Florham Park partner Mike Adelman and Philadelphia associate Deb Shuff were successful in obtaining a ruling regarding contribution for natural resource damages (NRD) under CERCLA on behalf of our client Champion Laboratories. This is the first case that permits CERCLA contribution for NRD.

In this case, pending in the U.S. District Court for the District of New Jersey, Champion alleged that groundwater contamination beneath a former Champion facility migrated across the road from a neighboring facility. Among other claims, Champion seeks the recovery of NRD - funds paid to the State of New Jersey for alleged damage to groundwater as a natural resource - from Metex Corp., the owner and operator of the neighboring facility. Champion seeks recovery under section 113(f)(3)(B) of CERCLA. Under that section, if a party settles CERCLA liability with the United States or a state, it can seek contribution from other parties for the overpayment to the government. Champion recently entered into a settlement with the State of New Jersey relating to alleged NRD liability. In its settlement agreement, Champion specifically settled CERCLA liability and was provided contribution protection for the settled NRD.

The Honorable William H. Walls, U.S.D.J. rejected a very technical reading of Section 113(f)(3)(B) as proposed by counsel for Metex. Following the Second Circuit in Consolidated Edison Co. of New York, Inc. v. UGI Utilities, Inc., 423 F.3d 90 (2d Cir. 2005), the court found that the use of the term "response action" as the only permissible action in which contribution may be sought under Section 113(f)(3)(B) includes NRD. Further, the court found that the determining factor for ascertaining whether contribution for NRD may be sought under Section 113(f)(3)(B) is whether Champion settled a CERCLA liability prior to seeking contribution. The court concluded that Champion did settle with the state in a judicially approved settlement prior to seeking contribution; and, therefore, denied defendant's motion to dismiss.

Mike Adelman and Deb Shuff prepared the case for a Fall trial.