This post is part of the Environmental Law Review Syndicate, a multi-school online forum run by student editors from the nation’s leading environmental law reviews.
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By Brianna E. Tibett[i]
I. HISTORY AND DEVELOPMENT OF CERCLA’S PRIVATE CAUSES OF ACTION.. 4
- CERCLA’s Enactment. 4
- SARA’s Contribution Action and Contribution Protection. 6
- The Supreme Court’s Cooper Industries Decision. 7
- Supreme Court’s Atlantic Research Decision. 8
II. ISSUES LEFT UNRESOLVED BY THE SUPREME COURT. 11
III. THE MUTUALLY EXCLUSIVE APPROACH ADOPTED BY THE U.S. COURTS OF APPEALS 13
- Availability of §§ 113(f)(1) and 113(f)(3)(B) Contribution Actions Under the Mutually Exclusive Approach 14
- Availability of Cost Recovery Pursuant § 107(a)(4)(B) Under the Mutually Exclusive Approach 18
- The Benefits of the Mutually Exclusive Approach. 21
INTRODUCTION
The purpose of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is to facilitate the “timely cleanup of hazardous waste sites and to ensure that the [cleanup costs are] borne by those responsible for the contamination.”[ii] The proper application of CERCLA’s two private causes of action are necessary to achieve these goals. When applied properly they encourage private parties to voluntarily cleanup hazardous waste sites, effectively spread the cost of cleanup to the responsible parties, and encourage settlement.
For example, when a private potentially responsible party (PRP) voluntarily cleans up a site before any action regarding the site is commenced the PRP eliminates their exposure to uncertain liability, and avails itself of the “arguably preferred recovery vehicle for a PRP,” the cost recovery action. The private cost recovery action, under § 107(a)(4)(B), allows private parties to seek to recover the costs they incurred in voluntarily cleaning up a contaminated site from PRPs (regardless of their contribution to the site’s contamination).[iii] The PRP subject to the § 107(a)(4)(B) cost recovery action, can counterclaim in or bring against multiple other PRPs a § 113(f)(1) contribution action, requiring the equitable apportionment of the response costs.[iv] The remedy and the shorter statute of limitations afforded by contribution actions incentivizes PRPs to immediately locate other PRPs and initiate lawsuits sooner.[v]
The Supreme Court’s framework for the application of these private causes of action created in Atlantic Research[vi] jeopardizes CERCLA’s mechanisms that encourage PRPs to settle with the EPA. The Court’s framework identifies the cause of action that applies exclusively in some circumstances but not all. Specifically, the framework leaves open the availability of both causes of actions in situations in which costs are directly incurred as a result of forced cleanup. Uncertainty around the cause of action that a court will allow in circumstances of compelled cleanup may cause PRPs to stray away from settling with the Environmental Protection Agency (EPA), and thus make it more difficult for the EPA to negotiate cleanup and reimbursement settlements.[vii] Or it could incentivize PRPs to attempt to pass their tab on to another PRP by settling [to cleanup] and then bringing a cost recovery action to recover those cleanup costs. Which if permitted would leave the defendant unable to counter-sue for contribution, because of the plaintiff-PRP’s contribution bar, defeating CERCLA’s goal to have the responsible parties pay for cleanup.[viii]
The United States’ Courts of Appeals, have advanced a mutually exclusive framework that fully clarifies the applicability of and the interplay between the private causes of actions. This Article supports the mutually exclusive approach. First, the Article provides a brief overview of the history and development of the private causes of actions. Second, the Article highlights the issues regarding the applicability of the private causes of actions left unresolved by the Court. Third, the Article demonstrates how the mutually exclusive framework, established by the U.S. courts of appeals, seamlessly resolves those issues and facilitates the advancement of CERCLA’s goals.
I. HISTORY AND DEVELOPMENT OF CERCLA’S PRIVATE CAUSES OF ACTION
Congress’s prime motivation for passing CERCLA was to provide the EPA with the ability to promptly respond to the country’s hazardous waste sites and to place the cost of the response on the responsible parties, the “polluters.”[ix] To that end, Congress furnished the EPA with the means to undertake cleanup itself,[x] sue PRPs for reimbursement,[xi] and the authority to compel PRPs to clean up contaminated sites.[xii] However, Congress recognized that the EPA would not be equipped on its own to address 30,000 to 50,000 improperly managed hazardous waste sites.[xiii] CERCLA would also have to induce private parties to perform cleanup.[xiv] Accordingly, Congress included § 107(a)(4)(B), to enable private parties to recover their costs of cleanup from PRPs.[xv]
Because of CERCLA’s liability scheme, the remedies available to PRPs were in dispute.[xvi] Under § 107(a)(4)(A) the courts have interpreted CERCLA’s liability to apply retroactively, strictly, jointly, and severally.[xvii] Additionally, CERCLA liability extends beyond polluters to also include those who would benefit from cleaned sites, such as current owners and operators.[xviii] Thus, a current owner of contaminated property who did not contribute to the release of hazardous waste, or a past owner who only contributed a small part of the waste, may be a PRP.[xix] PRPs may find themselves subject to a cost recovery action, and if so, ultimately liable for the entire cost of cleanup.
