October 14, 2011

Supreme Court Asked to Clarify Superfund Cost Recovery Options

Posted on October 14, 2011 by Daniel Riesel

This fall, the United States Supreme Court will decide whether to revisit a question it left open in United States v. Atlantic Research:  Whether a party who has incurred cleanup costs following an Environmental Protection Agency (“EPA”) lawsuit may recover its costs under § 107 of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), or instead is limited to a contribution action under CERCLA § 113.  The distinction between these cost recovery provisions has divided lower courts for much of the last decade, and forms the basis for the July 2011 certiorari petition in Morrison Enterprises v. Dravo Corp

In 2004, the Supreme Court ruled that contribution under CERCLA § 113(f) is only available while or after a plaintiff had been sued under CERCLA – and thus could not be used to recover “voluntary” cleanup costs when a Potentially Responsible Party (“PRP”) remediates a Superfund site prior to litigation.  Cooper Industries v. Aviall Services.  Three years later, the Court clarified in Atlantic Research that voluntarily-incurred response costs were instead recoverable under § 107(a), which “reimburses other parties for costs that those parties incurred.”

Atlantic Research, however, did not resolve whether Section 107 could ever apply during or following CERCLA litigation.  In a footnote, the Supreme Court “recognize[d] that a PRP may sustain expenses pursuant to a consent decree following a suit under” CERCLA without “reimbur[sing] the costs of another party.”  The Court declined to decide “whether these compelled costs of response are recoverable under §113(f), §107(a), or both.” 

That question recently arose in Morrison Enterprises v. Dravo Corp.  After being separately sued by EPA for their contributions to groundwater contamination, Morrison and Dravo entered consent decrees governing the cleanup of their respective “sub-sites”.  Morrison then sued Dravo under CERCLA 107, seeking to recover costs incurred in treating trichloroethylene (“TCE”) that Morrison alleged had originated from Dravo’s upgradient site.

The Eighth Circuit Court of Appeals affirmed the dismissal of Morrison’s suit, stating as a bright line rule: “§ 113(f) provides the exclusive remedy for a liable party compelled to incur response costs pursuant to an administrative or judicially approved settlement under §106 or §107.”  Other circuits courts have held that parties who incur costs under a administrative order with the state, W.R. Grace & Co.-Conn. v. Zotos Intern., Inc., or who contributed money to a cleanup fund under a private settlement agreement, Agere Systems, Inc. v. Advanced Environmental Technology Corp., could maintain cost recovery actions under CERCLA § 107.

The distinction is critical to Superfund plaintiffs and defendants.  For contribution actions under CERCLA § 113, the parties must share “common liability,” recovery is subject to equitable allocation and may be barred by prior settlements, and the statute of limitations is three years.  Under § 107, on the other hand, there is no settlement bar or common liability requirement, recovery is joint and several, and the statute of limitations is six years after the initiation of on-site construction of the remedy.

The Supreme Court is scheduled to consider the Morrison certiorari petition during its September 26, 2011 conference.

Tags: Superfund


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