A federal court in California has ruled that a company’s CERCLA consent decree with the U.S. government over clean up of groundwater does not shield it against a state court action for contribution to a settlement regarding water treatment costs caused by the contamination. United States v. Reuland Elec. Co., No. 08-5618 (C.D. Cal. 6/8/11).
In the 1980s, EPA identified dozens of potentially responsible parties (PRPs) at a site in California’s San Gabriel Basin, where volatile organic compound (VOC) contamination was found. EPA negotiations with several parties, including defendant, resulted in a consent decree in 2008. During the negotiations leading up to the consent decree, the San Gabriel Valley Water Co. sought compensation from the PRPs for the cost of installing, operating and maintaining water treatment systems to remove VOCs from its wells. In 2006, after defendant declined to participate in those negotiations, the other PRPs reached a settlement with the water company. In 2009, the other PRPs sued defendant in state court for contribution to the settlement.
In May 2011, defendant filed a motion in federal court to enforce the federal consent decree and enjoin the state court action. The other PRPs argued that the consent decree does not grant defendant contribution protection against their claim because liability to the water company is not a response cost under CERCLA.
The court first addressed defendant’s argument that it was entitled to relief under an exception to the federal Anti-Injunction Act, which bars federal courts from enjoining state-court proceedings except in narrow circumstances. According to the court, the exception requires that the injunction be “necessary” to prevent a state court from seriously impairing the federal court’s flexibility and authority to decide its case. Because defendant sought to enjoin the state court action after litigating there since 2009, the court said that an injunction was evidently not necessary.
Next the court reviewed the federal consent decree’s terms, finding that the decree defines “matters addressed” to include “response work” and “response costs,” which are further defined in the document. Because “response” was not defined in the document, however, the court referred to CERCLA’s definition to determine that the work undertaken by the water company and the subject matter of the decree, which was “containment of groundwater contaminated with VOCs,” do not appear to be the same. The court therefore concluded that liability to the water company was not a matter addressed by the consent decree and denied the request for an injunction.