This week, in United States v. Atlantic Research Corporation, a unanimous Supreme Court ruled that potentially responsible parties (PRPs) that voluntarily clean up contaminated sites may recover the costs of the cleanup from other PRPs under section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). For years, federal courts have struggled with the issue of the authority and mechanism for PRPs to recover cleanup costs from other PRPs, often reaching different and contradictory outcomes. The Supreme Court's decision could lead to a wave of lawsuits seeking to recover costs related to the environmental cleanup of contaminated sites.
After passage of the original Act, courts construed section 107(a) to provide a means for PRPs to recoup the costs of cleanup from other PRPs. Congress amended CERCLA by enacting the Superfund Amendments and Reauthorization Act of 1986 (SARA), and provided explicit means for PRPs to pursue contribution from other PRPs in section 113(f). After the enactment of section 113, some federal courts held that section 113 was the exclusive remedy for cleanup cost recovery by PRPs. Other courts prevented PRPs from suing under section 107 and expanded section 113 to allow PRPs' contributions in the absence of suit. The Supreme Court in its 2004 decision in Cooper Industries narrowly construed section 113, holding that parties can seek contribution from other PRPs only after they had been sued under CERCLA section 106 or 107.
Since the 2004 Cooper Industries decision, lower federal courts have reached various conclusions regarding the rights of PRPs to recover cleanup costs under section 107. The Third Circuit held that PRPs have no rights to recover incurred cleanup costs under section 107. The Second, Seventh, and Eighth Circuits held that section 107 allowed PRPs to recover cleanup costs from other liable parties.
Section 107 makes PRPs liable for, among other things, "all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe" and "any other necessary costs of response incurred by any other person." In Atlantic Research, the United States argued that the section 107 use of "any person" was limited to suits by "non-PRPs" and that Atlantic Research's claims were therefore barred. The Supreme Court did not find this interpretation persuasive and held that the statute must be "read as a whole." The Supreme Court noted that accepting the United States' reading of the language would reduce the number of potential plaintiffs to almost zero, rendering section 107 of no value.
The Supreme Court found that section 107 and section 113 provide two "clearly distinct" remedies. CERCLA provides a right to cost recovery in certain circumstances under section 107, and separate rights to contribution in other circumstances (during or following any civil action) pursuant to section 113. Section 107 permits PRPs to recover incurred cleanup costs from other PRPs. A PRP that has paid money to satisfy a settlement agreement or court judgment pursuant to CERCLA may pursue contribution through section 113. The Court made clear that simultaneous recovery pursuant to section 107 and section 113 is impermissible. There is no choice of remedies; the appropriate remedy will depend on the circumstances in each case.
Section 113 prohibits contribution claims against persons who have resolved their liability to the United States or a state in an administrative or judicially approved settlement. The United States argued that allowing PRPs to seek recovery under section 107 would eliminate the protection offered to settling PRPs by section 113. The Supreme Court conceded that the settlement bar does not protect against cost recovery liability pursuant to section 107(a). However, the Court stated that this "supposed loophole" would not discourage settlements because district courts would apply traditional rules of equity in such situations, taking into account any earlier settlements when apportioning liability.
The immediate effect of this opinion may well be the filing of numerous lawsuits seeking recovery of cleanup costs and contribution. Private parties would do well to examine their involvement in cleanup sites and determine whether they may have a claim for cost recovery under section 107(a). The opinion also may provide an incentive for voluntary cleanup on the part of potential PRPs who have not been sued in a CERCLA action, but know they are potential targets.
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