To mitigate these harsh results, some courts held either that § 107(a)(4)(B) or federal common law provided litigants subject to a § 107 cost recovery claim an implied right to contribution.[xx] This allowed PRPs to either counterclaim for contribution or sue other PRPs for contribution.[xxi] A successful contribution action permits the equitable apportionment of costs among PRPs,[xxii] ameliorating the harsh effects of joint and several liability. As a result, more PRPs were required to pay their proportionate share of the cleanup instead of leaving a single PRP liable. Despite these efforts, extensive litigation continued, necessitating a CERCLA amendment.[xxiii]
B. SARA’s Contribution Action and Contribution Protection
Congress passed the Superfund Amendments and Reauthorization Act (SARA) in 1986 to address: (1) the EPA’s inability to timely recover response costs; (2) the threat that the courts would erode joint and several liability into a “fair share” allocation; and (3) the effectiveness of contribution actions in spreading the cost of cleanup to responsible parties.[xxiv] SARA created an express cause of action for contribution and incorporated statutes of limitations.[xxv] The right to contribution, codified in § 113(f)(1),[xxvi] allows a PRP, “during or following” a § 106 (compelled clean-up) or § 107 civil action, to seek contribution payments from another PRP that has not resolved its liability.[xxvii] The “settlement bar” created by SARA in § 113(f)(2), provides parties who have reached an “administrative or judicially approved settlement” with “contribution protection”—immunity from contribution claims that concern matters within the agreement.[xxviii]
The new provisions, although preserving contribution, did not fully resolve existing issues and indeed generated new ones. For example, SARA did not answer whether an implied right to contribution still remains when contribution pursuant to § 113(f) is unavailable—i.e., whether PRPs may pursue contribution only through § 113(f).[xxix] Many United States Courts of Appeals, while attempting to navigate § 107(a) and § 113(f) claims, have held that a claim for contribution under § 113(f) was the exclusive remedy for PRPs.[xxx] By preventing PRPs from pursuing an action under § 107(a), § 113(f) served as PRPs’ sole avenue to seek contribution.[xxxi] Still, some courts expanded § 113(f)’s provisions to allow recovery actions even in the absence of a suit under § 106 or § 107.[xxxii]
C. The Supreme Court’s Cooper Industries Decision
In Cooper Industries, Inc. v. Aviall Services, Inc. the Court addressed the expanded application of § 113(f)(1) and ultimately limited its availability to PRPs “during or following” a § 106 or § 107 civil action.[xxxiii] The Court held that current property owners who voluntarily cleaned up the contaminated site could not maintain a contribution action under § 113(f)(1) because the claim did not arise out of a § 106 or § 107 civil action.[xxxiv] First, the Court held that “may” in § 113(f)(1) should not be read as permissive; it should be read to only authorize § 113(f)(1) contribution claims “during or following” § 106 or § 107 civil actions.[xxxv] The Court stated that reading “may” to allow a PRP to bring a “contribution action at any time, regardless of the existence of a . . . civil action,” would render the language “during or following” superfluous, along with § 113(f)(3)(B), which permits contribution actions after settlement.[xxxvi] Second, the Court found that § 113(f)(1)’s saving clause, does not change its reading.[xxxvii] The Court specified that the saving clause functions only to prevent the loss of “any cause(s) of action for contribution that may exist independently of § 113(f)(1).”[xxxviii] Therefore, it does not expand the scope of § 113(f)(1) or create a cause of action, it only “rebuts any presumption that the express right of contribution provided by . . . [§ 113(f)(1)] is the exclusive cause of action for contribution available to a PRP.”[xxxix]
Following this application of § 113(f)(1), several Courts of Appeals reconsidered whether PRPs have any right of action under § 107(a)(4)(B).[xl] After revisiting this issue, some courts permitted private cost recovery actions under § 107(a)(4)(B).[xli] However, the Third Circuit continued to hold § 113(f) as the exclusive cause of action available for PRPs.[xlii] Accordingly, the Third Circuit in E.I. DuPont De Nemours and Co. v. U.S. held that there was no cause of action for PRPs who engaged in “sua sponte voluntary cleanups,”[xliii] effectively disincentivizing voluntary cleanup.
