Posted On: March 21, 2013| Author: Thrasher, Dinsmore & Dolan| Chardon Attorneys, Cleveland Attorneys, News|

FirstEnergy Can’t Duck CERCLA Suit Over Polluted Fla. Sites

By Dan Prochilo

Law360, New York (March 18, 2013, 8:45 PM ET) — An Ohio federal judge on Monday refused to dismiss Progress Energy‘s suit against FirstEnergy Corp. over cleanup costs at two polluted Florida sites, finding that FirstEnergy’s predecessor might have left the company liable for the contamination.

U.S. District Judge Dan Aaron Polster said it was plausible that FirstEnergy’s notoriously corrupt predecessor, Associated Gas & Electric Corp., or Ageco, dominated the subsidiaries directly responsible for the dumping of hazardous tars and oils into the soil and groundwater at two sites in Orlando and Sanford, Fla.

In doing so, Ageco may have absorbed some of the subsidiaries’ liability, leaving FirstEnergy holding the bag, Polster ruled.

Ageco engaged in “not an isolated incident of corporate dominance, but a thorough-going practice, a rampant pattern of abuse by the Ageco ’empire’ that exploited ‘every possibility for plunder,’” Polster wrote. “It is conceivable that Ageco’s modus operandi applied with equal force to [Florida Public Service Co.] and Sanford Gas.”

FPSC, a distant subsidiary thrice removed from Ageco, ran a manufactured-gas plant at the Orlando site from 1929 to 1943.

Progress Energy will need to prove at trial that Ageco had interfered with that company and Sanford Gas — a critical link that could leave FirstEnergy on the hook under the Comprehensive Environmental Response, Compensation and Liability Act for the $1.8 million that Progress Energy has spent investigating and trying to clean up the two contaminated tracts.

But according to Polster there is enough evidence that, in other states at least, Ageco acted as a holding company for energy firms and it regularly violated its subsidiaries’ corporate sovereignty and “pillaged” them for $20 million between 1929 and 1938, or today’s equivalent of $300 million.

Ageco’s conduct elsewhere led Polster to find it was “plausible” that the parent company had the same level of intrusive involvement in the Florida power companies involved in this case.

The judge also rejected FirstEnergy’s contention that the statute of limitations had expired and that Progress Energy had missed its chance to seek reimbursement for the remediation efforts.

The judge ruled that, with the Sanford site, Progress Energy filed suit at the tail end of the three-year window it had after obtaining a consent decree in federal court in January 2009. Progress Energy filed suit near the end of 2011.

That decree, for the performance of the remediation, was issued following years of discussion between Progress Energy and the EPA extending back to 1998.

FirstEnergy had argued that the statute of limitations clock should have started once that initial agreement between the EPA and the plaintiff was forged in the late 1990s. But the judge said the law calls for the deadline to be three years from when a “judicially approved settlement” is made.

With the Orlando site, Progress Energy has until three years after it is done removing the contaminated material, a process that hasn’t even been completed yet, Polster said.

He also ruled that there is a possibility Progress Energy may be able to charge FirstEnergy for future cleanup costs. FirstEnergy had argued that, since Progress Energy was ineligible to recoup past costs, future costs were also out of reach. But the judge found that, since the statute of limitations hadn’t expired on the old cleanup expenses, future costs were also still accessible.

Dave Scanzoni, a spokesman for Duke Energy, the company that acquired Progress Energy in July 2012, said Duke is still reviewing the judge’s order and could not comment.

A message left for FirstEnergy was not immediately returned Monday.

The case is Florida Power Corp. v. FirstEnergy Corp., case number 1:12-cv-01839 in the U.S. District Court for the Northern District of Ohio.

–Editing by Jeremy Barker.