Gibbons Recognized as a Leading Firm by Chambers USA

The 2011 edition of the Chambers USA Guide to America’s Leading Lawyers for Business features 10 Gibbons practice areas and 18 individual attorneys ranked in the top tiers. The firm has appeared in the New Jersey section of the Chambers guide since its inception, but the 2011 version includes the highest total number of firm practices and attorneys to achieve the distinction of a Chambers ranking.

“It is a great accomplishment in and of itself to achieve a Chambers ranking, but the addition of new attorneys to the rankings, and the upward mobility within the rankings, are even more impressive,” says Patrick C. Dunican Jr., Chairman and Managing Director of Gibbons. “What that says is that Gibbons does not rest on its laurels, that the firm and our attorneys are constantly striving to provide ever more exceptional legal and client service.”

Chambers annually rates the nation’s leading business lawyers and law firms through comprehensive interviews with top companies, attorneys, and business executives, plus extensive supplementary research. Chambers and client testimonials, excerpted from this year’s guide, highlight the Gibbons Real Property & Environmental Department that ranked in the guide for New Jersey:

Environmental: Sources confirm that there is little beyond the capabilities of this team, which has in-depth expertise in litigation, regulatory concerns and real estate transactions affected by environmental issues. “A well-managed and responsive practice that seeks to provide the best possible representation in an affordable and pragmatic manner.”

Real Estate: Gibbons offers a broad selection of real estate services. “They are able to provide a deep well of resources, good bench strength and a rapid service.”

In addition, the following members of the Group were among the 18 individual Gibbons attorneys that received glowing reviews in the guide’s individual rankings:

Russell B. Bershad, Real Estate: Market sources consider Russell Bershad to be “easy to deal with, accessible and well connected within the business community. “He is hugely admired for his skillful handling of real estate financing, leases and transactions.”

Irvin M. Freilich, Environmental: Irvin Freilich has a wealth of experience in cost recovery and environmental litigation actions. His arrival at the firm added “a welcome layer of depth to the capabilities of the group.”

John H. Klock, Environmental: John Klock possesses a strong construction background that lends itself well to his site remediation work. Clients pay tribute to his “fantastic intellect and skillfulness in meeting our needs.”

Edward F. McTiernan, Environmental: Edward McTiernan oversees much of the team's work in his capacity as practice leader and is felt to be “indispensable in dealing with the very largest of projects.”

Susanne Peticolas, Environmental: Susanne Peticolas wins the acclaim of interviewees as a result of her “strategic, cost-conscious approach” and “practical engagement” with clients' concerns.

EPA to Announce the Possibility of Adding Vapor Intrusion as a Component to the Hazard Ranking System

On Monday, January 3, 2011, the Environmental Protection Agency published in the Federal Register, 76 Fed. Reg. 5,370 (Jan. 31, 2011), a Notice of Opportunity for Public Input on the Potential Addition of Vapor Intrusion Component to the Hazard Ranking System (the “HRS”). Should this proposal become a rule it would add another contamination pathway to analyze in connection with listing sites on the National Priorities List (the “NPL”).

The HRS is the principal tool used by EPA to determine which contaminated sites to place on the NPL. Under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which was enacted in 1980 and amended in 1986 by the Superfund Amendments and Reauthorization Act (“SARA”), EPA was required to develop a mechanism to identify sites posing the most serious and immediate threat to the environment or human health and create the list of those sites, constituting the NPL. The HRS was developed to handle that directive.

The HRS is a numerical system that takes into account four potential contamination pathways: 1) groundwater migration; 2) surface water migration; 3) soil exposure; and 4) air migration. During the preliminary assessment and site inspection phase of a site remediation, these four pathways are evaluated using three categories: 1) likelihood that a site has released or has the potential to release hazardous substances into the environment; 2) characteristics of the waste; and 3) people or sensitive environments affected by the release. A score is assigned to each pathway based on this analysis and a formula is employed to determine an overall score, which ranges from 0 to 100. A site with a score of 28.50 or more is eligible to be placed on the NPL.

