United States: Third Circuit Decision Allowing CERCLA Contribution Claim Based On Settlement Of State-Law Liability Sets Up Split With Second Circuit

A panel of the United States Court of Appeals for the Third Circuit decided an important precedential decision last week expanding the right to seek contribution for cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA").  The case is Trinity Industries, Inc. v. Chicago Bridge & Iron Co., No. 12-2059 (3d Cir. Aug. 20, 2013).

The Third Circuit held that a party may sue other parties for contribution under Section 113(f)(3)(B) of CERCLA if it settles its state-law environmental cleanup liability with a state even if its settlement does not also expressly resolve CERCLA liability.  In this case, the party entered a Consent Order for environmental remediation pursuant to two Pennsylvania environmental statutes without also purporting to resolve its liability under the federal CERCLA statute.

The decision creates a split with the Second Circuit, which held in Consolidated Edison Co. of New York, Inc. v. UGI Utilities, Inc., 423 F.3d 90 (2d Cir. 2005) that contribution actions cannot be brought under Section 113(f)(3)(B) when the settlement in question only resolves liability for a state-law claim, as opposed to a CERCLA claim.  Several federal district courts have followed the Second Circuit on this issue, but no other appellate court had addressed this issue until now.

The Third Circuit appears to have been persuaded by an amicus brief filed by the United States, which argued that the Second Circuit had relied on supposedly inapposite legislative history concerning a different section of the CERCLA statute.  The court was also persuaded by what it described as a lack of any plain language in Section 113(f)(3)(B) requiring a party to have settled its liability under CERCLA in particular.

Potentially limiting the sweep of its holding, the Third Circuit noted that one of the Pennsylvania statutes pursuant to which the Consent Order was entered cross-references CERCLA in a manner that the court concluded would preclude the state from asserting a CERCLA claim in the future, provided that the party satisfied the remediation standards under that state law (the Land Recycling and Environmental Remediation Standards Act).  It remains to be seen how persuasive other courts will find the Third Circuit's decision in cases that do not involve a state law that similarly cross-references the federal CERCLA statute.

For now, because this split between the Second and Third Circuits could eventually reach the Supreme Court, any party considering a settlement of environmental cleanup liability to a state may wish to give careful consideration to including resolution of CERCLA liability as well.

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