D. Supreme Court’s Atlantic Research Decision
The Court again revisited the scope of CERCLA’s private causes of action. In United States v. Atlantic Research Corp., the Court: (1) held that PRPs have a right to cost recovery under § 107(a)(4)(B);[xliv] (2) clarified that §§ 107(a) and 113(f) provide distinct remedies; and (3) provided a framework for the application of §§ 107(a)(4)(B) and 113(f)(1) actions.[xlv] The Court made the inference that Congress sculpted § 113(f)(1) based on the traditional sense of contribution, which is contingent “upon an inequitable distribution of common liability among liable parties.”[xlvi] However, because the statute authorizes PRPs to seek contribution “during or following” a civil action, liability does not need to be established before bringing a contribution action under § 113(f)(1).[xlvii]
The Court held that PRPs may utilize a cost recovery action, pursuant to § 107(a)(4)(B), only to recover costs the PRP “‘incurred’ in cleaning up a site.”[xlviii] For instance, when a PRP reimburses another party, the PRP has not incurred its own cleanup costs and thus cannot recover them under § 107(a)(4)(B).[xlix] Additionally, the Court held that § 107(a)(4)(B) is the sole cause of action to recover costs incurred during voluntary cleanup.[l] With these distinctions made, the Court states that the remedies available in §§ 107(a) and 113(f) “provid[e] causes of action ‘to persons in different procedural circumstances,’” and as a result they do not cause conflict, or provide an opportunity for a PRP to choose its remedy.[li]
To summarize, § 113(f) authorizes a right to contribution “to PRPs with common liability stemming from an action instituted under § 106 or § 107(a).”[lii] Respectively, after a PRP pays money pursuant to a settlement agreement or a court judgment, in which they are reimbursing those parties they may, and may only, pursue § 113(f) for contribution.[liii] On the contrary, “§ 107(a) permits cost recovery . . . by a private party that has itself incurred cleanup costs.”[liv] As a result, in cases of reimbursement, a PRP cannot circumvent § 113(f)(1)’s three-year statute of limitations by attempting to bring an action in cost recovery, which has a six-year limitation.[lv]
Lastly, the Court claims PRPs that utilize § 107(a) “will not eviscerate the settlement bar set forth in § 113(f)(2).”[lvi] The settlement bar provision “prohibits § 113(f) contribution claims against ‘[a] person who has resolved its liability to the United States or a State in an administrative or judicially approved settlement.’”[lvii] The Court explains that although the contribution bar “does not by its terms protect against cost-recovery liability,” the defendant can trigger equitable apportionment by filing a § 113(f) counterclaim.[lviii] In footnote 6, the Court states that in cases of reimbursement and voluntary cleanup, §§ 107(a)(4)(B) and 113(f) have no overlap, but there may be overlap when a PRP incurs expenses pursuant a consent decree.[lix] In cases of “compelled costs” a PRP does not incur costs voluntarily (which would have the effect of precluding a § 113(f)(1) contribution action) but also does not reimburse the costs of another party (which would have the effect of precluding § 107(a)(4)(B) cost recovery action).[lx] The Court did not address whether these compelled costs of response are recoverable under § 107(a) or § 113(f).
II. ISSUES LEFT UNRESOLVED BY THE SUPREME COURT
Although the framework provided by the Court’s Cooper Industries and Atlantic Research decisions reinstate PRP’s ability to utilize § 107(a)(4)(B) for cost recovery and § 113(f) for contribution, the decisions do not clarify the complete applicability and interplay of the private causes of action. The Court’s framework for CERCLA’s private actions is limited to the following: (1) PRPs who pay money to satisfy a settlement agreement or a court judgment—incur costs in the form of reimbursement—may only pursue § 113(f) contribution actions; and (2) PRPs who have incurred cleanup costs directly—not reimbursement costs—may only seek to recover those response costs from other PRPs pursuant to § 107(a)(4)(B). Thus, in those limited “procedural circumstances,” §§ 107(a)(4)(B) and 113(f) are mutually exclusive.[lxi]
This limited framework leaves unresolved the cause of action or actions available to private parties in other situations, specifically when PRPs incur costs directly.[lxii] The following issues, which were unresolved by the Court’s framework, have not only spurred considerable litigation, but have also caused apprehension to settling claims:
- Whether settling-PRPs may sue other PRPs for cost recovery pursuant 107(a)(4)(B) to recover cleanup costs that were incurred voluntarily, i.e., costs incurred independent of the administrative or judicially approved settlement.
- What causes of action do settling-PRPs that incur costs directly in order to comply with settlement obligations have when such settlement does not satisfy the requirements set forth in 113(f)(3)(B).
- What cause of action is available to PRPs who directly incur cleanup costs under an obligation in an “administrative or judicially approved settlement?” May they bring an action in cost recovery pursuant § 107(a)(4)(B) and as a result: (1) circumvent the contribution bar which prevents them from bringing an action in contribution against the other PRPs in their settlement agreement; and (2) render both non-settling PRPs and settling-PRPs unable to counterclaim in contribution because the plaintiff-PRP can utilize the contribution bar.
- Whether a PRP that settled with a state entity has a cause of action under CERCLA.
- Whether a private entity that finances a cleanup pursuant to a private agreement has a cause of action under CERCLA to recover costs.
- If the statute of limitations for a PRP’s contribution claim runs out—and a PRP can no longer pursue its right to contribution—may the PRP pursue cost recovery pursuant § 107(a)(4)(B) when it had incurred cleanup costs as a result of its obligations flowing from an “administrative or judicially approved settlement.”
Strictly adhering to the Court’s framework to resolve these issues would permit either a § 107(a)(4)(B) or § 113(f) action in all the above circumstances. Allowing settling-PRP’s to choose which cause of action they can utilize could cause any PRP, regardless their responsibility of contamination, to be stuck with the entire or a significant portion of the cleanup costs while other PRPs skirt liability.[lxiii] For example, under the Court’s framework, settling-PRPs could pursue cost recovery actions under § 107(a)(4)(B) for costs incurred directly from cleanup required in order to satisfy the “administrative or judicially approved settlement.” As a result, defendant PRPs subject to § 107(a)(4)(B) causes of action brought by a settling-PRP, can be subject to joint and several liability without the ability to counterclaim for contribution pursuant § 113(f)(1) because of the plaintiff-PRP’s contribution bar under § 113(f)(2). This application would not advance Congress’s intent of CERCLA being a “polluter pays” statute, where the responsible parties bear the financial responsibility of the cleanup. To the contrary, under this framework CERCLA functions more like a game of Uno.[lxiv]
III. THE MUTUALLY EXCLUSIVE APPROACH ADOPTED BY THE U.S. COURTS OF APPEALS
Litigation over the unresolved issues has ensued in the lower federal courts since the Court’s holding in Atlantic Research.[lxv] The United States’ Courts of Appeals that have heard the issues, collectively hold that the causes of actions available to private parties apply mutually exclusively.[lxvi] This framework provides a seamless application of the private causes of action in all circumstances, including those that were left unresolved by the Court.
