This
is the sixth of a series of blog entries regarding the evolution of CERCLA §107
cost recovery claims and CERCLA §113 contribution claims. It will discuss how
the Supreme Court restored the overlap between the cost recovery and
contribution remedies.
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. My fourth blog entry to this series
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 fifth blog entry in this series discussed how Atlantic
Research,
Burlington Northern & Santa Fe Ry. v. United States,
129 S.Ct. 1870 (2009), and other cases have continued to restore 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.
In Key Tronic Corp. v. United States, 511 U.S. 809, 816 (June 6,
1994), Cooper Industries, 543 U.S. at
163 n.3, and Atlantic Research, 551
U.S. at 139 n.6, the Supreme Court said
that §§
107(a) and 113(f) provide “similar and somewhat overlapping remedies.” United Techs. Corp. v. Browning-Ferris Indus. Inc., 33 F.3d 96 (1st
Cir., 1994) declared Key Tronic (the first of these three Supreme Court decisions)
simply meant that contribution and the implied right to contribution are
overlapping remedies, and then United
Technologies declared cost recovery and contribution are non-overlapping
remedies. 33 F.3d at 103. However, Cooper
Industries dispels that contention by indicating this statement from Key Tronic concerned cost recovery not
the implied right to contribution:
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).FN3
FN3. In Key Tronic Corp. v. United
States, 511 U.S. 809, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994), we observed
that §§ 107 and 113 created “similar and somewhat overlapping” remedies. Id.,
at 816, 114 S.Ct. 1960. The cost
recovery remedy of § 107(a)(4)(B) and the contribution remedy of §
113(f)(1) are similar at a general level in that they both allow private
parties to recoup costs from other private parties. But the two remedies are
clearly distinct.
543 U.S. at 163-63
n.3 (emphasis added). Here, it
would not make sense to discuss cost recovery both before and after the quote
from Key Tronic unless the quote Key Tronic was concerning cost
recovery. Further, footnote 6 and
sentence preceding it in Atlantic
Research show a similar juxtaposition indicating that the statement from Key Tronic concerned cost recovery not
the implied right to contribution. 551 U.S. at 139-39 n.6.
Additionally,
in Atlantic Research directly after,
and as authority for, holding CERCLA § 107(a)(4)(B) authorizes a PRP to bring a cost
recovery claim, the Court cites Key
Tronic for “stating in dictum that § 107 ‘impliedly authorizes private parties to
recovery cleanup costs from other
PRP[s]’”. Id at 136 (emphasis in original). This citation would not make sense if Key Tronic concerned the implied right
to contribution rather than the right to cost recovery. See Id. Therefore,
the Supreme Court has three times stated that cost recovery and contribution
are “similar and somewhat overlapping remedies.” Id. at 139 n.6; Cooper Industries, 543 U.S. at 163 n.3; Key Tronic, 551 U.S. at 816.
Atlantic Research suggests there is no reason for courts to prevent the cost recovery and
contribution remedies from overlapping. The Eight Circuit’s decision in Atlantic Research indicated that PRPs “subject to §§ 106
or 107 enforcement actions are still required to use §
113, thereby ensuring its continued vitality.”
Atlantic Research, 551 U.S. at 134.
In other words, the Eight Circuit would have prevented
the remedies from overlapping to ensure CERCLA § 113(f) remained
meaningful. However, this
statement was dicta because there were no PRPs subject to an enforcement action
before the court. Id. at 133-34. Therefore,
even though the Supreme Court disagreed with the Eight Circuit’s dicta regarding
preventing the remedies from overlapping, there was nothing for the Supreme
Court to reverse on that point because it was only dicta. Id. at 137-141.
However,
the Court did stated that the Eighth Circuit’s view—that PRPs “subject to §§ 106
or 107 enforcement actions are still required to use §
113”—was arrived at “[t]o prevent perceived conflict between §
107(a)(4)(B) and § 113(f)(1)…” Id. at 134. Use
of the word “perceived” indicates the Court did not believe there was an actual
conflict. Moreover, the Court showed
that there was no conflict between these two sections despite the overlap in
the remedies. Id. at 134, 137-41.
The
United States advanced three reasons why the Court should not interpret CERCLA §
107(a)(4)(B) to provide a claim for cost recovery to PRPs. That is, three reasons why an overlap
between the remedies would “create friction between §
107(a) and § 113(f)”: (1) the United States argued that
“offering PRPs a choice between § 107(a) and § 113(f)” would “effectively allow PRPs to
circumvent § 113(f)’s short statute of limitations”; (2) the
United States argued that “PRPs will eschew equitable apportionment under §
113(f) in favor of joint and several liability under §
107(a)”; and (3) the United States argued that this interpretation “eviscerates
the settlement bar set forth in § 113(f)(2).” Id. at 137-38. The
Court disagreed with all three reasons the United States advanced for
interpreting CERCLA § 107(a)(4)(B) in a manner in which the remedies
would not overlap. Id. at 137-41 (the
entirety of section II.B. of the Court’s decision describes why there is no
“friction” created by allowing a PRP that has incurred costs to assert a cost
recovery claim.).
