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United States of America v. James Y. Saporito and Paul Carr

June 22, 2011


The opinion of the court was delivered by: Judge Feinerman


The United States brought this action against James Saporito and Paul Carr under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq., seeking to recover the costs the government incurred in cleaning up hazardous substances at Crescent Plating Works, an electroplating facility in Chicago. In March 2008, the court denied Defendants' motion to dismiss. Docs. 17-18 (Pallmeyer, J.). On December 2, 2008, the court granted the parties' joint motion to bifurcate the proceedings, with the first phase addressing whether Defendants are liable under CERCLA, and the second addressing what cleanup costs, if any, the government may recover. Doc. 60 (Pallmeyer, J.).

The two defendants then took divergent paths. Carr and the government settled, and an agreed consent decree was entered. Docs. 142, 146. Saporito did not settle, and the court granted the government's motion for summary judgment, holding that Saporito was a responsible party under section 107(a) of CERCLA, 42 U.S.C. § 9607(a), and thus liable for the government's response costs. 684 F. Supp. 2d 1043 (N.D. Ill. 2010) (Pallmeyer, J.). Saporito and the government then conducted discovery concerning the propriety and amount of the government's cleanup activities and costs. Before the court is the government's motion for summary judgment in an amount certain, seeking an award of $2,564,709.86 plus statutory interest accruing since June 21, 2010. The government also seeks a declaratory judgment that Saporito is jointly and severally liable for "future" response costs, meaning all costs incurred after February 28, 2010-the latest date included in the government's cost calculations-plus statutory interest on those amounts. The government's motion is granted.


Familiarity with the court's liability opinion, which sets forth the pertinent facts, is assumed. CERCLA establishes a comprehensive response mechanism to mitigate environmental damages created by the release or threatened release of hazardous substances into the environment. See Metro. Water Reclamation Dist. of Greater Chicago v. N. Am. Galvanizing & Coatings, Inc., 473 F.3d 824, 826-27 (7th Cir. 2007). CERCLA shifts the costs of cleanup to the parties responsible for the contamination. See 42 U.S.C. § 9607(a). "[L]iability under [CERCLA] is strict, joint and several. In other words, . the [government] may recover its costs in full from any responsible party, regardless of that party's relative fault." Metro. Water, 473 F.3d at 827.

A responsible party must reimburse "all costs of removal or remedial action incurred by the United States Government . not inconsistent with the national contingency plan." 42 U.S.C. § 9607(a)(4)(A); see Burlington N. & Santa Fe Ry. Co. v. United States, 129 S. Ct. 1870, 1878 n.6 (2009). The National Contingency Plan ("NCP") outlines specific steps the government must take before and during its response efforts. See 40 C.F.R. pt. 300. Governmental cleanup activities and their attendant costs are presumed to be consistent with the NCP, see United States v. E.I. DuPont De Nemours & Co., 432 F.3d 161, 178 (3d Cir. 2005) (en banc); United States v. Hardage, 982 F.2d 1436, 1442 (10th Cir. 1992), and the responsible party bears the burden of proving otherwise, see United States v. Chapman, 146 F.3d 1166, 1169 (9th Cir. 1998); Hardage, 982 F.2d at 1442; United States v. Ne. Pharm. & Chem. Co., Inc., 810 F.2d 726, 747 (8th Cir. 1986).

Saporito has been found liable as a current owner of Crescent Plating facilities, and thus is a responsible party under section 107(a) of CERCLA. 684 F. Supp. 2d at 1063. He therefore is jointly and severally liable for all the government's costs unless he demonstrates that particular cleanup activities and their attendant costs were inconsistent with the NCP. Saporito challenged nearly all of the government's claimed cleanup costs, attorney fees, and oversight costs. His arguments are considered in turn.