Vapor intrusion is the product of subsurface contamination entering into overlying structures which then are released into the structure in the form of vapor. This creates a threat to individuals inhabiting the structure who may inhale or ingest the contaminant. Currently, vapor intrusion is not a pathway of concern under the HRS. However, in May 2010, the Government Accountability Office (the “GAO”) issued a report entitled “EPA’s Estimated Costs to Remediate Existing Sites Exceed Current Funding Levels, and More Sites are Expected to Be Added to the National Priorities List.” In it, the GAO concluded that there is the potential for unacceptable human exposure to contamination if vapor intrusion is not addressed through the HRS. The GAO recognizes that sites that possess vapor intrusion contamination may be placed on the NPL due to other pathways. However, the report notes that there are contaminated sites that do not qualify for the NPL but would if vapor intrusion factored into the scoring.

EPA engaged in public outreach regarding this topic and held several listening sessions to facilitate public participation. The public comment period closed on April 16, 2011. EPA received about 60 comment letters in response to the EPA announcement. The vast majority of the respondents favor adding vapor intrusion to the HRS as a benefit to the public health. These include United States Senator for New Jersey, Robert Menendez, and the New Jersey Department of Environmental Protection, as well as professors, attorneys, community groups, and others. The Utility Solid Waste Activities Group (“USWAG”), an association of over 100 utilities, energy companies and associations, and utility operating companies take the position that the addition of a vapor intrusion pathway to the HRS is unnecessary. USWAG believes, among other things, that vapor intrusion sites will be eligible for placement on the NPL based on already existing pathways under the HRS. Furthermore, USWAG contends that the addition of a vapor intrusion component will impose significant costs on the Superfund program and would not lead to quicker site remediation.

EPA has reviewed the feedback and expects to issue a Notice of Proposed Rulemaking by January 2012.


Sandro G. Ocasio is an Associate in the Gibbons Real Property & Environmental Department.

NJ Proposes to Ban decaBDE Flame Retardant in Products

In February and May of 2011, the New Jersey legislature induced identical bills in the Senate (S 2722) and Assembly (A3915) to ban the manufacture and sale of products containing decabromodiphenyl ether (decaBDE). DecaBDEs are used in plastics for TV cabinets, consumer electronics, wire insulation, back coatings for draperies and upholstery. Growing concerns over the connection between decaBDEs and liver, thyroid and neurodevelopmental toxicity have lead a number of states, countries, as well as the European Union to institute bans.

Under the proposed legislation, the ban would go into effect on January 1, 2014, and apply to products containing more than 0.1% decaBDE, unless it is used for military or transportation purposes or is solely derived from recycled materials and used exclusively in electronic equipment. Sellers would have up to December 31, 2014 to sell off existing stock. Violations of the act would be an unlawful practice under the NJ Consumer Fraud Act, N.J.S.A 56:8-1 et seq., carrying a penalty of $10,000 for the first offense and up to $20,000 for subsequent violations.

Washington was the first state to implement a ban on decaBDE products, joined by several others, including Oregon, Maine, Vermont and Maryland. In addition, in December 2009, EPA negotiated phaseout commitments from three companies responsible for most of the decaDBEs sold or imported into the United States who agreed to end all uses of the chemical by December 2013.

However, one of the most powerful deterrents to decaBDE sales is likely to be Wal-Mart’s Product Safety and Regulatory Notice of December 28, 2010. The notice, issued to Wal-Mart’s suppliers announced that beginning June 1, 2011, it would enhance its testing of consumer products for all polybrominated diphenyl ethers (PBDEs), including decaBDEs. What vendor would risk its supply contract with the world’s largest retailer when faced with clear direction backed up with enhanced testing?

EPA would appear to agree. As quoted in The Washington Post, Steve Owens, assistant administrator of the EPA’s Office of Chemical Safety and Pollution Prevention, stated: “Wal-Mart has taken an important step toward protecting children and families from exposure to toxic chemicals … EPA has long had concerns about PBDEs.” The Washington Post noted that although EPA had cited PBDEs as chemicals of concern in 2010, it had not been able to limit their use. In the absence of federal action, states and retailers have stepped up. The result is more complexity for corporate compliance because the various bans and limitations rarely correspond with each other, differing by products covered and dates of implementation.


