey, giving it immunity from contribution claims. Its immunity left a contribution claim against the U.S. government. The United States District Court for the District of New Jersey granted summary judgment, causing Cranbury Brick Yard to take the case to the United States Court of Appeals.

What Is CERCLA?

CERCLA provides an avenue to cleanup heavily contaminates sites. It allows for a person or government that incurs costs to cleanup a site to sue the polluter to recover the costs in a “cost recovery” action. Successful plaintiffs hold polluters strictly liable and jointly and severally liable. Polluters that settle liability with the government are immunized from contribution liability to other polluters. These polluters that settle with the government are limited to only bringing contribution claims against other polluters. Cost-recovery claims are barred.

District Court’s Decision

Cranbury Brick sued the U.S. government in 2015 seeking cleanup costs it incurred because the government was partly responsible for the site’s contamination. The District Court granted the government’s motion to dismiss. It held the Consent Order was a settlement under § 9613(f)(2) and immunized Cranbury Brick yard from contribution liability. However, the District Court held that Cranbury Brick Yard brought its contribution claim too late. It stated the “applicable statute of limitations is three years” from when all parties signed the Consent Order. Cranbury Brick’s claim was untimely because it filed suit nine years after the Consent Order. The court rejected Cranbury Brick yard’s argument that it had immunity as a “bona fide prospective purchaser.” The District Court stated that reburying the contaminated dirt on-site was equivalent to a “disposal.” It concluded that Cranbury Brick Yard lost its status as a bona fide prospective purchaser because the disposal occurred it acquired the site. Cranbury Brick appealed.

U.S. Court of Appeals Holding

The U.S. Court of Appeals agreed with the District Court’s judgment on the cost-recovery claim. It held that Cranbury Brick Yard cannot bring a cost-recovery claim because it has contribution-claim immunity. The Court of Appeals concluded Brick Yard’s counterarguments lacked merit. It was Cranbury Brick Yard’s contention that it had a viable cost-recovery claim because it voluntarily cleaned up the contaminated site. However, a bar on cost-recovery claims applies when a settlement makes that party immune from contribution claims. The Court of Appeals found, “voluntariness is irrelevant.”

The U.S. Court of Appeals upheld the District Court’s decision that Cranbury Brickyard’s contribution claim was untimely. It concluded that “a contribution claim accrues when a litigant formally recognizes its CERCLA liability.” Cranbury Brick Yard’s trigger for limitations period was when the amended Consent Order was signed in 2006.

Cranbury Brick Yard appealed the District Court’s holding that it was not a bona fide prospective purchaser. The U.S. Court of Appeals concluded that whether it was such a purchaser was irrelevant. The Court of Appeals stated it mattered only because that status would have protected Cranbury Brick Yard from the U.S. government’s counterclaim for contribution. This issue is moot however, because Cranbury Brick yard had no cost-recovery claim.

Cranbury Brick Yard removed itself from any possible liability to the State of New Jersey as well as any cost-recovery claims. It had the option for a contribution claims, but its attempt to claim it came too late. The U.S. Court of Appeals agreed with the decision made by the District Court, granting summary judgment for the U.S. government. If you would like more information on this case, or have questions about government contracts, call Whitcomb Selinsky PC at (866) 476-4558

 

About the AuthorRaymundo Ribota

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