First,
the Court showed that allowing the remedies to overlap would not mean that the
statute of limitations for contribution actions would become obsolete. The
Court explained that the “costs of reimbursement to another person pursuant to
a legal judgment or settlement” are not recoverable in cost recovery. Atlantic Research, 551 U.S. at 139 n.6. “Thus, at least in the case of reimbursement, the PRP cannot
choose the six-year statute of limitations for cost recovery actions over the
shorter limitations period for 113(f) contribution claims.” Id. at 139. Cost recovery cannot “swallow[]” contribution. Id. at 139 n.6. The Supreme Court also observed that
contribution cannot “swallow[]” cost recovery because costs that have been
incurred “voluntarily” (i.e. without a lawsuit) are not recoverable in
contribution, but such costs are recoverable in cost recovery. Id. In
other words, the Court indicated that even though there is an overlap between
the remedies both remedies are necessary because there is not a complete
overlap. Id.
Second,
the Court observed a PRP could not choose to avoid the equitable distribution
of reimbursement costs because for reimbursement costs there is no “choice of
remedies.” Id. at 140. Further, even where there
would be a choice of remedies a “defendant PRP… could blunt any inequitable
distribution of costs by filing a § 113(f) counterclaim.” Id. In
other words, a PRP claimant could not avoid paying its equitable share of costs
that it is itself liable for because the defendant PRPs could always assert
contribution counterclaims for those same costs.
To envision this logic it is helpful to
consider an example. Imagine that PRP-A
is found liable for, and ordered to perform, a cleanup of a site pursuant to a
judgment. PRP-A performs the
cleanup pursuant to the judgment. PRP-B
has not spent any money on the cleanup.
PRP-A brings a cost recovery suit against PRP-B for the costs of the
cleanup. PRP-B then brings a
contribution counterclaim against PRP-A, that says if PRP-B is found liable to PRP-A
for cost recovery, then PRP-B asserts a contribution counterclaim against PRP-A
to have the court equitably allocate the costs of the cleanup between the two
responsible parties. In this
example, PRP-A did not gain any advantage by bringing a cost recovery claim
instead of a contribution claim because PRP-B asserted a contribution
counterclaim.
Third,
the Court observed that the settlement bar—which “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” and is designed to encourage settlement—will not be “eviscerate[d]”
by allowing a PRP to assert a cost recovery claim because “[t]he settlement bar
does not by its terms protect against cost-recovery liability under §
107(a).” Id.
Moreover, the Court found that interpreting the
settlement bar to apply to contribution claims only—which the Court
characterized as a “supposed loophole” to the settlement bar—would not
discourage settlement for three reasons. Id.
140-41. First, the Court stated
that interpreting the settlement bar to apply to contribution claims only would
not discourage settlement because a PRP who has settled its liability with the
United States or a State and who is sued in a cost recovery claim could assert
a contribution counterclaim, which would “undoubtedly” cause the court to
consider the prior settlement “as a part of the liability calculus.” Id. Second, the Court stated that interpreting the settlement
bar to apply to contribution claims only would not discourage settlement
because the settlement bar “provide[s] significant protection from contribution
suits by PRPs that have inequitably reimbursed the costs incurred by another
party.” Id. at 141. In other words, because reimbursement
costs are not recoverable in cost recovery, the settlement bar’s prohibition on
contribution suits will effectively shield a settled PRP from reimbursement
costs for which it otherwise might have been sued. Id. Third,
interpreting the settlement bar to apply to contribution claims only does not
discourage settlement because “settlement carries the inherent benefit of
finally resolving liability as to the United States or a State.” Id.
Thus,
the plain language of CERCLA § 107(a)(4)(B) does not suggest that “PRPs that have
been subject to §§ 106 or 107 enforcement actions” are not allowed to
assert a cost recovery claim. Id. at 134-36. The
Supreme Court dispelled all three reasons suggested for the “perceived
conflict” between CERCLA §§ 107(a)(4)(B) and 113(f) created by the overlap in
the remedies. Id. at 134, 137-41.
Therefore, there is no reason for courts to prohibit a PRP that has
incurred costs from asserting a cost recovery claim because the “continued
vitality” of CERLCA § 113(f) will be “ensur[ed]” by the plain language
of CERCLA §§ 107(a)(4)(B) and 113(f). The remedies do not completely overlap each other. That is, they are only “somewhat
overlapping.” Id. at 134, 136, 139.
