As seen on: NorthJersey.com
By Scott Fallon
The nation's most expensive Superfund cleanup to remove cancer-causing pollution from the Passaic River will be expanded to include 9 more miles in Bergen, Passaic and Essex counties under a plan approved Monday by the U.S. Environmental Protection Agency.
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EPA Notice Letters Trigger Insurance Coverage
A New Jersey court recently held that the receipt of a U.S. Environmental Protection Agency (“EPA”) General Notice Letter (“GNL”) pursuant to the Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”) triggers an insurer carrier’s duty to defend. Cooper Industries LLC v. Employers Insurance of Wausau A Mutual Co., et al, case number L-9284-11.
GNLs inform recipients that they are:
In addition, GNLs provide information on CERCLA, the site, and may include a request for additional information.
In holding that a GNL is a “suit” which creates defense obligations, the Court relied on the fact that EPA threatened to bring enforcement proceedings against the insured if it failed to cooperate. The EPA issued the GNL which identified the insured as a potentially responsible party (“PRP”) for the pollution in the 17-stretch of the lower Passaic River and urged the insured to join a cooperative parties group participating in the investigation of the river.
The Court noted that a GNL uses the threat of legal proceedings to coerce payment or conduct by a policyholder, bringing the letter within the definition of a suit as defined in the policies. Due to CERCLA’s coercive nature, the Court found it would be naïve to consider EPA’s letter as a request for a voluntary action.
Therefore, the Court ruled EPA's issuance of a GNL can be said to establish a potentially covered claim within the meaning of the policy, and the Court ruled carriers have the burden of proving the application of the pollution exclusion.
As a result of this ruling, recipients of an EPA General Notice Letter should immediately notify their carriers and seek the advice of legal counsel.
EPA Releases Cleanup Strategy for the Lower 8.3 Miles of the Lower Passaic River
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EPA Finalizes $165 Million Agreement to Begin the Cleanup of the Lower Eight Miles of the Passaic River
The United States Environmental Protection Agency (“EPA”) recently announced an agreement with Occidental Chemical Corporation (“OxyChem”), one of over 100 entities identified as potentially responsible parties (“PRPs”) for the contamination in the lower Passaic River, to conduct the engineering and design work required to begin the implementation of EPA’s proposed remedy for the lower 8.3 miles of the Passaic River. This scope of work will involve sampling, evaluating technologies, and performing the engineering work necessary to begin the physical cleanup.
More specifically, OxyChem will:
OxyChem also agreed to pay EPA’s oversight costs, which is a typical component of EPA settlement agreements. It is important to note, both EPA and OxyChem reserved their rights under Section 113 of the Comprehensive Environmental Response Compensation and Liability Act of 1980 to bring contribution claims against other PRPs for costs associated with the cleanup. In addition to its settlement with OxyChem, EPA has already stated it will seek agreements with other PRPs to fund the cleanup of the lower 8.3 miles of the river as well as the rest of the Lower Passaic River Study Area.
Interested parties must remember this is only the beginning. EPA has yet to issue a Record of Decision for the contamination in the sediments in the upper 9 miles of the lower Passaic River, the water column of the entire 17 miles of the river and the entire Newark Bay Study Area. As we have stated in previous posts, the remedies for these operable units have yet to be developed and the total costs are unknown at this time.
Previously identified PRPs continue to seek out additional parties to help foot the tremendous bill for this cleanup. Sills Cummis & Gross P.C. will continue to monitor EPA’s investigation into the lower Passaic River, as well as the rest of the Diamond Alkali Superfund Site. If you believe you or your organization may have exposure with this ongoing cleanup, contact us to evaluate the scope of your potential liability
EPA Releases Cleanup Strategy for the Lower 8.3 Miles of the Lower Passaic River
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The United States Environmental Protection Agency (“EPA”) released the long awaited Record of Decision (“ROD”) for the lower 8.3 miles of the Lower Passaic River, which outlines EPA’s proposed $1.38 billion remedy. Potentially Responsible Parties (“PRPs”) should note that the proposed remedy only tackles the contamination in one of the four operable units of the Diamond Alkali Superfund Site, which includes 17-miles of the Lower Passaic River.
EPA has recently shifted its focus away from traditional single site Superfund Sites and towards contaminated waterways. “Sediment mega sites” like Portland Harbor, the Hudson River, Gowanus Canal, and the Fox River are the most challenging and expensive to remediate, the largest in areal extent, and some of the most complex to investigate. As a result, costs to remediate these sites can easily exceed $1 billion.
Like many of the contaminated waterways, the Passaic River’s sediments are comprised of a chemical soup of hazardous substances, including dioxin, PCBs, mercury, pesticides (including DDT) and heavy metals, which are the result of generations of industrial operations along the waterways. The remedy set forth in the ROD is intended to be the final action for the sediments in the lower 8.3 miles and an interim action for the water column in this section of the river. In the interim, EPA and some of the PRPs continue to evaluate the contamination in the sediments in the upper 9 miles, the water column of the entire 17 miles of the river and the entire Newark Bay Study Area. The remedies for these operable units have yet to be developed and the total costs are unknown at this time.
Key elements of the EPA cleanup plan include:
In addition to issuing the ROD, EPA issued “Notices of Potential Responsibility” to numerous parties, which informed them of their potential liability for costs associated with contamination in the lower 8.3 miles of the Passaic River. It appears EPA is deviating from the traditional Superfund operating procedures in enforcing the ROD in which it would have issued “Special Notice Letters” to some or all of the PRPs inviting them to perform or fund the proposed remedy. This departure is largely attributed to the complexity of sediment mega sites.
Parties who did not receive Notices of Potential Responsibility, but may still have liabilities associated with the Passaic River, may still see litigation. The recipients of the notices are diligently working to identify other parties they feel should help shoulder the burden of funding the remedy. In the past, claims have been brought against entities that owned or operated sites where hazardous substances were released and migrated to the Passaic River.
Also, although New Jersey settled its natural resource damages (“NRDs”), federal NRD claims have yet to be resolved.
We will continue to observe this cleanup, as well as other sediment mega sites, and share lessons learned in future posts. Contact Sills Cummis & Gross P.C. to evaluate the scope of your potential liability if you believe you or your organization may have exposure.
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Thomas H. Prol, Esq.