To recover cleanup costs under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) from a former owner of contaminated property, a plaintiff must establish that the costs it incurred in responding to the contamination are both necessary and consistent with the national contingency plan (“NCP”). In Valbruna Slater Steel Corp. v. Joslyn Manufacturing Co., No. 1:10-CV-044, 2015 WL 8055999 (N.D. Ind. Dec. 4, 2015), the court granted summary judgment for a plaintiff who asserted such a claim, holding that a state agency’s substantial oversight of the cleanup work established consistency with the NCP and that the plaintiff’s motivation for its cleanup efforts was irrelevant to whether its costs were necessary. Both aspects of the ruling represent firsts by an Indiana court.

Valbruna Slater Steel involved a former steel-manufacturing plant in Fort Wayne that had been purchased in a bankruptcy auction. The current owner, Valbruna, sued one of the site’s previous owners, Joslyn, claiming it released contaminants onto the property during the period of its ownership and that Valbruna had spent money to remove them. Joslyn did not dispute those allegations. Instead, it claimed Valbruna’s costs were not compensable under CERCLA because they did not comply with the NCP and were not “necessary” in that their purpose was solely to enhance the property’s value. The court disagreed with both contentions.

The NCP is a series of regulations promulgated by the EPA to establish procedures and criteria for cleanup work conducted by the government or private parties. Joslyn claimed Valbruna failed to comply with the NCP because it did not provide an opportunity for public comment on its proposed work and because it failed to conduct certain assessments and studies called for by those regulations. Valbruna responded that the Indiana Department of Environmental Management’s oversight of the cleanup work satisfied not only the public-participation requirements of the NCP but all other requirements of the regulations as well.

The court noted that no other court had directly addressed whether involvement of a governmental agency can provide an adequate substitute for the NCP’s various requirements, including in particular its requirement for public comment on proposed cleanup work. However, the court found indirect support for that proposition in several decisions, including that of the 7th Circuit in NutraSweet Co. v. X-L Engineering Co., 227 F.3d 776 (7th Cir. 2000). The court also found that Valbruna had presented undisputed evidence of IDEM’s substantial involvement in the cleanup effort. That evidence showed IDEM had reviewed and approved Valbruna’s work plan for an initial phase of remedial work and had reviewed and approved invoices from the contractor performing that work. After that first phase of remedial work was completed, IDEM sent Valbruna a letter outlining numerous sources of contamination that remained at the site. Valbruna then enrolled the site in IDEM’s voluntary remediation program to address remaining contamination. Based on that evidence, the court held that IDEM’s involvement was sufficiently substantial to satisfy the NCP’s public-participation and other requirements.

As for Joslyn’s contention that Valbruna’s cleanup costs were not “necessary” because their purpose was merely to enhance the property’s value, the court expressed doubt that a plaintiff’s subjective motivation could ever be relevant in assessing the necessity of costs sought to be recovered under CERCLA. But, it said, regardless of Valbruna’s motives, undisputed evidence showed it had spent at least some money for work that clearly lessened the public-health threat posed by the site, including work to remove asbestos, lead paint and transformer oil. The court held that evidence was enough to entitle Valbruna to summary judgment, establishing Joslyn’s liability under CERCLA. However, the amount of damages recoverable by Valbruna will have to be established by further proceedings in which Valbruna must show that each expenditure it seeks to recover was related to a public-health threat posed by the site and was reasonable in light of the degree of that threat.