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Ratner v. Christie

argued: January 27, 1994.

UNITED STATES OF AMERICA, APPELLEE
v.
PRINCETON GAMMA-TECH, INC., DEFENDANT/THIRD-PARTY PLAINTIFF JEFFREY SANDS; 206 CENTER, INC.; HILTON REALTY COMPANY OF PRINCETON, INC. (GEORGE SANDS & JEFFREY SANDS T/A HILTON REALTY COMPANY OF PRINCETON, INC.); GEORGE SANDS; ESTELLE SANDS; FIFTH DIMENSIONS, INC.; J & R ASSOCIATES, LTD.; PRINCETON CHEMICAL RESEARCH, INC.; CORNELIUS VAN CLEEF; FREDERICK DECICCO; JOSEPH A. BAICKER; ALDEN SAYRES; ABC CO. (1-100), JOHN DOE (1-100), XYZ CO. (1-100), JANE DOE (1-100), THIRD-PARTY DEFENDANTS PRINCETON GAMMA-TECH, INC., APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. (D.C. No. 91-00809).

Before: Mansmann, Nygaard, and Weis, Circuit Judges.

Author: Weis

Opinion OF THE COURT

WEIS, Circuit Judge.

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), as amended, limits judicial review of Environmental Protection Agency (EPA) cleanup programs. However, we conclude that when the EPA sues to recover initial expenditures incurred in curing a polluted site, a district court may review a property owner's bona fide allegations that continuance of the project will cause irreparable harm to public health or the environment and, in appropriate circumstances, grant equitable relief. Because the district court in this case believed that it lacked jurisdiction under these circumstances, we will reverse its order denying injunctive relief.

Defendant Gamma-Tech owns real property above the Passaic Formation aquifer in Rocky Hill, New Jersey. After trichloroethylene (TCE) contamination was discovered in the groundwater at two sites on Gamma-Tech property, they were placed on the National Priorities List, a list of hazardous waste sites that require the use of Superfund money under CERCLA. See 42 U.S.C. § 9605(a)(8)(B). In 1984, the EPA arranged for a remedial investigation and feasibility study preliminary to cleaning up the contamination. The agency issued its first Record of Decision in 1987 calling for installation of an alternative water supply and sealing of private wells at one site.

After further investigation and monitoring of the contamination, the EPA issued a second Record of Decision in 1988 outlining its plan for a remedy. In brief, the EPA proposed to extract contaminated water from the primary contamination plume in the shallow aquifer, to treat it, and then to reinject it into the aquifer. In addition, the plan provided for the installation of "open-hole" wells that penetrate through the shallow source to the deep aquifer to allow for monitoring and sampling. After the decision was announced, the public and potentially responsible parties were given the opportunity to comment on the plan.

At least some of the proposed wells have already been installed on the property, but the pump treatment system has not yet been fully implemented. The final design was expected to be completed in the fall of 1993 and the remedial process begun in the spring of 1994. It is anticipated that the cleanup will be completed in five to seven years.

In 1991, the EPA brought suit against Gamma-Tech pursuant to CERCLA, 42 U.S.C. § 9607(a), seeking reimbursement of "response costs" already incurred at the two sites. The agency also sought a declaratory judgment on Gamma-Tech's liability for future response costs.

Gamma-Tech filed a cross-motion for a preliminary injunction directing the EPA to cease the installation of open-hole wells into the deep layer of the aquifer, to encase existing open-hole wells, and to cease construction of the remedial system provided for in the 1988 decision (the water extraction and treatment plan). In support of its motion, Gamma-Tech asserted that the EPA's selected remedy will exacerbate the existing environmental damage and cause further irreparable harm to the environment. According to Gamma-Tech, the system devised by the EPA will cause contaminated water from the shallow strata of the aquifer to be drawn down into the deep zone where contamination has not been established conclusively, thus increasing, rather than remedying, the pollution of the water supply.

The district court concluded that it lacked subject matter jurisdiction to grant Gamma-Tech's request for injunctive relief. The court based its Conclusion on the general principle, garnered from statutory and decisional law, that district courts have no jurisdiction over claims challenging the EPA's choice of remedies until after completion of a distinct phase of the cleanup.