Susanne Peticolas is a Director in the Gibbons Real Property & Environmental Department.

Updated Guidance From USEPA Concerning Brownfield Redevelopment

Encouraging development of environmentally challenged real estate -- brownfields -- is usually the task of state agencies. In New Jersey the Office of Smart Growth; the Economic Development Authority and the Department of Environmental Protection all offer programs intended to encourage redevelopment of brownfields. However, states are struggling to fund and support their brownfield programs and funds for outreach to potential developers and their allied professionals are in short supply.

As a result USEPA’s recent “Federal Programs Guide” is a welcome reminder of the federal resources that may be available to assist brownfield redevelopment projects. This comprehensive guidebook provides an agency-by-agency survey of brownfield-related initiatives. EPA’s guidebook also presents a valuable primer on tax credits and favorable tax treatment for brownfield remediation.

Cost Recovery Under Superfund - The Eighth Circuit Fills the Void Created by the United States Supreme Court in the Atlantic Research Decision

The Eighth Circuit recently addressed an issue which the United States Supreme Court expressly side-stepped in 2007 when it decided United States v. Atlantic Research Corp., 551 U.S. 128 (2007). In Atlantic Research, the Court left open the question whether potentially responsible parties that incur response costs pursuant to an administrative consent order or a judicially approved consent decree may pursue a cost recovery claim under §107 of CERCLA, §113 of CERCLA or both sections.

In Atlantic Research, the Supreme Court held that ARC, a private party that had incurred response costs, could bring suit under §107 of CERCLA because it had “voluntarily” incurred response costs to remediate its property. It also recognized that the costs of reimbursement paid pursuant to a legal judgment or settlement are recoverable only under §113(f) of CERCLA. The Court refused to classify other response costs that did not fit either of these categories, declining to decide whether response costs incurred pursuant to a consent decree could be recovered under §107, §113(f) or both sections of CERCLA.

This issue left open by the U. S. Supreme Court in 2007 was recently ruled upon by the Eight Circuit in Morrison Enterprises, LLC v. Dravo Corporation, No. 10-1468 (April 5, 2011, 8th Cir.). Morrison and the City of Hastings, Nebraska sued Dravo Corporation under §107 of CERCLA to recover response costs that they had incurred responding to contaminated groundwater at the Site. In 1991 and again in 1996, Morrison had entered into Administrative Orders on Consent with EPA to operate a groundwater extraction and treatment system, which began operating in 1997. Morrison also entered into a consent decree regarding the operation of the groundwater extraction and treatment system.

On July 3, 2008, the City and Morrison sued Dravo under §§107 and 113(g)(2) of CERCLA; they did not assert a claim under §113(f) of CERCLA. The City and Morrison argued that the costs incurred to construct and operate the groundwater remediation system could be recovered under §107. The District Court concluded that CERCLA §113(f) was the exclusive remedy available to a party that incurs response costs pursuant to an administrative order or a judicially approved consent decree. It also found that the City’s §107 cost-recovery claim for replacement of the City’s water system was barred by the applicable statute of limitations, and refused to allow Morrison’s motion for leave to amend its complaint to assert a claim under §113.

On appeal, the Eighth Circuit affirmed the decision of the District Court. Relying upon the Atlantic Research decision, the Court noted that §107(a)(4)(B) was only available to a private party who had voluntarily incurred response costs and that §113(f) allowed a contribution claim for a person who is liable or potentially liable under §107(a) during or following a civil action under §§106 or 107. It declined to allow a party with a §113(f) claim to also proceed under §107(a), because doing so would in effect, “nullify the SARA amendment and abrogate the requirements Congress placed on contribution claims under §113” quoting from Niagra Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 128 (2nd Cir. 2010). The Eighth Circuit also relied upon pre Atlantic Research cases limiting a liable party to claims under §113. See Dico, Inc. v. Amoco Oil Co., 340 F.3d 525, 531 (8th Cir. 2003). Although the Supreme Court had noted the potential overlap between §107(a) and §113(f), in not only the Atlantic Research decision but also in Key Tronic Corp. v. United States, 511 U.S. (816) (1994), the Eighth Circuit determined that there was no overlap for a liable party compelled to incur response costs pursuant to an administrative order or a judicially approved settlement.