When a private party incurs costs directly, the mutually exclusive approach resolves the issue of what proper cause of action the PRP is authorized to utilize. The lower courts agree that once it is determined that either a § 113(f)(1) or § 113(f)(3)(B) contribution action is available for the costs sought, the PRP must pursue an action for contribution, and is barred from pursuing a § 107(a)(4)(B) cost recovery action.[lxvii] If, however, contribution is not available to recover the costs sought, the private party may pursue a § 107(a)(4)(B) cost recovery action to recover its response costs.[lxviii] The mutual exclusive approach provides a framework for determining the causes of action for each of the unresolved issues mentioned above, while simultaneously advancing CERCLA’s goals.
A. Availability of §§ 113(f)(1) and 113(f)(3)(B) Contribution Actions Under the Mutually Exclusive Approach
All contribution claims under § 113(f) are contingent upon “an inequitable distribution of common liability among” PRPs at the time the underlying claim is resolved.[lxix] Following the Court’s rulings in Cooper Industries and Atlantic Research, PRPs subject to a civil action under either § 106 or § 107 may only seek contribution. The unresolved issues following the Court decisions thus lie within the application of § 113(f)(3)(B).
Section 113(f)(3)(B) provides that contribution claims are available to entities who have resolved their “liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement[.]” Following the language of § 113(f)(3)(B), the agreements that trigger contribution claims must be “administrative or judicially approved settlement[s].”[lxx] A judicially approved settlement can take the form of a consent decree, which results from a court’s approval of a settlement that is “fair, reasonable, and consistent with CERCLA’s goals.”[lxxi] The “defining feature of an ‘administrative settlement’ is” the resolution of a “PRP’s liability to the United States . . . for some or all of a response action or for some or all of the costs of such action.”[lxxii]
For an administrative settlement to trigger the application of § 113(f)(3)(B), the federal government must have followed the procedures set forth in § 122(i).[lxxiii] Although § 112(i) procedural requirements apply only to the federal government, several courts have held that in light of due process concerns, CERCLA administrative settlements entered into with a state entity require hearings or public comments, as required for federal entities in § 112(i).[lxxiv] Thus, a state administrative settlement should provide non-settling parties with notice and an opportunity to be heard.[lxxv] If procedural safeguards similar to those set forth in § 122(i) are not followed, a settlement cannot constitute an “administrative settlement” that triggers § 113(f)(3)(B).[lxxvi] Those PRPs will neither have an action in contribution, nor will they be afforded contribution protection.[lxxvii]
Congress provided contribution protection to those parties entering into settlements to further incentivize settling, as well as to support the “polluters pay” philosophy.[lxxviii] Section 113(f)(2) bars contribution claims against entities that have resolved their liability to the United States or a state in an “administrative or judicially approved settlement” if the costs arise from matters addressed in the settlement.[lxxix] The party claiming contribution protection, whether defendant or plaintiff, must demonstrate that it is afforded such protection. Contribution protection will not be afforded to parties that cannot demonstrate the resolution of their CERCLA liability.[lxxx] In other words, PRPs must demonstrate that they have been subject to “an administrative or judicially approved settlement.”[lxxxi]
For example, the Pennsylvania Middle District Court held that the agreement between the Pennsylvania Department of Environmental Protection and United States did not constitute an administrative settlement because it was devoid of any procedures designed to safeguard due process concerns.[lxxxii] As a result, the court permitted the plaintiff to pursue a contribution claim against the federal government because the federal government was not afforded contribution protection[lxxxiii].
When adhering to the mutually exclusive approach, if the requirements to satisfy an “administrative or judicially approved settlement” are not met by the agreement that causes the PRP to incur cleanup costs directly, that party may pursue a cost recovery action to recover those costs, because it does not have an action for contribution. On the other hand, “a party who may bring a contribution action for certain expenses must use the contribution action, even if a cost recovery action would otherwise be available.”[lxxxiv]
Parties cannot circumvent the mutually exclusive approach by waiting for their contribution action to run so they can employ an action for cost recovery. When a party could have brought a § 113(f) contribution claim, but failed to do so in a timely manner (three years had passed since the party had the availability of an action under § 113(f)) the party cannot evade the statute of limitations and the allocation scheme of a § 113(f) contribution claim by bringing a § 107(a) cost recovery action.[lxxxv]
Moreover, the mutually exclusive approach permits a PRP that has incurred costs as a result of both a civil action or settlement agreement and voluntary cleanup at a single site to pursue both cost recovery and contribution actions without compromising CERCLA’s liability structure. Under the mutually exclusive approach, when any of the statutory triggers for a contribution claim occurs for certain expenses the party may only bring a § 113(f) contribution action for those expenses.[lxxxvi] But, the same party may also bring a § 107(a)(4)(B) action to recover expenses that fall outside of the contribution action.[lxxxvii] “[A] party’s right to contribution for some of its expenses at a site does not necessarily mean that the party loses its right to bring a cost recovery action for other expenses.”[lxxxviii] Thus, costs incurred from work performed outside the obligations of an “administrative or judicial settlement” are recoverable under § 107(a)(4)(B).
