United States: Supreme Court Holds That CERCLA Section 107 Provides A Responsible Party With A Private Right Of Action For Recovery Of Response Costs

CERCLA Is A Comprehensive, Federal Law Governing The Remediation Of Sites Contaminated By The Release Of Hazardous Substances. It Imposes Strict, Often Joint And Several, Liability On Responsible Parties, And Has Been Applied Retroactively To Activities Occurring Long Before Its Passage In 1980. In Passing CERCLA, Congress Intended To Ensure The Timely Cleanup Of Contaminated Sites, And To Place The Cleanup Costs On Those Parties Responsible For The Contamination. Courts Have Repeatedly Held That, Consistent With Furthering These Purposes, The Statute Is Designed To Encourage Private Parties To Assume Financial Responsibility For Cleanups By Allowing Those Parties To Seek Financial Recovery From Other Potentially Responsible Parties (Prps) Through Contribution Claims, Allowing The Courts To Allocate The Cleanup Costs Among The Liable Parties.

CERCLA Identifies Four Categories Of Parties (I.E., Prps) That Are Responsible For Cleanup Costs, Including Costs Incurred By Governmental Agencies And Costs Incurred By "Any Other Person" Consistent With The Cleanup Requirements Of The National Contingency Plan. CERCLA Section 107 Expressly Provides A Cause Of Action For Recovery Of These Costs. In Early Litigation Under The Statute, Several Courts Held That The Ability Of A PRP To Assert A Claim For Contribution Against Another PRP At A Site Involving Multiple Parties Was Implicit In Section 107. In 1986, In Part To Remove Any Doubt About That Right Of Contribution, Congress Amended And Reauthorized CERCLA, And Added Section 113(F), Which Provides An Explicit Right To Contribution.

In Early Litigation After This Legislative Change To CERCLA, The Majority Of Courts Held That A Cost Recovery Cause Of Action Under Section 107 Did Not Include A Contribution Action By A PRP, But Was Limited To Claims By "Innocent" Parties—Typically The Government Or A Private Party That Did Not Fit Within Any Of The Four Statutory PRP Categories. In Order To Address Congress’s Intent To Encourage Prompt, Voluntary Cleanups, Many Courts Liberally Interpreted Section 113(F) To Ignore Statutory Language That Appeared To Require That A Party Must Have Been Sued Under CERCLA Sections 106 Or 107, Or Have Resolved Its Liability To The Federal Government Through A Settlement, Before That Party Could File A Contribution Claim Under Section 113(F). That Interpretation Allowed Parties Implementing A Voluntary Cleanup To Seek Cost Recovery From Other Responsible Parties. However, In 2004, In Cooper Industries, Inc. V. Aviall Services, Inc. (Aviall), In An Opinion By Justice Thomas, The Supreme Court Ruled That Section 113 Meant What It Said, And Did Not Authorize A Contribution Action For Costs Incurred Voluntarily.

Prior To Aviall, State Agencies And EPA, Which Did Not Have The Resources To Bring Enforcement Actions At Every Site, Relied Heavily On Voluntary Compliance. In Turn, Many Prps Chose To Carry Out Voluntary Cleanups At Sites Where They Had Responsibility, And Then Institute Contribution Actions Under Section 113 Against Other Parties, As Part Of A Strategy To Commence The Cleanup Promptly While Spreading The Cleanup Cost Among Responsible Parties. The Aviall Decision Seemed To Threaten This Approach, By Removing A Substantial Incentive For Voluntary Compliance By Requiring A PRP To Carry The Entire Cost Of A Cleanup At A Multiparty Site, Unless It Was First Subject To A Lawsuit Under Sections 106 Or 107.

Post-Aviall, Several Courts Revisited The Language Of Section 107 And Concluded That Its Provisions Should Not Be Limited To Innocent Parties After All. Last Week, In Another Decision Written By Justice Thomas, The Supreme Court Affirmed This Reading Of Section 107, Holding That Prps Who Engage In Voluntary Cleanups Can Use Section 107 To Recover Their Cleanup Costs From Other Prps Including The Federal Government. United States V. Atlantic Research Corporation.

The Court Rejected The Government’s Argument That This Reading Of Section 107 Would Render Section 113 Superfluous And Allow A PRP To Pay Less Than Its Fair Share By Recovering Costs From Other Prps. The Court Held That Sections 107 And 113 Provide Separate And Distinct Remedies, And That Trial Courts Have Ample Tools To Prevent Excessive Recovery.

Justice Thomas Explained: Section 113(F)(1) Authorizes A Contribution Action To Prps With Common Liability Stemming From An Action Instituted Under Sections 106 Or 107(A). A Right To Contribution Is Defined As "The Tortfeasor's Right To Collect From Others Responsible For The Same Tort After The Tortfeasor Has Paid More Than His Or Her Proportionate Share, The Shares Being Determined As A Percentage Of Fault." Thus A Party's Right To Contribution "Is Contingent Upon An Inequitable Distribution Of Common Liability Among Liable Parties."

Conversely, Under Section 107, A PRP Can Sue For Recovery Of Cleanup Costs That It Has "Incurred," Which The Court Held Does Not Include Costs Paid To Satisfy A Settlement Agreement Or Court Judgment. However, The Court Declined To Decide Whether Compelled (Court-Ordered) Cleanup Costs Would Be Recoverable Under Section 107, Section 113, Or Both. The Court Recognized That The Lines Between The Two Provisions May Be Blurred In Those Circumstances, But Declined To Decide The Issue.

The Court Noted That An Effort By A PRP To Recover Excessive Amounts By Being Under Section 107 Rather Than Section 113 Could Be Avoided Because The Defending PRP May File A Counterclaim For Contribution And Allow The Trial Court To Allocate Costs Between The Parties. The Supreme Court Appears To Have Substantially Removed The Cloud Over The Ability Of A Potentially Liable Party To Obtain Recovery From Other Prps For Voluntarily Assumed Cleanup Costs. The Court’s Decision Makes It Clear That Such A PRP Can File A Cost Recovery Action Pursuant To Section 107 Against Other Prps, Regardless Of The Absence Of An Enforcement Order Or Lawsuit, And Recover Some Or All Of The Cleanup Costs. On The Other Hand, Prps Which Have Entered Into An Enforcement Or Settlement Agreement With EPA May Use Only The Contribution Provisions In Section 113 To Recover Reimbursement From Other Prps. An Action Under That Section Requires The Plaintiff PRP To Demonstrate That It Has Paid More Than Its Fair Share Of Cleanup Costs, So That The Court Can Direct The Equitable Apportionment And Allocation Of Costs Among The Liable Parties.

It Is Important To Be Aware That CERCLA Sections 107 And 113 Provide Different Limitations Periods—Three Years For Contribution Claims; Six Years For Response Cost Claims—That Are Triggered By Different Events. This May Make It Advisable For A Party To Assert Claims Under The Earlier Limitations Date, If It Is Unclear Under The Facts Which Section Should Control.

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