The decision highlights the need to assert all possible bases for recovery in cost recovery cases, given the complexities of CERCLA and the divergent and oftentimes conflicting interpretations of it.


Irvin M. Freilich is a Director in the Gibbons Real Property & Environmental Department.

Proving Liability for Clean-Up Costs - Nexus; Circumstances and Experts - Lessons from Dimant and DVL

On May 18, 2011, the New Jersey Appellate Division upheld a trial court’s decision that the New Jersey Department of Environmental Protection had failed to establish sufficient “nexus” or connection between the operator of a dry cleaner and regional groundwater contamination. In New Jersey Department of Environmental Protection v. Dimant, et al., (Docket A-3180-09T2), the Appellate Division soundly rejected New Jersey’s claim that “the Spill Act must be interpreted and applied very broadly to find that any discharge at any time, even a de minimis one, imposes liability on all operators handling that product, and that a direct causal connection between the discharge and the damages need not be established.” This sort of argument which asks the court to overlook critical connections is all too common in environmental cases. Indeed, governmental plaintiffs often invoke policy reasons when asking for relaxed nexus requirements whereas private parties seeking contribution frequently call on the courts to shift the burden to the alleged dischargers.

However, in Dimant the Appellate Division reminded all potential plaintiffs seeking to impose liability for clean-up costs on former owners or operators that they must meet their burden by coming forward with a preponderance of the evidence sufficient to prove a “nexus” between the defendant and the discharge as well as connecting the damages to the contamination. Although plaintiffs may resort to circumstantial evidence and experts, any break in the chain of connections between a defendant and the discharge or the discharge and the alleged contamination (or the contamination and the plaintiff’s damages) should be fatal after Dimant.

Dimant involved the dry cleaning solvent perchloroethylene (PCE) which had impacted over 350 acres of groundwater in and around Bound Brook. Although there were no less than three dry cleaners in the neighborhood (each of which had several owners and operators), as well as two or three other possible sources of PCE, NJDEP’s investigations eventually focused on only one relatively short term operator of one of the dry cleaners. Using a combination of inspection reports that confirmed the presence of discharge pipes in and around dry cleaning operations, and sampling data, NJDEP’s expert concluded that one particular operator was the “primary source” of the groundwater contamination. However, the trial court took a critical look at the alleged connections between this dry cleaner’s operations and the PCE discharge as well as the nexus between any potential discharge and the probability that it caused such extensive contamination. After a non-jury trial, the court found that NJDEP failed to prove its case primarily because its expert failed to address the presence of older, weathered PCE which pre-dated defendant’s activities. NJDEP’s expert was further faulted for the failure to consider other possible sources of the PCE. Indeed, reading between the lines it appears that NJDEP probably cobbled together sufficient evidence to prove that defendant’s operations resulted in minor discharges into a paved parking area. However, it also appears that NJDEP utterly failed to establish that defendant’s discharge was of sufficient volume or duration to have permeated the pavement and entered the groundwater and then caused the contamination. Thus, the chain of connections between the dry cleaning operations and the contaminated groundwater was broken.

The decision in Dimant considered the Spill Act’s somewhat open ended “in any way responsible” standard for liability. However, the analysis, and especially the court’s reluctance to fill in any gaps connecting the defendant to the discharge, or the discharge to the contamination, is very similar to a recent CERCLA decision from the Northern District of New York. In an unpublished decision in DVL, Inc. v. General Electric (Docket No. 07-cv-1075, N.D.N.Y., December 6, 2010), the Federal District Court granted summary judgment based largely upon a private cost recovery plaintiff’s failure to establish that defendants disposed of PCBs on plaintiff’s property. The District Court acknowledged that CERCLA contains a “relaxed” causation requirement which can be satisfied by circumstantial (as opposed to direct) evidence. Nevertheless, in DVL the District Court found that testimony concerning historical practices at other nearby sites and mere proximity to a manufacturing operation which produced PCBs was insufficient to satisfy plaintiff’s burden of showing that defendants had disposed of PCBs at plaintiff’s site. As in Dimant, there was no doubt that defendant handled the chemical which caused the contamination. Nevertheless, the property owner could not recover because it failed to connect the defendants to the particular PCBs which drove the clean-up of its property.

