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City of Waukegan, Illinois v. National Gypsum Co.

November 20, 2009

CITY OF WAUKEGAN, ILLINOIS, PLAINTIFF,
v.
NATIONAL GYPSUM CO., ET AL., DEFENDANTS / THIRD- PARTY PLAINTIFFS,
v.
WAUKEGAN PORT DISTRICT, ET AL., THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

The City of Waukegan (Waukegan) has sued various entities pursuant to section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9607(a), to recover past and future anticipated costs incurred in connection with remediation of Waukegan Harbor. The defendants have filed third-party complaints against others for contribution pursuant to section 113(f) of CERCLA, 42 U.S.C. § 9613(f). The third-party defendants include the Waukegan Port District (WPD), the United States Army Corps of Engineers, and the United States Coast Guard.

WPD and the federal government defendants moved to dismiss both the third- party complaint and Waukegan's second amended complaint. In an earlier decision, the Court deferred consideration of the motions to dismiss and directed Waukegan to file a third-party complaint describing with greater particularity the past and future costs it seeks to recover in this case. After Waukegan filed its third amended complaint, WPD, the federal defendants, and Waukegan all filed supplemental briefs regarding the motions to dismiss.

For the reasons below, the Court denies defendants' motions to dismiss in part and defers them in part pending consideration of a very recent decision by the United States Environmental Protection Agency (EPA). That decision was provided to the Court on November 20, 2009, after the present ruling was completed but before it was entered on the docket.

Facts

Waukegan Harbor is contaminated with polychlorinated biphenyls (PCBs) that were discharged into and around the harbor by the now-defunct Outboard Marine Corp. (OMC). In the 1980's, the EPA put the harbor and some of the surrounding land (to which the Court will refer as "the facility" or "the site") on the National Priorities List (NPL). In 1992, OMC completed a sediment remediation project in the harbor pursuant to a consent decree it entered into with the EPA in 1988. In 2000, OMC permanently closed its manufacturing operations on the Waukegan lakefront and filed for bankruptcy. After OMC abandoned the property, Waukegan came to own portions of the site in and around the harbor through eminent domain and purchase approved by the bankruptcy court.

In 2004 and 2005, in conjunction with its purchase of portions of the site, Waukegan entered into two consent decrees with the EPA and the State of Illinois. These two consent decrees concluded any potential liability Waukegan might have for the vast majority, and possibly the entirety, of the OMC site. See City of Waukegan v. Nat'l Gypsum Co., No. 07 C 5008, 2009 WL 972608, at *1-2 (N.D. Ill. Apr. 9, 2009). Collectively, the decrees protect Waukegan against any legal obligation to incur further CERCLA response costs relating to the OMC site and against contribution claims from other potentially responsible parties.

In this case, Waukegan has sued several entities with business operations adjacent to or near the harbor, alleging that they are liable for response costs relating to PCB contamination at the site as owners and/or operators pursuant to CERCLA section 107(a). Waukegan also seeks a declaratory judgment pursuant to CERCLA section 113(g)(2), 42 U.S.C. § 9613(g)(2), that the defendants are liable for any further response costs that Waukegan may incur as a result of releases or threatened releases of PCBs at the site.

As noted earlier, on September 2, 2009, the Court directed Waukegan to file a third amended complaint providing further particulars regarding its past and anticipated future response costs, to enable the Court to determine the viability of any claim for cost recovery or declaratory judgment. The third amended complaint alleges that Waukegan has voluntarily incurred response costs, including for the following:

* Designing a response action in connection with PCB-contaminated sediments in the Harbor, "pursuant to an agreement with USEPA";

* Lowering the City's potable water supply line, which traverses the Harbor, to allow a response action including dredging of PCB-contaminated sediments;

* Assessing the feasibility of alternative response actions proposed by the EPA and/or the Army Corps of Engineers relating to PCB-contaminated sediments in the harbor;

* Conducting a soil investigation of PCB contamination on land adjacent to the harbor and within the facility; and

* Maintaining the impoundments that store the PCB-contaminated sediment dredged by OMC in its 1992 remediation action.

The third amended complaint also states that Waukegan anticipates incurring additional response costs in the future, including for the following:

* Addressing recently-discovered high levels of PCB contamination located on Operable Unit 4 of the site;

* Costs resulting from the EPA's imposition of liens on city-owned property around the harbor to secure unreimbursed response costs or to allow the EPA to realize any increase in value to the property resulting from its response actions; and

* Maintaining the impoundments that store the PCB-contaminated sediment dredged by OMC in its 1992 remediation action.

During 2008, after Waukegan filed this lawsuit, the EPA began a new remedial investigation and feasibility study (RI/FS) for the harbor (Operable Unit 1 of the facility) and issued a plan for public comment. That plan proposes a dredging project to remove sediment containing PCBs. The public comment period closed in January 2009. At the time of the supplemental briefing, the EPA anticipated issuing an amended Record of Decision (ROD) this fall. As noted earlier, the amended ROD was provided to the Court on November 20, 2009, after this decision was completed but before it was ...


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