This
is the second of a series of blog entries regarding the evolution of CERCLA
§107 cost recovery claims and CERCLA §113 contribution claims. It will show how circuit courts blurred
the distinctions between cost recovery and contribution after SARA was
enacted. These distinctions were
discussed in my first blog entry to this series, which discussed the pre
SARA decisions cited in Cooper
Industries, Inc. v. Aviall Services, Inc.,
543 U.S. 157, 161-62
(2004). 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. Prior to SARA, both a private right to cost recovery and a
private right to contribution emerged through case law as distinct legal
remedies. Id. at 161-62. In 1986, Congress Amended CERCLA by way of the
Superfund Amendments and Reauthorization Act (“SARA”) to explicitly provide for
a right to contribution. Id.
at 162. There are two CERCLA provisions that provide for
contribution—CERCLA §§ 113(f)(1) and 113(f)(3)(B). 42
U.S.C. §§ 9613(f)(1), 9613(f)(3)(B). CERCLA §
113(f)(1) provides, in relevant part, as follows:
Any person may seek contribution from
any other person who is liable or potentially liable under section 9607(a) of
this title, during or following any civil action under section 9606 of this
title or under section 9607(a) of this title… Nothing in this subsection shall
diminish the right of any person to bring an action for contribution in the
absence of a civil action under section 9606 of this title or section 9607 of
this title.
42 U.S.C. § 9613(f)(1). And CERCLA § 113(f)(3)(B) provides, in relevant part, as
follows:
A person who has resolved
its 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 may seek contribution...
42 U.S.C. §
9613(f)(3)(B).
“In short,
after SARA, CERCLA provided for a right to cost recovery in certain
circumstances, § 107(a), and separate rights to contribution in other
circumstances, §§ 113(f)(1), 113(f)(3)(B).” Cooper Industries, 543
U.S. at 163. “After
SARA’s enactment… some Courts of Appeals believed it necessary to ‘direc[t]
traffic’” determining which parties may assert a cost recovery claim and which
parties may assert a contribution claim. U.S. v. Atlantic Research Corp., 551 U.S. 128, 132 (2007).
After SARA but before Cooper
Industries, virtually every time a Court of Appeals considered the question
of whether a particular PRP’s claim was one for cost recovery or contribution
the result came back the same—its claim was for contribution not cost recovery. See Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 672 (5th
Cir., 1989) (claim was one for contribution not cost recovery); Akzo Coatings, Inc. v. Aigner Corp., 30
F.3d 761, 764-65 (7th Cir., 1994) (same); United Techs. Corp. v. Browning-Ferris Indus. Inc., 33 F.3d 96, 103
(1st Cir., 1994) (same);
United States v. Colorado & Eastern R.R. Co., 50 F. 3d 1530, 1536 (10th
Cir., 1995) (same); Redwing Carriers,
Inc. v. Saraland Apartments, 94 F.3d 1489, 1496 (11th Cir.,
1996) (same); Bancamerica Commercial
Corp. v. Mosher Steel of Kansas, Inc., 100 F.3d 792, 800 (10th
Cir., 1996) (same); New Castle County v.
Halliburton Nus Corp., 111 F.3d 1116, 1120 (3rd Cir., 1997)
(same); Pinal Creek Group v. Newmont
Mining Corp., 118 F.3d 1298, 1301 (9th Cir., 1997) (same); Sun Co. Inc. v. Browning-Ferris, Inc.,
124 F.3d 1187, 1190 (10th Cir., August 14, 1997) (same); Pneumo Abex Corp. v. High Point, Thomasville
& Denton R.R. Co., 142 F.3d 769, 776 (4th Cir., 1998)
(same); Centerior Service Co. v. Acme
Scrap Iron & Metal Corp., 153 F.3d 344, 351 (6th Cir.,
August 31, 1998) (same); Bedford
Affiliates v. Sills, 156 F.3d 416, 423-24 (2nd Cir., 1998)
(same); Axel Johnson Inc. v. Carroll
Carolina Oil Co. Inc., 191 F.3d 409, 415-19 (4th Cir., 1999)
(same); New Jersey Turnpike Authority v.