I. Cleanup Costs

A. Statute of Limitations

CERCLA requires the government to file suit "within 3 years after completion of the removal action." 42 U.S.C. § 9613(g)(2)(A). Saporito asserts that because the government was authorized to make expenditures as early as December 2003, it had to file suit by December 2006. The argument is defeated by the statute's plain text. In saying that a cost recovery suit must commence within three years "after completion" of the removal action, § 9613(g)(2)(A) makes clear that the limitations period commences not when the government allocates funds to the removal action, but when the removal action is completed. The removal action at Crescent Plating was not completed until June 21, 2004, at the earliest, when the United States Environmental Protection Agency ("EPA") issued its final Pollution Report for the site. See Illinois v. Grigoleit Co., 104 F. Supp. 2d 967, 975 (C.D. Ill. 2000) ("a 'removal' action is not complete until a document has been issued which contains the final remedy selected for the site" or until the government ceases "to evaluate, assess and monitor the land") (collecting cases); United States v. Cantrell, 92 F. Supp. 2d 704, 716 (S.D. Ohio 2000) (statute of limitations did not commence until the final "walk-through" of the site was complete); United States v. City of Aberdeen, 929 F. Supp. 989, 993 (N.D. Miss. 1996) (statute of limitations did not commence until all work was complete and the site was photographed). The government's suit was filed on June 6, 2007, less than three years later, and thus was timely.

Saporito next contends that because his liability derives solely from his ownership of "filter press equipment, characterized as a separate 'facility' for CERCLA liability purposes," Doc. 160 at 6, and that because the filter press was dismantled by June 4, 2004, the government had to file suit by June 3, 2007. This contention rests on an incorrect premise. As the court held in its liability decision, the plating line was the "facility" subject to the government's cleanup action, and the filter press equipment owned by Saporito was merely a part of the relevant facility. 684 F. Supp. 2d at 1056-57; see also id. at 1053 (noting that Saporito did not dispute the plating line was a "facility"). Because the dismantling of the filter press was just one component of a single "removal action" at Crescent Plating, it had no independent impact on the statute of limitations. See United States v. W.R. Grace & Co., 429 F.3d 1224, 1230 n.9 (9th Cir. 2005) ("we analyze the EPA's activities in Libby as a single response action rather than a patchwork of discrete smaller actions"); Colorado v. Sunoco, Inc., 337 F.3d 1233, 1240-41 (10th Cir. 2003) (rejecting argument that the statute of limitations applied separately to each component of the cleanup activity because "there will be but one 'removal action' per site or facility"); Kelley v. E.I. DuPont De Nemours & Co., 17 F.3d 836, 843-44 (6th Cir. 1994) ("It is simply inconsistent with [CERCLA's] 'essential purposes' to require suit on each arguably independent removal activity."); Yankee Gas Servs. Co. v. UGI Utils., Inc., 616 F. Supp. 2d 228, 270 (D. Conn. 2009) ("courts have generally held that there can be only one removal . regardless of the number of phases in which the clean-up occurs"); United States v. Nalco Chem. Co., 2002 WL 548840, at *10-11 (N.D. Ill. Apr. 10, 2002).

B. Commerce Clause

Saporito contends that CERCLA cannot authorize the government's recovery of costs because it is unconstitutional, reasoning that Congress exceeded its authority under the Commerce Clause by empowering the EPA to regulate environmental hazards that do not "have effects in more than one state" and to regulate "spills at a [single] Site." Doc. 160 at 9. The Second and Eleventh Circuits have rejected materially identical contentions. See Frier v. Westinghouse Elec. Corp., 303 F.3d 176, 202 (2d Cir. 2002) ("even wholly intrastate disposal of hazardous wastes can threaten interstate and foreign commerce, as those wastes can contaminate streams that run through landfills and feed into tributaries of navigable waters"); United States v. Olin Corp., 107 F.3d 1506, 1511 (11th Cir. 1997) ("the regulation of intrastate, on-site waste disposal constitutes an appropriate element of Congress's broader scheme to protect interstate commerce and industries thereof from pollution"); see also United States v. Domenic Lombardi Realty, Inc., 204 F. Supp. 2d 318, 328 (D.R.I. 2002) ("CERCLA's legislative history demonstrates that if left unregulated, on-site disposal of hazardous waste would unquestionably affect surface and groundwater, which in turn, would substantially affect the fishing and agriculture industries, as well as livestock production, recreation, and domestic and industrial water supplies"). Saporito does not and could not show that the Seventh Circuit would chart a different course. See United States v. Vasquez, 611 F.3d 325, 331 (7th Cir. 2010) (even where a statute "regulates solely intrastate activity," if the "regulatory means chosen are 'reasonably adapted' to the attainment of a legitimate end under the commerce power," there is no constitutional problem). Saporito's Commerce Clause challenge accordingly is rejected.