B. Availability of Cost Recovery Pursuant § 107(a)(4)(B) Under the Mutually Exclusive Approach
Following the Court decision in Atlantic Research, private parties may bring a cost recovery action against other PRPs to recover costs directly incurred from engaging in cleanup pursuant to § 107(a)(4)(B).[lxxxix] This distinction does not resolve the issue of what cause of action is applicable when PRPs are obligated to incur cleanup costs pursuant to a civil action, an “administrative or judicially approved agreement,” or a private agreement. In all of these circumstances, a PRP does not reimburse another entity, but rather incurs costs directly.
The Third Circuit Court in Agere Systems applied the mutually exclusive approach to determine which, if any, private cause of action is available to a private entity that is obligated under a private settlement agreement to fund a response action. The Third Circuit held that in such circumstances the private party may recover their costs with a § 107(a)(4)(B) cost recovery action.[xc] In Agere, the plaintiffs that had been subject to EPA § 107(a) civil actions were required to comply with consent decrees by doing work such as cleanup at the contaminated facilities.[xci] The two plaintiffs not subject to the consent decree (Agere and TI)[xcii] joined a private settlement agreement with the plaintiffs subject to the consent decree.[xciii] The private settlement agreement required Agere and TI to fund the other plaintiffs’ two consent decrees.[xciv] Agere and TI then brought a cost recovery action under § 107(a)(4)(B) against other PRPs.[xcv] The Third Circuit Court held that the Agere and TI were permitted to bring a cost recovery action pursuant § 107(a)(4)(B).[xcvi]
The Third Circuit explains that this holding is in-line with the Court’s decision in Atlantic Research. First, Agere and TI “incurred” costs in the ordinary sense since they were paying for ongoing work.[xcvii] Second, when the Court made the statement that payments made pursuant to a settlement agreement are not recoverable with a § 107(a)(4)(B) cost recovery claim, those parties had § 113(f) contribution claims for their settlement amounts.[xcviii] In contrast, the two Agere plaintiffs did not have such contribution claims, and as a result they would not have an avenue to recover those amounts under CERCLA if they were not permitted to utilize § 107(a)(4)(B).[xcix]
The Third Circuit goes on to explain that Congress could not have intended such an outcome because CERCLA’s goal is “to encourage private parties to assume the financial responsibility of cleanup by allowing them to seek recovery from others.”[c] CERCLA should not be read to discourage private entities’ participation in cleanup in situations where they have not yet been sued, but are aware that they may bear some responsibility for cleaning up hazardous waste.[ci] The Third Circuit correctly explained that private entities would be less likely to settle if it is uncertain whether they can seek to recover some of the amounts they will contribute.[cii] If they cannot recover costs for participating in cleanup, then they will wait for a party to file a civil action against them to ensure they can sue for contribution against other PRPs.[ciii]
Most courts have drawn this line, holding “that costs may be recovered under § 107(a)[(4)(B)] notwithstanding that they may have been ‘compelled’ under an administrative order or settlement with the government where that order or settlement does not give rise to contribution rights under § 113(f)(3)(B).”[civ] But if a PRP meets one of the requirements for suit under 113(f)(1) or (3)(B), it must proceed under that § 113 subsection.[cv]
C. The Benefits of the Mutually Exclusive Approach
This mutually exclusive framework advances CERCLA’s goals by bringing all of the responsible parties to the settlement table, therefore ensuring responsible parties pay their fair share of the cleanup.[cvi] This framework promotes the private causes of actions that Congress contemplated when it enacted SARA.[cvii] It does not allow a settling party to circumvent the contribution bar by bringing a § 107(a)(4)(B) action against another settling party for compelled costs pursuant to its settlement agreement. Moreover, the mutually exclusive framework does not allow a settling party to wait until its contribution claim is no longer ripe once the statute of limitations has run.
Although settling parties may be subject to § 107(a)(4)(B) cost recovery actions as a result of the mutually exclusive approach, settlements in most situations do not “‘resolve liability’ for response actions not yet completed or costs of responses not yet incurred.”[cviii] Thus, a cost recovery action that is permitted under the mutually exclusive approach against a PRP that has already settled or been subject to a civil action is for cleanup that the party did not yet resolve its liability for, and they may counterclaim for contribution under § 113(f)(1). Furthermore, settling PRPs may be subject to claims of contribution for settlements to which it was not a party. The idea is that by the end of response actions, each phase will have a settlement with possibly different PRPs. Through the exhaustion of contribution actions, each PRP will ultimately be responsible for their fair share, and thus fully reimbursing the entities cleaning up the contamination.
However, if instead of settling, a PRP decides to wait and see whether the United States, the State, or another entity brings an action against them, they risk the possibility of being subject to a recovery action for all costs incurred from a facility. As a result, they will bear the costs of: (1) the initial litigation; (2) the substantial judgment amount; and (3) the burden of seeking out other PRPs and bringing claims in contribution, until they are relieved of the inequitable dispersion of costs. This is the original intent of CERCLA.
