Los Angeles….A federal court in Los Angeles on Tuesday dismissed a Superfund lawsuit brought by the federal government in February 2010 on behalf of the Environmental Protection Agency (EPA) against Pyro Spectaculars, Inc. (PSI) and seven other defendants.

The suit sought $7 million in past cleanup costs and an estimated $50 million in future costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Resource Conservation and Recovery Act, two federal cleanup statutes, for Southern California’s Rialto-Colton Basin, which was contaminated with perchlorate and trichloroethylene (TCE).

Judge Philip Gutierrez of the US District Court for the Central District of California rejected the United States’ claim that the federal government alone is not subject to Federal Rule of Civil Procedure 13, which requires a party to file a counterclaim for every claim made by the opposing party.

PSI’s attorney, Philip Hunsucker, of Hunsucker Goodstein & Nelson PC, said, “This decision makes clear that when the United States government has environmental liability under CERCLA, it will be treated just like every other party in a lawsuit.”

Judge Gutierrez also rejected the government’s argument that it did not have to file counterclaims after it was sued for pollution caused by the US Army during World War II at the Rialto Ammunition Backup Storage Point in Rialto, California. The judge held that the United States should have filed compulsory counterclaims in a lawsuit brought by the City of Colton in 2005. The government had argued unsuccessfully that Rule 13 should not apply because contamination claims in that suit involved the Department of Defense, while cleanup claims involved the EPA.

Litigation relating to perchlorate and TCE contamination in the Rialto-Colton Basin began in lawsuits filed in 2004 by the City of Rialto and in 2005 by the City of Colton. The Colton case was dismissed on summary judgment in 2006. Despite being a defendant in that case, the government failed to file enforcement claims until last February.

This is only the second federal court to address the issue of whether the federal government must follow Rule 13 in CERCLA cases in which it is a potentially responsible party. In Raytheon Aircraft Co. v. United States, a US District Court in Kansas ruled in favor of the government. Judge Gutierrez found the earlier decision was irrelevant, noting that the Kansas Court had specified that its holding was limited to Raytheon’s unique facts.

Pyro Spectaculars, Inc. was represented in the matter by attorneys Philip Hunsucker and Brian Zagon of Hunsucker Goodstein & Nelson PC; an environmental litigation firm with offices in California, Indiana, and Washington, DC.

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In a precedent-setting decision, the 9th Circuit Court of Appeals on Monday ruled in favor of Pyro Spectaculars, Inc. (PSI) and 16 other defendants, dismissing a lawsuit filed by the City of Colton, California, which sought up to $124 million in past and future environmental cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The 9th Circuit Court also affirmed the dismissal of Colton’s declaratory relief claim and reinstated PSI’s CERCLA cost-recovery claims against other potentially responsible parties.

“This decision makes it clear to governmental entities seeking to recover tens of millions of dollars in costs that they must play by CERCLA’s rules,” said PSI’s attorney, Brian Zagon of Hunsucker Goodstein & Nelson PC.

The decision upheld a lower court’s 2006 summary judgment ruling against Colton, agreeing that Colton failed to show that $4 million in incurred cleanup costs were necessary and consistent with CERCLA’s National Contingency Plan requirements.

In 2005, Colton filed a lawsuit claiming that PSI and other defendants had contaminated local wells with perchlorate, seeking $4 million in reimbursement for incurred cleanup costs and declaratory relief for future costs to remove low levels of the chemical from wellheads. Estimates by some of the parties of the future clean up costs are in the range of $120 million. The US District Court for the Central District of California granted summary judgment against Colton and dismissed the case in 2006. The lower Court also dismissed CERCLA cost recovery claims sought by PSI and other defendants, a decision which the 9th Circuit Court reversed on Monday.

This is the first time that the 9th Circuit Court has considered whether a plaintiff who failed to prove a defendant’s liability for past cleanup costs can obtain a declaratory judgment for future costs against that defendant.

9th Circuit Court Judge Diarmuid O’Scannlain wrote the opinion affirming the lower court’s ruling, stating that “CERCLA’s purpose would be better served by encouraging a plaintiff to come to court only after demonstrating its commitment to comply with the [National Contingency Plan] and undertake a CERCLA-quality cleanup.”

PSI was represented in the matter by attorneys Philip Hunsucker and Brian Zagon of Hunsucker Goodstein & Nelson PC; an environmental litigation firm with offices in California, Indiana, and Washington, DC.