C. Consistency with the NCP

Saporito contends that most of the government's cleanup activities were inconsistent with the NCP. To prove that a particular cleanup activity is inconsistent with the NCP, Saporito must demonstrate that the government acted arbitrarily and capriciously in pursuing the activity. See Hardage, 982 F.2d at 1442. Arbitrary and capricious review "is deferential," United States v. Tarkowski, 248 F.3d 596, 602 (7th Cir. 2001), and acknowledges that "determining the appropriate removal and remedial action involves specialized knowledge and expertise, [and therefore that] the choice of a particular cleanup method is a matter within the discretion of the EPA," Ne. Pharm. & Chem. Co., 810 F.2d at 748. See Wash. State Dep't of Transp. v. Wash. Natural Gas Co., Pacificorp, 59 F.3d 793, 802 (9th Cir. 1995); Hardage, 982 F.2d at 1442 ("We . give deference to the EPA's choice of response action and will not substitute our own judgment for that of the EPA."). Saporito's various arguments may be categorized as follows.

1. Proof of Substantial Threat of Harm and Causation

Saporito contends that the government "never demonstrated a substantial threat of harm" sufficient to justify the removal action or its attendant costs. Doc. 160 at 11. Specifically, he argues that the government failed to "tie" the substances and storage conditions at Crescent Plating to "any imminent, substantial real-world threat or danger, as opposed to hypothetical speculation." Ibid. In the liability phase, Saporito similarly argued that the government failed to prove that the relevant chemicals were hazardous, that the government failed to demonstrate an imminent and substantial danger to the public, and that there was no evidence of a release or threatened release. See Doc. 110 at 7-14. The court rejected these arguments, noting that (1) Saporito failed to "offer anything that would contradict the government's evidence on the threat posed by Crescent Plating's condition"; (2) "it is undisputed that hazardous chemicals did enter the soil"; (3) "[t]here is no genuine dispute here; chemicals found at the site have been designated as hazardous by the EPA"; and (4) "it is undisputed that thousands of gallons of hazardous waste were being stored unsafely . [and] that there was a threatened release at the time of cleanup." 684 F. Supp. 2d at 1058-59.

"The doctrine of law of the case precludes reexamining a previous ruling (unless by a higher court) in the same case unless it was manifestly erroneous." Starcon Int'l, Inc. v. NLRB, 450 F.3d 276, 278 (7th Cir. 2006); see also Moriarty v. Svec, 429 F.3d 710, 722-23 (7th Cir. 2005). The principle applies with particular force where, as here, a successor judge is asked to reconsider a predecessor judge's rulings. See Gilbert v. Ill. State Bd. of Educ., 591 F.3d 896, 902 (7th Cir. 2010) ("in general, the successor judge is discouraged from reconsidering the decisions of the transferor judge"). A successor judge should depart from a predecessor's decision only if he or she has a "conviction at once strong and reasonable that the earlier ruling was wrong, and if rescinding it would not cause undue harm to the party that had benefitted from it." HK Sys., Inc. v. Eaton Corp., 553 F.3d 1086, 1089 (7th Cir. 2009). Saporito does not acknowledge Judge Pallmeyer's rulings regarding the threat of harm posed by the hazardous substances at Crescent Plating, let alone demonstrate that those rulings were erroneous. It would be inappropriate to depart from those rulings where, as here, there is no indication either that the rulings were reached in error or that there are "considerations of fact or law that were [un]available when the previous" decision was made. Vidimos, Inc. v. Wysong Laser Co., Inc., 179 F.3d 1063, 1065 (7th Cir. 1999).

The same holds for Saporito's argument that the government failed to prove causation. He contends that the government was required to demonstrate specifically that it was his particular equipment "from which there was a threatened release." Doc. 160 at 16. As Judge Pallmeyer noted in the liability ruling, however, "causation need not be proven under CERCLA." 684 F. Supp. 2d at 1060 (citing United States v. Capital Tax Corp., 545 F.3d 525, 530 (7th Cir. 2008); United States v. Hercules, Inc., 247 F.3d 706, 716 (8th Cir. 2001) ("once the requisite connection between the defendant and a hazardous waste site has been established . it is enough that response costs resulted from 'a' release or threatened release-not necessarily the defendant's release or threatened release")). Saporito intimates that Judge Pallmeyer's ruling was wrong, arguing that he cannot be forced to pay cleanup costs given that his filter press was not specifically identified as the cause of the government's cleanup action. Doc. 160 at 16-17. But it is Saporito who is wrong. Because Saporito owned necessary components (including, but not limited to, the filter press) of the plating line and the plating line was identified as the cause of the ...

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