Federal Ct Says NY Waited Too Long to File Cost Recovery

The United States District Court for the Eastern District of New York dismissed a cost recovery action filed by the State of New York because the state waited too long to file its complaint. The outcome hinged on whether construction of wellhead treatment constituted a remedial action or removal action. This case is significant because New York uses CERCLA almost exclusively to recover response costs.

In State of New York v Next Millenium Realty, LLC , 2011 U.S. Dist. LEXIS 136902 (E.D.N.Y. 11/29/11), the Nassau County Health Department (NCHD) discovered widespread contaminated groundwater at the New Cassel Industrial Area (NCIA) site in 1986 that threatened the drinking water supply wells of the Bowling Green Water District (“Bowling Green”). In 1988, the New York State Department of Environmental Conservation (“NYSDEC”) placed the entire NCIA on the Registry of Inactive Hazardous Waste Sites (“Registry”) which is the state superfund list.

In 1990, Bowling Green authorized construction of a $1.25MM granulated activated carbon treatment system (“GAC System”). The state Department of Health (NYSDOH) approved the application the modifications to the public water supply system and delegated supervision of the construction to the NCHD. The GAC system became operational at the end of 1990.   

In 1995, NCHD identified higher than expected contaminant concentrations in the groundwater. As a result, a $1.22MM air stripping tower was added to supplement the GAC system. The state superfund reimbursed the NCHD for the cost of the air stripper in 1988.

From 1995 to 1998, NYSDEC removed the NCIA area from the Registry but added individual properties that were believed to be sources of the groundwater contamination. The NYSDEC a Record of Decision (“ROD”) in 2003 that required the remediation of three distinct plumes located in the upper and lower portions of the aquifer with in-well stripping treatment systems. In 2005, the NYSDEC issued an Explanation of Significant Differences that separated the sites involved into two distinct groups: those located in the source areas of the origin of the Eastern and Central plumes, and those located in the area of the origin of the Western plum

In March 2006, the State commenced an action against the current and former owners and operators of the properties identified to be sources of the VOC contamination. The state sought  to recover NYSDOH oversight costs incurred in connection with approval and supervision of the wellhead treatment systems, the construction costs for the air stripping tower system as well as its investigation costs. The complaint also sought injunctive relief to abate the contamination in the NCIA as well as reimbursement of the State’s past costs under public nuisance, restitution and indemnification theories of liability.

The defendants filed a motion for summary judgment, contending that the GAC and air tower systems had been remedial actions and that the CERCLA statute of limitations for remedial actions had expired since the complaint had been filed more than six years after construction of the remedial action had commenced. The State argued the statute of limitations had not run because the GAC and air stripping tower were removal actions.

In September 2010, a magistrate recommended that the defendants’ motion for summary judgment be granted. The magistrate concluded that the GAC System and the air stripper were part of a permanent remedial action designed “to prevent and minimize the release of hazardous substances so that they do not migrate to cause substantial danger to present or future public health or welfare or the environment.” In ruling that the GAC and air stripper were remedial actions, the magistrate said the manner in which the project was planned, designed and implemented suggested that the response was intended to be a remedial action. Moreover, he said the response action was undertaken as part of a long-term strategy for the remediating of the groundwater contamination. Moreover, he noted that state representatives referred to the work as a remedial action in correspondence with the NCHD as well as in an interrogatory. All of this evidence suggested to the magistrate that the response activities were undertaken as the initial phases of remediation as opposed to a short-term clean-up arrangement. The court not only adopted the magistrate’s report but also declined to exercise jurisdiction over the state common law claims. As a result, the entire federal action was dismissed with prejudice.

While the court was deciding if it should adopt the magistrate’s recommendations, the NCIA was added to the NPL earlier this year. EPA has considerably more authority than the NYSDEC has under the state Environmental Conservation Law (ECL) and it will be interesting to see if EPA will fund the groundwater remediation (estimated to range from $10MM to $30MM) or to “encourage” the PRPs to implement the work.

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