CERCLA’s purpose is to facilitate the prompt cleanup of contaminated sites that pose a risk to health and welfare of the country. CERCLA’s success and integrity hinges on PRPs’ cooperation in voluntarily cleaning up sites, reimbursing the EPA for response costs, and sorting out amongst themselves the equitable allocation of the costs based on their responsibility. The mutually exclusive framework created by the United States’ Courts of Appeals encourages that cooperation. It maintains the liability structure that Congress contemplated when it adopted SARA, and ensures that the responsible parties at some point throughout a site’s cleanup will be allocated their share of the costs. In conclusion, circuits that have not yet heard these issues should adopt the mutually exclusive approach to maintain CERCLA through consistency and reliability.
[i] J.D. Candidate, 2018, Vermont Law School; Administrative Editor, Vermont Journal of Environmental Law.
[ii] Burlington N. & Santa Fe Ry. Co v. United States, 556 U.S. 599, 602.
[iii] 42 U.S.C. § 9607(a)(4)(B) (2012). Cost recovery is seen as the preferable cause of action because it has a longer statute of limitation and it provides the “opportunity for joint and several recovery.” Whittaker Corp. v. United States, 825 F.3d 1002, 1007 n.4 (9th Cir. 2016).
[iv] The contribution actions, under §§ 113(f)(1) and 113(f)(3)(B), allow parties to recover from other PRPs some of the costs they paid either pursuant to a CERCLA civil action or to “an administrative or judicially approved settlement” through equitable apportionment. 42 U.S.C. §§ 9613(f)(1), (3)(B).
[v] 42 U.S.C. § 9613(g)(3) (contribution actions are subject to a three year statute of limitations); Whittaker Corp. v. United States, 825 F.3d 1002, 1013 (9th Cir. 2016).
[vi] United States v. Atl. Research Corp., 551 U.S. 140, 140 – 41 (2007).
[vii] Martha L. Judy & Katherine N. Probst, Superfund at 30, 11 Vt. J. Envtl. L. 191, 244–46 (2009) (explaining that after Atlantic Research Corp., the contribution-protection provision—provided to private entities in settlement agreements with the United States or States and to parties that have been subject to enforcement actions—have been called into question because uncertain whether private party cost recovery claims may be able to circumvent the contribution bar, dis-incentivizing settlements).
[viii] Luis Inaraja Vera, Compelled Costs Under CERCLA: Incompatible Remedies, Joint and Several Liability, and Tort Law, 17 Vt. J. Envtl. L. 394, 415–16 (2016).
[ix] Elizabeth F. Mason, Comment, Contribution, Contribution Protection, and Nonsettlor Liability Under CERCLA: Following Laskin’s Lead, 19 B.C. Envtl. Aff. L. Rev. 73, 74–75 (1991).
[x] 42 U.S.C. § 9604(a).
[xi] Id. § 9607(a).
[xii] Id. § 9606(a).
[xiii] Peter L. Gray, The Superfund Manual: A Practitioner’s Guide to CERCLA Litigation 255 (2016); Judy & Probst, supra note 7, at 193 (citing H.R. Rep. No. 1016, 96th Cong., 2d Sess., pt. 1, at 18 (1980), reprinted in 1980 U.S.C.C.A.N. (94 Stat.) 6119).
[xiv] United States v. Chem-Dyne Corp., 572 F. Supp. 802, 805 (S.D. Ohio 1983) (citing 1980 U.S.C.C.A.N. (94 Stat.) 6119, 6119–20).
[xv] Gray, supra note 13, at 255; Judy & Probst, supra note 7, at 225.
[xvi] Gray, supra note 13, at 256.
[xvii] See Id. at 85 n.1, 86 n.2, 88 n.10 (listing the cases establishing CERCLA’s liability scheme).
[xviii] Judy & Probst, supra note 7, at 214; Luis Inaraja Vera, Compelled Costs Under CERCLA: Incompatible Remedies, Joint and Several Liability, and Tort Law, 17 Vt. J. Envtl. L. 394, 396 (2016); see also 42 U.S.C. § 9607(a) (providing the scope of those persons that may be held liable under CERCLA).
[xix] Vera, supra note 18, at 397.
[xx] United States v. Atl. Research Corp., 551 U.S. 128, 141 (2007); see Gray, supra note 11, at 257 n.3 (citing cases that found an implied right for contribution pursuant § 107(a) and federal law).
[xxi] The court in United States v. New Castle County, 642 F. Supp. 1258, 1262 (D. Del 1986) questioned whether CERCLA provided contribution rights and found a right to contribution under federal common law…In Wehner v. Syntex Agribusiness, Inc., 616 F. Supp. 27, 31 (E.D. Mo. 1985) the court that § 107(e)(2) implied a right of contribution. Look to Cooper Industries, 161-162, 125 S.Ct. 577 for a listing of these cases (if needed); Key Tronic Corp. v. United States, 511 U.S. 908, 816, also has listings of such cases.
[xxii] United States v. Atl. Research Corp., 551 U.S. 128, 140 (2007).
[xxiii] Judy & Probst, supra note 5, at 214; Vera, supra note 16, at 396.
[xxiv] Richard H. Mays, Settlements with SARA: A Comprehensive Review of Settlement Procedures Under the Superfund Amendments and Reauthorization Act, 17 ELR 10101, 10102 (1987).
[xxv] Id. at 10102.
