Type: Law Bulletins
Date: 09/05/2019

Seventh Circuit Ends Bid to Shift 19-Year-Old Environmental Liability

In 1998, Refined Metals Corporation (Refined Metals) entered into a consent decree with the Environmental Protection Agency that required it to close and remediate a lead smelter site. Nearly 19 years later, Refined Metals sued former owner NL Industries, Inc. (NL) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) seeking to recoup some of its clean up costs. The suit seemed like a classic contribution claim under CERCLA section 113(f). Because any contribution claim would be barred by a three-year statute of limitations which begins to run when a party resolves its environmental liability to the United States or a state, Refined Metals advanced three creative longshot arguments in an attempt to characterize the claim as a cost recovery action under CERCLA section 107(a). If the action was actually a cost recovery action, Refined Metals would have had a chance to make another longshot argument that the six-year cost recovery statute of limitations had not run. The court in Refined Metals Corp. v. NL Industries, Inc., ___ F.3d ___, No. 18-3235, 2019 WL 3955889 (7th Cir. Aug. 22, 2019), never addressed that issue because it rejected all three of Refined Metals’ arguments as to why its action was not a contribution claim.

First, Refined Metals argued that its refusal to admit liability in the consent decree meant that the consent decree did not actually resolve its liability. The central inquiry in determining whether a consent decree triggers the contribution action statute of limitations, however, is whether there is an immediately effective covenant not to sue. Here there was one and thus the court found it irrelevant whether Refined Metals specifically admitted liability in the consent decree.

Second, Refined Metals argued that the consent decree’s failure to specifically mention CERCLA in its covenants not to sue meant that the consent decree did not resolve CERCLA liability. The court rejected this argument holding that the consent decree need only resolve some portion of Refined Metals’ cleanup liability under any statute to trigger the statute of limitations for a contribution action.

Finally, in an argument that is difficult to comprehend, Refined Metals argued that it could not seek contribution from NL because Refined Metals and NL were not joint tortfeasors. The court struggled with this argument because to prevail on either action, Refined Metals would have to show that both parties were liable for the cleanup. The court also found that Refined Metals waived this argument by failing to raise it in the district court.

This result is sound as “[a] delay of 19 years is a long time to keep an entitlement to reimbursement up in the air.” Refined Metals, 2019 WL 3955889, at * 1. Statutes of limitations are designed to move parties to prompt action on their rights. Refined Metals did not act promptly in its rights and forfeited its chance to seek contribution.

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