Dimant and DVL show that defendants - even defendants that produced or handled the toxic chemical at issue - can prevail in clean-up cost recovery litigation. Despite the ambiguous nature of the liability provisions in New Jersey’s Spill Act and the relaxed proofs allowed by CERCLA, a plaintiff seeking to recover clean-up costs must meet its burden by proving causation at each step in the chain between the defendant and the contamination. The “nexus” requirement in both Spill Act and CERCLA require that plaintiffs connect the dots with evidence not mere speculation.

Paper Companies That "Created, Mobilized and Profited From" PCBs Must Bear 100% of Cleanup Costs in Fox River CERCLA Case, But May Not Be Liable for PCBs in Waste Paper Sold to Recyclers

The other shoe dropped on February 28 in the closely watched CERCLA case involving PCB contamination of the Fox River in Wisconsin. District Judge William C. Griesbach, who had previously ruled that the paper companies that made and discharged PCBs to the river could not seek contribution from recycling mills that unknowingly bought PCB-laden waste paper, called “broke,” and also discharged PCBs, held that those companies must reimburse those comparatively innocent companies for 100% of the costs they have incurred for most of the polluted river. But he held that it was too early to say whether the paper companies knew, and did, enough, to make them liable for “arranging for” disposal of the PCBs that ended up in the recycling mills’ discharges to an upstream stretch of the river.

In his recent decision, Judge Griesbach considered arguments concerning two separate stretches of the Fox River Superfund Site in Wisconsin, which the U.S. Environmental Protection Agency has divided into five operable units (OUs). The plaintiff paper companies discharged PCBs into OU2, and the PCBs flowed downstream to OUs 3,4, and 5. The recycling mills discharged PCBs to all five OUs, including OU1, which is upstream from all of the others. (Another decision in the Fox River case was the subject of an earlier blog post.

The defendants sought contribution from plaintiffs Appleton Papers Inc. and NCR Corp., which themselves or through their predecessors made carbonless copy paper using a coating that contained PCBs. Waste paper from the manufacturing process was sold to the recyclers, whose manufacturing process also discharged PCBs. In December 2009, Judge Griesbach had determined that the plaintiffs could not receive contribution from other parties because they knowingly took the risk that the product they made, sold, and mobilized would harm the environment. Their fault, said Judge Griesbach, outweighed all other equitable factors in his determination of how cleanup costs should be allocated for OUs 2 through 5. He used the same analysis in his recent decision to find that the paper companies must reimburse the defendants for their costs in these areas, stating:

Although the Defendants may have discharged roughly half of the PCBs into OU2-OU5, and although some of them may have polluted the river in other ways,” he wrote, “they do not share any of the culpability for the PCB pollution that gave rise to this CERCLA action.

The plaintiffs did manage to salvage a partial victory with respect to OUs 2 through 5. Many defendants had received payments from insurers regarding their cleanup activities in those areas. The court determined that there should be no windfall and that the amounts some insurers paid to some of the defendants would subject to the collateral source rule and the plaintiffs were entitled to discovery on the issue.

OU1, the upstream stretch, presented a different situation. The paper companies’ discharges to OU2 could not have caused the PCB contamination there (because the river flows in only one direction), so they could bear CERCLA liability for cleanup costs at OU1 only if they could be said to have “arranged for” the disposal of PCBs there within the meaning of CERCLA Section 107(a)(3). In its 2009 opinion in Burlington Northern and Santa Fe Ry. Co. v. United States, the Supreme Court held that “arranger” liability required an intent to dispose of the material in question. Here, while the paper companies clearly wished to get rid of the waste paper, they sold it (rather than paying someone to haul it away). In addition, the record was not clear as to whether they had sufficient knowledge that the PCBs in the waste paper would end up in the river. Such unresolved fact questions, said Judge Griesbach, were enough to require denial of the defendants’ motion for summary judgment as to OU1.