[xxvi] 42 U.S.C. § 9613(f)(1) (2012) (emphasis added) (“Any person may seek contribution from any other person who is liable or potentially liable under [§ 107(a)] of this title, during or following any civil action under [§ 106] of this title or under [§ 107] of this title.”).
[xxvii] Mays, supra note 22, at 10102.
[xxviii] Vera, supra note 16, at 398.
[xxix] Gray, supra note 13, at 257.
[xxx] United States v. Atl. Research Corp., 551 U.S. 128, 131 (2007).
[xxxi] Id. at 132.
[xxxii] Id. at 133.
[xxxiii] Cooper Industries, Inc. v. Aviall Servs., Inc., 543 U.S. 157, 167–68 (2004).
[xxxiv] Id.
[xxxv] Id. at 166.
[xxxvi] Id.
[xxxvii] Id. at 166–67.
[xxxviii] Id. at 166.
[xxxix] Id. at 166–67.
[xl] United States v. Atl. Research Corp., 551 U.S. 128, 133 (2007).
[xli] Id.; see, e.g., Metro. Water Reclamation Dist. v. N. American Galvanizing & Coatings, Inc., 473 F.3d 824, 835 (7th Cir. 2007) (“Nothing in subsection [§ 107(a)(4)](B) indicates that a potentially liable party . . . should not be considered ‘any other person’ for purposes of a right of action.”).
[xlii] Atl. Research Corp, 551 U.S. at 133 (citations omitted).
[xliii] E.I. DuPont de Demours & Co. v. United States, 460 F.3d 515, 543 (3d Cir. 2006), vacated, 551 U.S. 1129 (2007).
[xliv] Atl. Research Corp., 551 U.S. at 135–37.
[xlv] Id. at 138–41.
[xlvi] Id. at 138–39 ( “[A] ‘tortfeasor’s’ right to collect from others responsible for the same tort after the tortfeasor has paid more than his or her proportionate share.”).
[xlvii] Id.
[xlviii] Id. at 139.
[xlix] Id.
[l] See id. (explaining § 107, as opposed to § 113, must be used for party who incurs cleanup costs).
[li] Id.
[lii] Id.
[liii] Id.
[liv] Id.
[lv] Id.
[lvi] Id. at 140.
[lvii] Id. (citation omitted).
[lviii] Id. at 140–41.
[lix] Id. at 139 n.6.
[lx] Id.
[lxi] See id. at 138–41 (describing the distinct differences between § 107 and § 113).
[lxii] Jeffrey M. Gaba, The Private Causes of Action Under CERCLA: Navigating the Intersection of Section 107(a) and 113(f), 5 Mich. J. Envtl. & Admin. L. 117, 141 (2015); Gray, supra note 13, at 258 (2016).
[lxiii] Alfred R. Light, Avoiding the Contribution “Catch-22”: CERCLA Administrative Orders for Cleanup Are Civil Actions, 46 ELR 10791, 10791–92 (2016).
[lxiv] An American card game where the aim of the game is to discard all of your cards to get out of the game first, the last one holding a deck of cards is the loser.
[lxv] Gaba, supra note 62, at 142.
[lxvi] Id.
[lxvii] See Diamond X. Ranch LLC v. Atl. Richfield Co., 2016 U.S. Dist. LEXIS 114799, 12 (2016) ( “[A] party who may bring a contribution action for certain expenses must use the contribution action, even if a cost recovery action would otherwise be available.”) (quoting Whittaker Corp. v. United States, 825 F.3d 1002, 1007 (9th Cir. 2016)); see also Niagara Mohawk Power Corp. v. Chevron U.S.A., 596 F.3d 112, 118 (2d Cir. 2010); Hobart Corp. v. Waste Mgmt. of Ohio, Inc., 758 F.3d 757, 767 (6th Cir. 2014); Bernstein v. Bankert, 733 F.3d 190, 206 (7th Cir. 2013); Solutia, Inc. v. McWane, Inc., 726 F.Supp. 2d. 1316, 1342 (N.D. Ala. 2010); Morrison Enters., LLC v. Dravo Corp., 638 F.2d 594, 603 (8th Cir. 2011); Agere Sys. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir. 2010).
[lxviii] See discussion infra Section III.B.
[lxix] Atl. Research Corp., 551 U.S. at 139; Agere Sys. v. Advanced Envtl., Tech. Corp., 602 F.3d 204, 220 (3d Cir. 2010); see Solutia, Inc. v. McWane, Inc., 726 F. Supp. 2d 1316, 1336 (N.D. Ala. 2010) (quoting Atlantic Research, 551 U.S. at 139.).
[lxx] 42 U.S.C. § 9613(f)(2).
[lxxi] Pa. Dep’t of Envtl. Prot. v. Lockheed Martin Corp., 2015 U.S. Dist. LEXIS 10814 at *15–16 (2015) (citing United States v. Cannons Eng’g Corp., 899 F.2d 79, 85 (1st Cir. 1990)).
[lxxii] Fla. Power Corp. v. First Energy Corp., 810 F.3d 996, 1001(6th Cir. 2015) (alterations omitted) (citing Hobart v. Waste Mgmt. of Ohio, Inc., 758 F.3d 757, 768 (6th Cir. 2014)).
[lxxiii] 42 U.S.C. § 9612(i) (2012); Lockheed Martin Corp., 2015 LEXIS 10814 at *16.