PPG Industries, Inc., 197 F.3d 96, 104 (3rd Cir., 1999) (same); Morrison Enterprises v. McShares, Inc.,
302 F.3d 1127, 1135 (10th Cir., 2002) (same); Dico Inc. v. Amoco Oil Co., 340 F.3d 525, 530 (8th Cir.,
2003) (same). The only exception was when a PRP could
prove it was an innocent party—innocent even though liable. See, e.g., Rumpke of Indiana, Inc.
v. Cummins Engine Co., 107 F.3d 1235, 1239-1242 (7th Cir., 1997).
At first, Court of Appeals cases holding that PRPs must use
contribution were careful to note that contribution is a claim “by and between
jointly and severally liable parties…” Akzo, 30 F.3d at 764; See also, Amoco Oil, 889
F.2d at 672 (“The hazard on the property constitutes an indivisible harm… [the
contribution plaintiff] shares joint and several liability for remedial actions
with [the contribution defendant].”); United
Technologies, 33 F.3d at 99, 100 (“Contribution is a standard legal term
that enjoys a stable, well-known denotation. It refers to a claim ‘by and
between jointly and severally liable parties…’”; “[a] principal goal of the new
section
9613 was to ‘clarif[y] and confirm[ ] the right of a
person held jointly and severally liable under CERCLA to seek contribution…’”);
Colorado & Eastern, 50 F. 3d at
1536 (“A principal objective of the new contribution section was to ‘clarif[y]
and confirm[] the right of a person held jointly and severally liable under
CERCLA to seek contribution…’”; “[w]hatever label [the claimant] may wish to
use, its claim remains one by and between jointly and severally liable
parties…”); New Castle, 111 F.3d at
1121 (“[the contribution plaintiff] did not seek to apportion its liability
when it was sued by the United States, and it does not contend that the harm at
the landfill is divisible, so this exception to pure joint and several
liability [under CERCLA § 107] is not applicable here”; “the term
‘contribution’ is a standard legal term that refers to a claim ‘by and between
jointly and severally liable parties…’”); Sun
Company, 124 F.3d at 1190 (“The fact that Plaintiffs incurred cleanup costs
by complying with a unilateral administrative order, without forcing the
government to take them to court, does not change their status as jointly and
severally liable parties… Plaintiffs' claim is still by and between jointly and
severally liable parties...”); Bedford
Affiliates, 156 F.3d at 423-24 (“Where the environmental harm is indivisible, multiple responsible
persons will be jointly and severally liable for cleanup costs… As noted
earlier, where multiple parties are responsible, joint and several liability
attaches. Consequently, one potentially responsible person can never recover
100 percent of the response costs from others similarly situated since it is a
joint tortfeasor...”).
Other cases from this same
time period reinforce this principle.
For example, the Seventh Circuit declared, “[t]here can be no right to
contribution unless there is joint and several liability…” Environmental
Transportation Systems, Inc. v. Ensco, Inc., 969
F.2d 503, 508 (7th Cir., 1992); see also, United States v.
Asarco, Inc.,
814 F.Supp. 951, 956 n.4 (D. Colo., 1993) (“[I]f two
parties are not jointly and severally liable because the harm is divisible…
there is no common liability and therefore no right of contribution.”); County Line Inv. Co. v. Tinney, 933 F.2d
1508, 1515, 15 n.11, 1516 (10th Cir., 1991) (“Contribution is
available under CERCLA because of the statute’s imposition of joint and several
liability… Liability under CERCLA may not be joint and several, however, where
the harm is divisible… contribution is only available where joint liability can
be imposed.”).
