Unanimous Supreme Ct Settles CERCLA Liability Issues

Jun 11: In a relatively brief, 11-page unanimous opinion, the U.S. Supreme Court has decisively settled an important liability issue left open in a previous decision and which has been dealt with by three separate circuits. The case, U.S. v. Atlantic Research Corp. (Docket: 06-0562), appealed by the U.S. from the Eighth Circuit Court of Appeals decision of August 11, 2006 [See WIMS 8/14/06]. Oral arguments were held on April 23, 2007 [See WIMS 4/23/07].

The High Court succinctly summarizes its opinion saying, "Two provisions of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) -- §§107(a) and 113(f) -- allow private parties to recover expenses associated with cleaning up contaminated sites. 42 U. S. C. §§9607(a), 9613(f). In this case, we must decide a question left open in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U. S. 157, 161 (2004): whether §107(a) provides so-called potentially responsible parties (PRPs), 42 U. S. C. §§9607(a)(1)–(4), with a cause of action to recover costs from other PRPs. We hold that it does."

The High Court explains that after SARA’s [Superfund Amendments and Reauthorization Act of 1986] enactment, some Courts of Appeals believed it necessary to “direc[t]traffic between” §107(a) and §113(f). As a result, many Courts of Appeals held that §113(f) was the exclusive remedy for PRPs. But as courts prevented PRPs from suing under§107(a), they expanded §113(f) to allow PRPs to seek “contribution” even in the absence of a suit under §106 or §107(a). Aviall Servs., Inc. v. Cooper Industries, Inc., 312 F. 3d 677, 681 (CA5 2002) (en banc). In Cooper Industries, we held that a private party could seek contribution from other liable parties only after having been sued under §106 or §107(a). 543 U. S., at 161. The High Court said, "This narrower interpretation of §113(f) caused several Courts of Appeals to reconsider whether PRPs have rights under §107(a)(4)(B), an issue we declined to address in Cooper Industries. Id., at 168."

The Eighth Circuit opinion in Atlantic Research Corp agreed with a similar ruling in the Second Circuit decision in Consolidated Edison Co. v. UGI Utilities, Inc., 423 F.3d 90, 100 (2d Cir. 2005]; however, those decisions were in conflict with a decision of the Third Circuit in E. I. Dupont de Nemours & Co. v. United States, 460 F. 3d 515 (CA3 2006).

In brief review of the instant case, the High Court summarizes that Atlantic Research cleaned the site at its own expense and then sought to recover some of its costs by suing the United States under both §107(a) and §113(f). After our decision in Cooper Industries foreclosed relief under §113(f), Atlantic Research amended its complaint to seek relief under §107(a) and federal common law. The United States moved to dismiss, arguing that §107(a) does not allow PRPs (such as Atlantic Research) to recover costs.The District Court granted the motion to dismiss, relying on a case decided prior to our decision in Cooper Industries, Dico, Inc. v. Amoco Oil Co., 340 F. 3d 525 (CA8 2003). The Court of Appeals for the Eighth Circuit reversed.

The Supreme Court says, "The parties’ dispute centers on what 'other person[s]' may sue under §107(a)(4)(B). The Government argues that 'any other person' refers to any person not identified as a PRP in §§107(a)(1)–(4).2 In other words, subparagraph (B) permits suit only by non-PRPs and thus bars Atlantic Research’s claim. Atlantic Research counters that subparagraph (B) takes its cue from subparagraph (A), not the earlier paragraph (1)–(4). In accord with the Court of Appeals, Atlantic Research believes that subparagraph (B) provides a cause of action to anyone except the United States, a State, or an Indian tribe -- the persons listed in subparagraph (A). We agree with Atlantic Research... The Government’s interpretation makes little textual sense."

The Supreme Court summarizes the Government's arguments as follows: the Government maintains that our interpretation, by offering PRPs a choice between §107(a) and §113(f), effectively allows PRPs to circumvent §113(f)’s shorter statute of limitations. Furthermore, the Government argues, PRPs will eschew equitable apportionment under §113(f) in favor of joint and several liability under §107(a). Finally, the Government contends that our interpretation eviscerates the settlement bar set forth in §113(f)(2).

The High Court counters the three Government arguments and explains in some detail why "in the case of reimbursement, the PRP cannot choose the 6-year statute of limitations for cost-recovery actions over the shorter limitations period for §113(f) contribution claims." Likewise, the High Court says, "a PRP could not avoid §113(f)’s equitable distribution of reimbursement costs among PRPs by instead choosing to impose joint and several liability on another PRP in an action under §107(a). The choice of remedies simply does not exist. In any event, a defendant PRP in such a §107(a) suit could blunt any inequitable distribution of costs by filing a §113(f) counter-claim." And, finally the High Court says, "...permitting PRPs to seek recovery under §107(a) will not eviscerate the settlement bar set forth in §113(f)(2). That 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 . ..'”

Washington State Attorney General Rob McKenna hailed the decision as a victory for his State and explained why the decision is important to other states as well. McKenna said, "The Court’s decision ensures that many contaminated sites which might have been unaddressed for a significant time will be cleaned up. In Washington, more than 1,200 sites are listed on the state’s contaminated sites list. Of these, approximately 250 are in the process of being cleaned up by liable parties under the state’s formal oversight. Because the state does not have resources to address every known site in the state, the remaining sites will likely be addressed as voluntary cleanups. This means that a party who has liability for cleaning up the property will undertake the cleanup without any action by the federal or state government. The ability to obtain contribution to the costs of cleanup from other parties who have liability for a contaminated site is one of the key incentives for parties to perform these voluntary cleanups.”

Access the complete opinion (click here). Access the U.S. Supreme Court Docket listing all amici curiae parties for the case (click here). Access a release from the Washington State AG (click here). Access a discussion of the opinion on the SCOTUS Blog (click here). [*Remed]