Appealing under 28 U.S.C. § 1292(a)(1), Gamma-Tech asserts that once the EPA brought its cost-recovery suit under CERCLA, the general jurisdictional bar to the review of challenges was lifted pursuant to the cost-recovery action exception under 42 U.S.C. § 9613(h)(1). The district court thus had authority to grant an injunction even though the remedial work has not yet been completed. Gamma-Tech also contends that it was denied due process and that the district court erred in denying leave to file a supplemental pleading adding claims for damages.

I.

By enacting CERCLA, Congress intended to combat the hazards that toxic waste sites pose to public health or the environment. The EPA was granted broad powers to eliminate or reduce toxic contamination in the environment by either requiring responsible parties to clean up the sites, 42 U.S.C. § 9606, or by undertaking the task itself, 42 U.S.C. § 9604.

Because of the menace to public health and the environment, Congress was anxious to safeguard EPA remedial efforts from delay resulting from litigation brought by potentially responsible parties. See Lone Pine Steering Comm. v. EPA, 777 F.2d 882, 886-87 (3d Cir. 1985); Wheaton Indus. v. EPA, 781 F.2d 354, 356 (3d Cir. 1986). In the Superfund Amendments and Reauthorization Act of 1986 (SARA), Congress adopted a "clean up first, litigate later" philosophy. See 132 Cong. Rec. 28,409 (1986) (statement of Sen. Stafford) (Congress wanted to avoid "specious suits [that] would slow cleanup and enable private parties to avoid or at least delay paying their fair share of cleanup costs.").

SARA generally bars preliminary judicial review of challenges to the EPA's response actions. 42 U.S.C. § 9613(h), entitled "Timing of review," provides in pertinent part:

"No Federal court shall have jurisdiction under Federal law . . . to review any challenges to removal or remedial action selected under section 9604 . . . in any action except one of the following:

(1) An action under section 9607 of this title to recover response costs or damages or for contribution.

(4) An action under section 9659 of this title (relating to citizens suits) alleging that the removal or remedial action taken under section 9604 of this title or secured under 9606 of this title was in violation of any requirement of this chapter. . . ."

The language in section 9613(h) demonstrates Congress' intent that the EPA be free to conduct prompt and expeditious cleanups without obstructive legal entanglements. By providing several exceptions to the timeliness bar, however, Congress recognized that the limitation on court challenges should not be absolute.

We now examine the exceptions listed in subsections 9613(h)(1) and (h)(4) in greater detail to determine when those exceptions would serve to lift the jurisdictional bar to challenges to response actions. In so doing, we note that it is helpful to bear in mind that the word "jurisdiction" has a variety of meanings and can refer to a court's power to review a matter in any aspect, or to a limited degree, or in a specified venue, or by restricting the time when an action can be brought. A. Cost-Recovery Action Exception Under Subsection 9613(h)(1).

The exclusion under subsection 9613(h)(1) retains jurisdiction in the federal courts after a cost-recovery or contribution action has been brought by the government under 42 U.S.C. § 9607 of CERCLA. Section 9607 permits the EPA to sue a potentially responsible party for reimbursement of response costs.*fn1

It is the cost-recovery suit that opens the door for alleged responsible parties to contest their liability as well as to challenge the EPA's response action as being unnecessarily expensive or otherwise not in accordance with applicable law. See 42 U.S.C. § 9607(a)(4)(A) (permits challenges against costs inconsistent with National Contingency Plan); id. § 9607(b) (sets out defenses to liability); id. § 9613(j)(2) (arbitrary and capricious standard of review applies to response actions). The language in subsection 9613(h)(1), the corresponding legislative history, and relevant caselaw establish that once the EPA brings an enforcement action under section 9607, the agency is subject to challenges to its response action.

Courts have held that liability and cost-effectiveness suits filed by potentially responsible parties to challenge a selected response plan were premature when the EPA had not yet sought enforcement through a cost-recovery action. Those opinions describe the suit for reimbursement of response costs as the opportunity for challenging the EPA's remedial or removal decisions. See Reardon v. United States, 947 F.2d 1509, 1512 (1st Cir. 1991) (en banc) (section 9613(h) precludes "review of 'innocent landowner' and 'overbroad lien' claims prior to the commencement of an enforcement or recovery action"); Voluntary Purchasing Groups, Inc. v. Reilly, 889 F.2d 1380, 1390 n.21 (5th Cir. 1989) ("'Once the cost-recovery action is brought, the alleged responsible party can assert all its statutory and nonstatutory defenses and can obtain a complete declaration of its rights and liabilities.'" (quoting B.R. MacKay & Sons, Inc. v. United States, 633 F. Supp. 1290, 1297 (D. Utah 1986))); Barmet Aluminum Corp. v. Reilly, 927 F.2d 289, 295 (6th Cir. 1991) (CERCLA scheme "merely serves to effectuate a delay in a plaintiff's ability to have a full hearing on the issue of liability and does not substantively affect the adequacy of such a hearing"); Dickerson v. EPA, 834 F.2d 974, 978 (11th Cir. 1987) (property owner may contest cost effectiveness of the EPA remedy as soon as cost-recovery suit is brought).