However, somewhere along the line some Circuit Courts decided to
adopted a general rule, which dropped the qualification that contribution requires
joint and several liability, and held that all
suits by and between PRPs are suits in contribution. PRPs were precluded from seeking cost recovery. See Redwing Carriers, 94 F.3d at 1496, 1514 (“Redwing is a responsible
party under CERCLA, and therefore, its claims against other allegedly
responsible parties are claims for contribution;” further, the court stated,
without citing any authority, that “[s]ince there is no joint and several
liability among defendants in a contribution action, the divisibility defense
has no relevance as a ‘defense’ in these cases.”); Bancamerica Commercial, 100 F.3d at 800 (“We have since held an
action between potentially liable persons… to apportion [CERCLA] response costs
between them is ‘the quintessential claim for contribution’ and proceeds
pursuant to § 113 rather than § 107, regardless of how pled.”); Pinal Creek, 118 F.3d at 1301-02
(“Because all PRPs are liable under the statute, a claim by one PRP against
another PRP necessarily is for contribution.”); Pneumo Abex, 142 F.3d at 776 (“The courts have held consistently
that section
[113] must be used by parties who are themselves
potentially responsible parties… As the case before the court involves entirely
potentially responsible parties, such parties must seek contribution under section
[113].”); Centerior
Service, 153 F.3d at 351 (“The plaintiffs are all PRPs, who have never
asserted their innocence or challenged their liability under § 107(a). Pursuant
to a § 106 order they had a legal obligation to conduct the site cleanup, which
they fulfilled and in so doing, paid more than their fair share of the
obligation. Plaintiffs now seek costs for this cleanup from other PRPs who also
contributed to the site contamination and are also potentially liable under §
107(a) but who did not contribute their pro rata share. As stated by other circuit
courts, this is the ‘quintessential’ action for contribution.”); Axel Johnson, 191 F.3d at 415, 416,
415-419 (“Every circuit that has addressed the question, including this one,
has held that parties such as [the claimant] who are potentially responsible
for cleanup costs under § 107 cannot bring § 107 cost recovery actions; rather,
such parties ‘must seek contribution’ under § 113”; the court then held the
claimant must use contribution, not cost recovery, even though it contended it
was “innocent with respect to some of the contamination…”); New Jersey Turnpike, 197 F.3d at 104
(The claimant is a PRP, therefore, “its action against other PRPs is properly
characterized as a section 113 action.”); Morrison
Enterprises, 302 F.3d at 1133, 1135 (The claimant was a PRP, therefore, it
could not pursue cost recovery and contribution, it “may only proceed with an
action for contribution”); Dico, 340
F.3d at 530 (the claimant is “clearly” a PRP, therefore, any action brought by
it to recoup cleanup costs “must be for contribution.”).
“[A]s 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).” Atlantic
Research, 551 U.S. at 132 (note the
sarcastic quotes around the term “contribution”); see also, Centerior
Service, 153 F.3d at 352 (holding CERCLA § 113(f)(1) allows contribution
claims even “in the absence of a civil action” under CERCLA §§ 106 or 107); Sun Company, 124 F.3d at 1192 (same); Akzo, 30 F.3d at 762-65 (implying a
similar holding by allowing a contribution claim for costs incurred in
complying with a CERCLA § 106 cleanup order); Amoco Oil, supra (court
fails state any basis for the accrual of the right to seek contribution, and it
does not appear that the claimant had been sued by, or had settled with, anyone
for the costs it was seeking to recover).
One Court of Appeals even
found that, just like cost recovery, the right to seek contribution accrued
when costs were incurred. Pinal
Creek, 118 F.3d at 1305-06.
Lastly, another Court of Appeals observed, “CERCLA's text
indicates that contribution and cost recovery actions are… non-overlapping”
remedies. United Technologies, 33 F.3d
at 103. Essentially, the Circuit Courts generally all ruled that PRPs
must use contribution and that they cannot use cost recovery.
Virtually
all the distinctions between cost recovery and contribution that existed prior
to SARA, which were discussed in my first blog entry to this series, were
erased: (1) some decisions allowed PRPs to pursue contribution as soon as cost
were incurred; prior to SARA, the incurrence of costs would have caused a cost
recovery claim to accrue but not a contribution claim; (2) some decisions
adopted a general rule whereby PRPs were prohibited from pursing cost recovery;
prior to SARA, PRPs were allowed to pursue cost recovery; (3) some decisions
had held contribution no longer required a prior cost recovery action; prior to
SARA, a contribution suit accrued when a person was sued for cost recovery; (4)
some decisions had held contribution no longer requires joint liability between
the parties; prior to SARA, courts were in agreement that contribution required
joint liability between the parties; (5) and some decisions viewed cost
recovery and contribution as non-overlapping remedies; prior to SARA, it
appeared the remedies could overlap and there was nothing to suggest the
remedies should not overlap.
It is this line of Circuit Court cases
that lead the United States government to argue to the Supreme Court in Atlantic Research that cost recovery and
contribution are not even different remedies. “Contribution is merely a form of cost recovery, not a
wholly independent type of relief.” Atlantic Research,
551 U.S. at 138 (quoting the United States’ brief). After SARA, the Circuit Courts blurred the distinctions
between cost recovery and contribution treating them as the same type of relief
available to different parties.
Cost recovery was thought to be for non-PRPs and contribution was thought
to be for PRPs.
THAT’S MY ARGUMENT.
© July 2013 Brandon J. Evans
