Thursday, July 25, 2013

CERCLA 107 COST RECOVERY v 113 CONTRIBUTION: Part Four: Atlantic Research Implications for Cost Recovery

This is the fourth of a series of blog entries regarding the evolution of CERCLA §107 cost recovery claims and CERCLA §113 contribution claims. It will discuss how U.S. v. Atlantic Research Corp., 551 U.S. 128 (2007), and other cases have begun restoring the nature of a cost recovery action to the way it was before SARA was enacted. 

My first blog entry to this series discussed how cost recovery and contribution were distinct legal remedies prior to SARA being enacted.  My second blog entry to this series discussed how the circuit courts blurred those distinctions after SARA was enacted.  My third blog entry to this series discussed how Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004), and other cases have begun restoring the nature of a contribution action to the way it was before SARA was enacted.  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.
Cooper Industries focused on the text of CERCLA and held that “a private party who has not been sued under § 106 or § 107(a)”, and who has not settled its/his/her liability, cannot obtain contribution. 543 U.S. at 165-67.  This naturally made people wonder if PRPs that did not have a contribution suit because they have not been sued or settled their liability could assert a cost recovery claim.  Atlantic Research focused on the text of CERCLA and held that any person that has incurred costs may seek cost recovery, including PRPs. Id. at 134-35.  
The Cooper Industries decision caused quite a stir in CERCLA litigation, was unexpected, and began a “major reexamination of the basics of Superfund liability.” Gershonowitz, Aaron, United States v. Atlantic Research Corp: Who Should Pay to Clean Up Inactive Hazardous Waste Sites?, 19 DUKE ENVTL. L. & POL’Y F 119, 119.  The Supreme Court foresaw that reexamination of many decisions would be necessary after its opinion in Cooper Industries:
Aviall and amicus Lockheed Martin contend that, in the alternative to an action for contribution under § 113(f)(1), Aviall may recover costs under § 107(a)(4)(B) even though it is a PRP. The dissent would have us so hold. We decline to address the issue.
Furthermore, the parties cite numerous decisions of the Courts of Appeals as holding that a private party that is itself a PRP may not pursue a § 107(a) action against other PRPs for joint and several liability. See, e.g., Bedford Affiliates v. Sills, 156 F.3d 416, 423-424 (C.A.2 1998); Centerior Serv. Co. v. Acme Scrap Iron & Metal Corp., 153 F.3d 344, 349-356 (C.A.6 1998); Pneumo Abex Corp. v. High Point, T. & D.R. Co., 142 F.3d 769, 776 (C.A.4 1998); Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1301-1306 (C.A.9 1997); New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1120-1124 (C.A.3 1997); Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1496, and n. 7 (C.A.11 1996); United States v. Colorado & E.R. Co., 50 F.3d 1530, 1534-1536 (C.A.10 1995); United Technologies Corp. v. Browning-Ferris Industries, 33 F.3d 96, 98-103 (C.A.1 1994). To hold here that Aviall may pursue a § 107 action, we would have to consider whether these decisions are correct… We think it more prudent to withhold judgment on these matters.

Cooper Industries, 543 U.S. at 168-170.  To the extent these decisions held that PRPs were prohibited from asserting cost recovery claims, they were overruled by Atlantic Research. 551 U.S. at 136.
In Atlantic Research, a PRP voluntarily cleaned-up a “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).” Id. at 133.  The United States successfully moved to dismiss the § 107(a) claim on the authority of Dico, which had held PRPs are precluded from suing in cost recovery and can only sue in contribution. Id. at 133-34; Dico Inc. v. Amoco Oil Co., 340 F.3d 525, 530 (8th Cir., 2003).  The Eight Circuit reversed recognizing that Dico, supra, was undermined by Cooper Industries. Atlantic Research, 551 U.S. at 134.  The Eighth Circuit held CERCLA § 107(a)(4)(B) authorizes a PRP to bring a cost recovery claim. Id. 
The Supreme Court affirmed this part of the Eighth Circuit’s decision by focusing on the text of CERCLA § 107(a)(4)(B). Id. at 134-36.  The Court stated as follows:
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).  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 paragraphs (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.

Atlantic Research, 551 U.S. at 134-35.  The Court went on to say, “the plain language of subparagraph (B) authorizes cost-recovery actions by any private party, including PRPs.” Id. at 136. 
Atlantic Research cited the Second Circuit’s decision in Consol. Edison Co. of New York, Inc. v. UGI Utilities, Inc., 423 F.3d 90 (2nd Cir., 2005) that had similarly held that the plain language of CERCLA § 107(a)(4)(B) authorizes PRPs to seek cost recovery:
Section 107(a) makes parties liable for the government's remedial and removal costs and for “any other necessary costs of response incurred by any other person consistent with the national contingency plan.” 42 U.S.C. § 9607(a)(4)(B). The only questions we must answer are whether Con Ed is a “person” and whether it has incurred “costs of response.”
Unlike some other courts, we find no basis for reading into this language a distinction between so-called “innocent” parties and parties that, if sued, would be held liable under section 107(a)… Section 107(a) makes its cost recovery remedy available, in quite simple language, to any person that has incurred necessary costs of response, and nowhere does the plain language of section 107(a) require that the party seeking necessary costs of response be innocent of wrongdoing.

Id. at 99-100.
The Atlantic Research decision that “any private party, including PRPs” could bring a “cost-recovery action[]” brought the current view of cost recovery more in line with the pre-SARA view of cost recovery, which was described in my first blog entry to this series and which allowed “a PRP that had incurred response costs” to assert “a cause of action for cost recovery” under CERCLA § 107(a)(4)(B). Id. at 136; Cooper Industries, 543 U.S. at 161-62.  Moreover, Atlantic Research reached the exact same holding that City of Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135 (E.D.Pa., 1982), a pre-SARA decision, reached in 1982:
[T]he City, itself possibly subject to liability for governmental response costs, undertook the clean up and now contends that defendants are liable for its “necessary costs of response” under 42 U.S.C. s 9607(a)(4)(B). It is this anomaly which gives rise to defendants' primary argument in seeking judgment on the City's CERCLA claim. They contend that the term “any other person” as used in 42 U.S.C. s 9607(a) (4)(B) does not include a party which itself is subject to liability under the act… the statute's language does not explicitly support this construction…
Because …[denying the City a claim] is not compelled by the language of CERCLA, by its legislative history, or by the environmental objectives which it is designed to achieve, I will reject defendants' position and deny their motion for judgment on Count I of the complaint.

Id. at 1141-42; see also, Cooper Industries, 543 U.S. at 161-62 (citing City of Philadelphia for this proposition).
© July 2013 Brandon J. Evans