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Saturday, June 15, 2024 | Back issues
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Insurers Excluded From Superfund Cleanup Deal

(CN) - Insurers cannot hold up payment of about $17.4 million for New Jersey pollution rooted in the production of World War II equipment, a federal judge ruled.

Cornell-Dubilier Electronics started using polychlorinated biphenyls (PCBs) to insulate the electrical capacitors it manufactured in 1939.

After submerging its products into PCB oils, Cornell-Dubilier cleaned the products with solvents that ultimately left the 26-acre facility in South Plainfield, N.J., through its built-in drainage system.

The company also discarded dysfunctional capacitor units in pits on the facility grounds.

Though government contractors bought most of the capacitors to make military equipment during World War II, and had employed five workers to operate federally owned capacitor-testing equipment at the facility, Cornell-Dubilier found itself being sued by the United States decades later under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) when the Environmental Protection Agency discovered PCBs in the environment there.

An EPA evaluation from March 1996 to January 1997 confirmed the presence of PCBs at the facility, several adjacent residential and commercial properties, and the adjoining Bound Brook corridor in soil, surface water, sediments and fish.

Removal actions to temporarily stabilize and contain pollution concluded in 2008, and the EPA says it spent nearly $167 million on remediation at the site by 2012.

With all past and future cleanup costs expected to total $365.5 million, the parties entered into a consent decree that requires Cornell-Dubilier to pay the feds and state more than $1.1 million. The government meanwhile will pay $16.3 million for its role at the site.

The government moved for approval of the proposed consent decree in April 2013.

Cornell-Dubilier's three insurers had refused to participate in the lawsuit about 20 years ago, but they intervened in November to oppose the settlement.

The deal requires Cornell-Dubilier to pay the government a large chunk of any award resulting from its ongoing state court insurance coverage suit.

U.S. District Judge Jose Linares approved the consent decree Thursday, seeing no evidence that Cornell-Dubilier and the government inflated the insurers' share of the costs.

"There is substantial evidence in the record that indicates the negotiations between the government and CDE were candid, open, and balanced," the unpublished ruling states. "As the government points out, both parties were represented by competent counsel with years of experience working on issues involving CDE and the South Plainfield site in various state and federal level proceedings. CDE retained its own environmental consultancy firm, and the information provided by that firm indicated that the government's estimates for cleanup costs and [natural resources damages] NRD were conservative. Likewise, the government also retained its own independent consultants and relied upon the considerable expertise of the Environmental Protection Agency in arriving at its conclusions."

The insurers in question are Exxon Mobil Corp.; Columbia Casualty Co. and Continental Casualty Co.; and Certain Exxon London Market Insurers.

Though Uncle Sam knew that rejected capacitors were being dumped in pits at the facility, it is not liable as a prior "arranger" for hazardous substance disposal, according to the ruling.

"In particular, aerial photographs from the site dating from the 1940s along with testimony from a former employee indicate that disposal pits were present at this site prior to and during the government's involvement," Linares wrote. "However, mere knowledge that an entity's product will be disposed of is not sufficient to establish arranger liability."

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