Legislative history similarly indicates that review of challenges is available once a cost-recovery action is brought. "Therefore, the [section 9613(h)] amendment reaffirms that, in the absence of a government enforcement action, judicial review of the selection of a response action should generally be postponed until after the response action is taken." H.R. Rep. No. 99-253 (III), 99th Cong., 2d Sess. 22, reprinted in 1986 U.S.C.C.A.N. 3038, 3045. One member of Congress noted that

"when the essence of a lawsuit involves contesting the liability of the plaintiff for cleanup costs, the courts should apply the other provisions of section [9613(h)], which require such plaintiff to wait until the Government has filed a suit under [sections 9606 or 9607] to seek review of the liability issue."

132 Cong. Rec. 29,754 (1986) (statement of Rep. Roe).

The pattern of precluding review of challenges until a cost-recovery action is brought is clear enough where the EPA does not file suit until after all of its work has been completed. Congress, however, authorized the EPA to seek reimbursement for costs even before the Conclusion of the cleanup process. 42 U.S.C. § 9613(g)(2) permits a cost-recovery action to be brought as soon as "costs have been incurred."

The question thus becomes whether the exception under subsection 9613(h)(1) would lift the bar to challenges against response actions even where the EPA brings a cost-recovery suit before cleanup is complete, as is permitted under subsection 9613(g)(2). Because an interim decision on costs may affect the completion of the project, such suits introduce an additional factor into the jurisdictional question.

Nothing in the timeliness language of either subsections 9613(g)(2) or 9613(h)(1) indicates any differentiation between the scope of an action where all the remedial work has been completed and one filed while the project is still in progress. Section 9607(a)(4)(A) does limit a party's liability in a cost-recovery action, however, to costs "incurred." Thus, in an action brought before a project has been completely carried out, reimbursement is limited to expenses "incurred" before the date of judgment, leaving to future litigation costs that come due thereafter.

Once it has been established that subsection 9613(h)(1) applies and that review under that exception is available, a court must then resolve the question of what types of challenges may be considered and what remedies are available. Although the statute makes no distinction between cost-recovery suits brought after completion of a project and those brought while work is continuing, the remedies may differ because of the possibility of affecting future work at a site.

42 U.S.C. § 9607(b) sets out defenses to liability vel non as contrasted with disputes over the amount of the claim due or the legality of the remedy selected. In United States v. Hardage, 982 F.2d 1436, 1446 (10th Cir. 1992), the Court held that a responsible party may contest EPA expenditures as well as its liability in a response action. In that case, the Court of Appeals, citing section 9607(a)(4)(A), concluded that a person found to be a responsible party may nevertheless contest payment of expenses resulting from a remedial action that is inconsistent with the National Contingency Plan. Id. at 1443, 1447.

Pursuant to 42 U.S.C. § 9605, the EPA has published a National Contingency Plan for the effective removal of hazardous substances in 40 C.F.R. pt. 300, regulations that set out procedures for the selection of response actions. These regulations direct the EPA to evaluate alternative remedies, weighing such factors as the overall protection of human health and the environment, long-term effectiveness, reduction of toxicity through treatment, potential environmental impacts of the remedial action, cost feasibility, and availability of services and materials, among others. See id. § 300.430(e)(9)(iii)(A)-(I), .430(f)(1)(i). Remedial actions inconsistent with the policy objectives of the National Contingency Plan may be challenged in defending a cost-recovery action. 42 U.S.C. § 9607(a)(4)(A).

Potentially responsible parties may also defend cost-recovery actions on the ground that the EPA's decision in the selection of a response action was "arbitrary and capricious or otherwise not in ...


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