Sunday, July 7, 2013

CERCLA 107 COST RECOVERY v 113 CONTRIBUTION: Part One: Cost Recovery and Contribution Were Distinct Remedies Prior to SARA

This is the first of a series of blog entries regarding the evolution of CERCLA §107 cost recovery claims and CERCLA §113 contribution claims.  It will show that prior to SARA cost recovery and contribution were distinct legal remedies by discussing the Pre-SARA cases the Supreme Court cited in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157, 161-62 (2004).  The discussion is limited to these cases cited by the Supreme Court because, by citing these decisions, the Supreme Court was foreshadowing where the case law was likely to return.  The overarching argument of this series of blog entries is that cost recovery and contribution were distinct remedies prior to SARA, then the Circuit Courts blurred the distinctions between these two remedies, and now, starting primarily with Cooper Industries, the Supreme Court and other courts have begun restoring those distinctions that existed prior to SARA.   

The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) was passed in 1980, and at the time it was passed it did not explicitly provide a right to contribution. Cooper Industries, 543 U.S. at 162.
Shortly after CERCLA’s passage, the question emerged regarding whether it provided private parties with a right to cost recovery.  This question was answered in the affirmative. Walls v. Waste Resource Corp., 761 F.2d 311, 317-18 (6th Cir., 1985) (finding a private right to cost recovery under CERCLA § 107(a)(4)(B)); City of Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135, 1139-42 (E.D.Pa., 1982) (same); Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 890 (9th Cir., 1986) (same); Cooper Industries, 543 U.S. at 161-62 (citing Walls, City of Philadelphia and Wickland Oil for this proposition); see also, United States v. New Castle County, 642 F.Supp. 1258, 1261-62, 1267-69 (D.Del., 1986) (recognizing a right to cost recovery under CERCLA § 107(a)(4)(B), and, as discussed below, finding a right to contribution).   
The question regarding whether a PRP could pursue cost recovery was also litigated and answered in the affirmative. City of Philadelphia, 544 F.Supp. at 1139-42 (the court held the liability (or potential liability) of the plaintiff did not prevent it from being able to bring a cost recovery action.); see also, Cooper Industries, 543 U.S. at 161-62.  This private right of cost recovery accrued when a person incurred cleanup costs and damages and the relief sought was reimbursement of those costs and damages incurred. See Wickland Oil, 792 F.2d at 888-92; City of Philadelphia, 544 F.Supp. at 1139, 1142-43; Walls, 761 F.2d at 314, 317-18; Cooper Industries, 543 U.S. at 161-62.
Additionally, shortly after CERCLA’s passage, “the separate question” emerged regarding whether a private party that “had been sued in a cost recovery action” could seek contribution.  This question was also answered in the affirmative. Cooper Industries, 543 U.S. at 161-62 (citing Asarco, infra, New Castle, supra, and Wehner, infra, for this proposition); see also, Colorado v. Asarco, Inc., 608 F.Supp. 1484, 1490 (D.Colo., May 13, 1985) (finding a right to contribution as a matter of federal common law after being sued); New Castle, 642 F.Supp. at 1261-62, 1267-69 (same); Wehner v. Syntex Agribusiness, Inc., 616 F.Supp. 27, 31 (E.D.Mo., April 1, 1985) (finding an implied right to contribution under CERCLA § 107(e)(2) after being sued). 
This right to seek contribution arose after being sued.  These contribution claims were a way for the contribution plaintiff—who was also a cost recovery defendant—to have the court determine the equitable amount the contribution defendant(s) should pay only if the contribution plaintiff is “held jointly and severally liable” with the contribution defendant(s) to the cost recovery plaintiff. Asarco, 608 F.Supp. at 1485; see also, Wehner, 616 F.Supp. at 31; New Castle, 642 F.Supp at 1261; Cooper Industries, 543 U.S. at 161-62 (characterizes these decisions as allowing contribution after being sued in a cost recovery action). 
The right to obtain contribution was contingent upon the suit being between parties who shared joint liability. Asarco, 608 F.Supp. at 1492 (“[i]t is settled law that contribution is only available where joint liability can be imposed.”); see also, Wehner, 616 F. Supp. at 31 (The court held, “CERCLA allows contribution among joint tortfeasors…”).  In other words, the right to obtain contribution was contingent upon the harm being indivisible. Asarco, 608 F.Supp. at 1485 n.1 (noting that if the contribution plaintiffs could prove their divisible share of the harm, then they could not obtain contribution); see also, Wehner, 616 F. Supp. at 31 (The court cited legislative history testimony from Representative Al Gore about contribution being available to “nonapportioned” defendants).    
However, a person could seek contribution even if they contended they are not entitled to contribution because the harm is divisible. See Asarco, 608 F.Supp. at 1485 n.1, 1492.  In Asarco, the State of Colorado sued multiple defendants under CERCLA § 107. Id. at 1485.  The defendants contended they were not jointly and severally liable because the harm was divisible. Id. at 1485 n.1.  The defendants sued third-parties for contribution, and the third-party defendants moved to dismiss arguing there was no right to contribution. Id. 1485-86.  The court found that, if the defendants could prove their divisibility defense to the State of Colorado’s CERCLA § 107 claim against them, then they would not have a right to obtain contribution. Id. at 1485 n.1.  However, if the defendants were found jointly and severally liable under CERCLA § 107(a), then defendants would have a right to obtain contribution. Id. at 1492.  Even though the defendants’ contribution claims were contingent upon them being liable for an indivisible harm and they contended the harm was divisible, the court did not dismiss their contribution claims because liability issues had not yet been decided. Id. at 1485 n.1, 1492.  
In short, the pre-SARA state of the law can be boiled down as follows: (1) any person that incurred costs, including PRPs, could seek cost recovery; and (2) any person that had been sued for cost recovery (or sued in an enforcement action) could seek contribution, but obtaining contribution was contingent upon the parties being jointly liable.  Note that were a person incurs costs, has been sued and found liable for those same cost, and can prove another person is jointly liable with it/he/she for those same costs, it appears the cost recovery and contribution remedies overlap.  In other words, it appears that person can recover the costs they incurred in either a cost recovery action or a contribution action.
            THAT’S MY ARGUMENT.
© July 2013 Brandon J. Evans