[lxxiv] See Lockheed Martin Corp., 2015 LEXIS 10814 at *17 (holding that the agreement was neither an administrative settlement nor judicially approved settlement because the agreement was made without following administrative procedures and no impartial arbiter determined whether the settlement amount was fair and reasonable); see CPC Int’l v. Aerojet-Gen. Corp., 759 F. Supp. 1269, 1283 (W.D. Mich. 1991) (stating that an “administrative or judicially approved” settlement must include hearings and public comment).
[lxxv] Lockheed Martin Corp., 2015 LEXIS 10814 at *16.
[lxxvi]Id. at *18 (2015).
[lxxvii]Id.
[lxxviii] Id. at *15; Gray, supra note 13, 175 (2016).
[lxxix] Lockheed Martin Corp., 2015 LEXIS 10814 at *14; U.S. v. Aerojet General Corp., 606 F.3d 1142, 1149 (9th Cir. 2010); Gray, supra note 11, 175 (2016) (This benefit is limited as it only applies to “matters addressed in the settlement.”); see also 42 U.S.C. § 9613(f)(2) (2012).
[lxxx] Lockheed Martin Corp., 2015 LEXIS 10814 at *15.
[lxxxi] Id.
[lxxxii] Id. at *18 (2015).
[lxxxiii] Id. at *29 (2015).
[lxxxiv] See Diamond X. Ranch LLC v. Atl. Richfield Co., 2016 U.S. Dist. LEXIS 114799, at *12 (2016) (quoting Whittaker Corp. v. United States, 825 F.3d 1002 (9th Cir. June 13, 2016)); Niagara Mohawk Power Corp. v. Chevron U.S.A., 5966 F.3d 112, 112 (2d Cir. 2010); Hobart Corp. v. Waste Mgmt. of Ohio, Inc., 758 F.3d 757, 767 (6th Cir. 2014); Bernstein v. Bankert, 733 F.3d 190, 206 (7th Cir. 2013); Solutia, Inc. v. McWane, Inc., 726 F. Supp. 2d 1316, 1342 (N.D. Ala. 2010); Morrison Enters., LLC v. Dravo Corp., 638 F.2d 594, 603 (8th Cir. 2011); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir. 2010).
[lxxxv] ITT Indus. v. BorgWarner, Inc., 615 F.Supp.2d 640, 646–48 (W.D. Mich. 2009).
[lxxxvi] See Whittaker Corp. v. United States., 825 F.3d 1002, 1011 (9th Cir. 2016)(holding that the plaintiff could only bring a contribution action for expenses it was found liable for in a prior action).
[lxxxvii] See Whittaker Corp., 825 F.3d at 1009 (9th Cir. 2016) (holding that plaintiffs could recover costs with a cost recovery action for expenses separate from those which the plaintiff was found liable for in a prior action); Bernstein v. Bankert, 733 F.3d 190, 202–03 (7th Cir. 2012) (holding that plaintiffs could bring cost recovery action for expenses separate from those for which the plaintiffs had a right of contribution); NCR Corp. v. George A. Whiting Paper Co., 768 682, 690–92 (7th Cir. 2014) (holding that the plaintiff was required to bring all claims in contribution because each set of expenses was covered by an order triggering the right to contribution); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602, F.3d 204, 225 (3d Cir. 2010) (holding that a party who had been sued in a § 107(a) cost recovery action could bring a cost recovery action for expenses separate from the liability established by the prior suit, because § 113(f) had not been triggered for those separate costs and a contribution action was therefore unavailable for those costs it seeks).
[lxxxviii] Whittaker Corp. v. United States, 825 F.3d 1002, 1011 (9th Cir. 2016).
[lxxxix] See discussion supra Section III.
[xc] Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602, F.3d 204, 225 (3d Cir. 2010).
[xci] Id. at 21l.
[xcii] Id. at 225–26
[xciii] Id. at 212.
[xciv] Id.
[xcv] Id. at 225.
[xcvi] Id.
[xcvii] Id.
[xcviii] Id.
[xcix] Id.
[c] Id. at 226 (3d. Cir. 2010) (citing Key Tronic Corp. v. United States, 511 U.S. 809, 819 n.13 (1994)).
[ci] Id.
[cii] Id.
[ciii] Id. (citations omitted).
[civ] See Solutia, Inc. v. McWane, Inc., 726 F.Supp. 2d 1316, 1341 (N.D.A.L., 2010) (citing W.R. Grace & Co.Conn. v. Zotos Int’l, Inc., 559 F.3d 85, 90–91 (2d Cir. 2009) (holding that the plaintiff could bering § 107(a) claim based upon cleanup costs incurred pursuant to administrative settlement with state environmental agency that did not give rise to contribution rights under § 113(f)(3)(B), because agreement did not settle liability under CERCLA).
[cv] PCS Nitrogen, Inc., v. Ross Dev. Corp. 104 F. Supp. 3d 729, 740 (D.S.C. 2015); Niagara Mohawk Power Corp. v. Chevron, (2d Cir. 2010); Hobart Corp. v. Waste Mgmt. of Ohio, Inc., 758 F.3d 757, 766 (6th Cir. 2014).
[cvi] A Bill to Extend and Amend the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and for Other Purposes: Hearings Before the Senate Committee on the Judiciary on S. 51, 99th Cong. 1, 52 (1985).
[cvii] See discussion supra Section I.B..
[cviii] Light, supra note 63, at 10791–800.