It was a split decision from Judge Griesbach for the plaintiff paper companies -- a loss (albeit with some limited success) on OUs 2 through 5, and a win on OU1. But their win was only temporary, and given Judge Griesbach’s past decisions, it seems clear that they are still swimming against the current.


John H. Klock is a Director in the Gibbons Real Property & Environmental Department. Paul M. Hauge, an Associate in the Gibbons Real Property & Environmental Department, co-authored this post.

After 15 Years, EPA Wants to Reinstate the Superfund "Polluter Pays" Taxes

On June 21, 2010, EPA sent a letter to Congress supporting the reinstatement of the Superfund tax which expired on December 31, 1995. EPA believes that the tax will provide a “stable, dedicated source of revenue ... and increase the pace of Superfund cleanup.” According to EPA, it would also ensure that the parties who manufactured or sold the substances that are being cleaned-up at hazardous waste sites - and not the taxpayers - would bear the cost of cleanup when responsible parties cannot be identified. EPA states that the taxes are needed to ensure that the polluter pays” for the Superfund program.

Since 1995, the Superfund program has been financed largely from transfers from the country’s general revenue funds. The EPA would like to reinstate the taxes for a 10 year period beginning in January 2011, in the same manner as they were last in effect on crude oil, imported petroleum products, and imported substances that use hazardous chemicals as feedstock.

Carl Dooley, President and CEO of the American Chemistry Council issued a statement in response to EPA’s announcement, calling EPA’s proposal “a lose-lose for the environment and the economy.” Mr. Dooley points out that since 1995, responsible parties have continued to pay for the cleanup of Superfund Sites, -- they have paid for sites for which they were responsible, they helped pay for “orphan” sites where they were not responsible parties and they have paid corporate taxes including the Corporate Environmental Income Tax. More importantly, he views EPA’s proposal as being in direct conflict with the desire to grow US jobs and double US exports. According to Mr. Dooley, EPA’s suggestion “will cost US jobs and damage our nation’s global competitiveness without positively affecting site remediation.”

With the recent events in the Gulf and the Deepwater Horizon, EPA’s “polluters pay” declaration will likely be well received in Congress and by the American public.


Irvin M. Freilich is a Director in the Gibbons Real Property & Environmental Department.

The Fox River Cleanup Snares Insurers, Passaic River PRPs Should Take Note

On June 8, 2010, in Westport Insurance Co. v. Appleton Papers, Inc., the Wisconsin Court of Appeals for the First District held that two insurers, namely Munich Re Ag and Westport Insurance Co., are liable each for $5 million dollars to compensate Appleton Papers, Inc. (Appleton) for cleaning up the sediment contamination in the Fox River. The Fox River is undergoing a cleanup pursuant to oversight by the United States Environmental Protection Agency.

Appleton acquired assets of National Cash Register Inc. (NCR) during the l950’s and later, NCR manufactured carbonless paper using PCBs (polychlorinated biphynols). The Fox River became polluted with PCBs, a suspected carcinogenic substance. Appleton had sued nine insurers but settled with seven. The remaining two filed the appeal decided by the Wisconsin Court of Appeals in a 2 to 1 decision. Among the issues raised on appeal was whether the insurers were responsible for “after-acquired liability,” namely liability that Appleton acquired along with NCR assets after the policy periods in question expired. The insurers also asserted that Appleton had made voluntary payments not covered by the policies and that notice to the insurers was late, excusing coverage.

Passaic River, Newark, NJ.  Photo courtesy of EPA.While the case was decided under Wisconsin state law, it bears significance to USEPA led river cleanups here in New Jersey. At present the USEPA has entered into a consent decree with 73 potentially responsible parties to conduct a remedial investigation and feasibility study of the Lower Passaic River, a seventeen mile stretch of the estuarine portion of the Passaic River. Presumably parties potentially responsible for sediment contamination in the Passaic will be scrutinizing both their old insurance policies for possible coverage and this decision for legal authority.


 

Passaic River, Newark, NJ. Photo courtesy of EPA.


John H. Klock is a Director in the Gibbons Real Property & Environmental Department.