Circuit Clears Way for State to Recoup Cleanup Costs

, New York Law Journal

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Distinguishing between "removal" and "remedial" environmental actions, the U.S. Court of Appeals for the Second Circuit has given New York State the green light to proceed with a lawsuit to recoup costs related to the cleanup of the New Cassel Industrial Area in North Hempstead.

In a decision yesterday, the circuit reinstated a case that had been dismissed by Eastern District Judge Sandra Feuerstein (See Profile) on statute of limitations grounds. The case, State of New York v. Next Millennium Realty, 12-2894-cv, centers on a 170-acre site in North Hempstead that was home to a number of light industries in the early 1950s. Waste seeped into the groundwater and the town took a series of actions, including the installation of two treatment systems. The project, expected to cost $3.5 million and take seven years to complete, is still underway.

In 2006, the state filed a cost recovery suit against several defendants under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980. Feurstein dismissed the case, finding that the actions for which the state sought recovery were "remedial" in nature, and therefore subject to a six-year statute of limitations triggered by the start of a cleanup operation.

But the Second Circuit agreed with the state's argument that the activities in question were "removal" actions, which are governed by a three-year statute of limitations which begins when the work is completed.

The circuit said the systems installed at the site were "in response to an immediate health threat and designed to render the drinking water safe without addressing the underlying source of pollution" and, therefore, qualify as removal actions.

Circuit Judges Denny Chin (See Profile) and Raymond Lohier Jr. (See Profile) were joined by Southern District Judge Laura Taylor Swain (See Profile), sitting by designation. Solicitor General Barbara Underwood represented the state. Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan in Manhattan appeared for Next Millennium.

Attorney General Eric Schneiderman said in a statement that the decision "re-affirms the critical authority of state and local governments to take necessary actions to protect the public from dangerous chemicals, while they determine the source of the contamination and an appropriate long-term remedial plan. The decision appropriately holds polluters responsible for paying the cleanup costs."

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