The whole notion that allowing a PRP to
assert a cost recovery claim would allow the PRP to avoid the shorter statute
of limitations for contribution actions originates from United Technologies. 33 F.3d at 101. However, Atlantic
Research implies a clear disagreement with United Technologies.
Atlantic Research
held a PRP could assert a cost recovery claim. 551 U.S. at 134-36.
United Technologies held a PRP
couldn’t assert a cost recovery claim. 33 F.3d at 101-103.
Atlantic Research
held that allowing a PRP to assert a cost recovery claim would not cause the
statute of limitations for cost recovery claims to “swallow[]” the statute of
limitations for contribution claims. 551 U.S. at 139. United Technologies
held that allowing a PRP to assert a cost recovery claim would cause the
statute of limitations for cost recovery claims to “swallow” the statute of
limitations for contribution claims. 33 F.3d at 101.
Atlantic Research
held that cost recovery and contribution are “somewhat overlapping” remedies. 551
U.S. at 139 n.6. United Technologies held that cost
recovery and contribution are “non-overlapping” remedies. 33 F.3d at 103.
Lastly, as further evidence
that Atlantic Research disagreed with
United Technologies, consider the
Supreme Court’s decision to cite United
Technologies. The Court stated,
“a PRP may sustain expenses pursuant to a consent decree following a suit under
§ 106 or § 107(a). See, e.g., [United Technologies]. In such a case the PRP does not incur costs
voluntarily but does not reimburse the costs of another party” and then the
Court suggests this might be one place where the cost recovery and contribution
remedies overlap. 551 U.S. at 139 n.6 (“we do not decide whether such compelled
costs of response are recoverable under § 113(f), § 107(a), or both.”). This is precisely the circumstance that
United Technologies had before it when
it determined that the remedies do not overlap. 33 F.3d at 98-103. In other words, by citing United Technologies and raising this
question, the Court basically said, “we will not determine whether United Technologies was right or wrong.” Why would the Court bring up United Technologies if the Court thought
it was a correct decision? There
is no reason. Moreover, because
these facts were not before the Court in Atlantic
Research it could not directly overrule United
Technologies at that time.
Moreover, an analysis of the statute of limitations
would provide a logical reason why the remedies should overlap in some
circumstances—where cleanup costs are incurred pursuant to a judgment or a
settlement—and why the remedies should not overlap in other circumstances—where
the person is trying to recover reimbursement costs.
The statute
of limitations for contribution claim under CERCLA § 113(f)(1) begins to run
when there is a judgment. 42 U.S.C. § 9613(g)(3)(A). The statute of limitations for contribution claim under
CERCLA § 113(f)(3)(B) begins to run when there is a settlement. 42 U.S.C. §
9613(g)(3)(B). Both of these
statutes of limitations provide for a three-year statute of limitations. 42 U.S.C. § 9613(g)(3)(A)-(B). Where a person agrees (in a settlement)
to pay, or is found liable (in a judgment) for, reimbursement costs, the costs
are fixed in that judgment or settlement because the costs have already been
incurred. Thus, it would make sense to provide a
relatively short time for the person to bring a contribution claim; hence the
three-year time limit.
However,
where a person agrees (in a settlement) to incur, or is found liable (in a
judgment) for, the costs to complete a cleanup, the costs are not fixed in that
judgment or settlement because the cleanup is ongoing. Thus, it would not make sense to provide a relatively
short time in which to bring an action (like it does for reimbursement costs) because
the total costs of the cleanup are unknown.
The statute of limitations for an “initial” cost
recovery action is six years from the beginning of a cleanup. 42 U.S.C. § 9613(g)(2)(B). The statute of limitations for cost
recovery actions contemplates
multiple cost recovery actions with all such actions being brought “no later than 3 years after the date of completion of all
response action.” Id. Thus, where a person agrees (in a settlement) to incur, or is found (in a judgment)
to be liable for, the costs to complete a cleanup, the person has the option to
bring a cost recovery claim (rather than a contribution claim) to get the
benefit of the longer statute of limitations. Providing this benefit is logical—the costs are not complete
at the moment the person settles or is found liable in a judgment, thus
allowing the person to pursue a cost recovery claim ensures the person will
have three years from the time the cleanup is complete—from the time the
cleanup costs become fixed or definite—in which to bring a final cost recovery
action. If the courts force PRPs to use contribution--that is prevented the remedies from overlapping--then it would be possible for a PRPs only claim for certain costs to expire before those costs are even incurred. That is clearly illogical.
For all of
the above reasons, cost recovery and contribution are “similar and somewhat overlapping remedies” and
there is no reason for courts to prevent them from overlapping. The whole notion that courts ought to prevent
the remedies from overlapping started with the Post SARA decision in United Technologies and the Supreme
Court clearly disagrees with that case and that point.
THAT’S
MY ARGUMENT.
© August 2013 Brandon
J. Evans
