By Andrew N. Sawula

On June 11, 2007, the United States Supreme Court issued a unanimous opinion clarifying when a private party may sue to recover all or a portion of its costs under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), commonly referred to as Superfund. In United States v. Atlantic Research Corp., Case No. 06-562, the Supreme Court held that a potentially responsible party ("PRP") may bring a "cost recovery" action against another PRP pursuant to CERCLA Section 107(a)(4)(B) to recover response costs that it incurred cleaning up a site, but not to recover costs paid to reimburse other parties (in contribution) for costs that those parties incurred. This case affirms that a party who voluntarily cleans up a contaminated property may recover its costs from other parties who are liable for the contamination under CERCLA.

In the fifteen years following the passage of the Superfund Amendments and Reauthorization Act of 1986, courts generally drew a clear line between actions for cost recovery and actions for contribution. Courts generally held that an action for cost recovery (i.e., an action imposing joint and several liability on the defendant for all of the plaintiff's clean-up costs, regardless of the defendant's share of responsibility) were available only to non-PRPs or, in some jurisdictions, certain innocent PRPs who did not contribute to any of the contamination. Any PRP, on the other hand, could recover its costs pursuant to a contribution action, but could recover from a defendant only that defendant's share of the clean-up costs. Courts viewed Section 107(a) as the basis for cost recovery actions, and Section 113(f) as the basis for contribution actions.

From 2001 through 2007, a series of decisions, including the Supreme Court's Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004), brought this framework into question. In 2001, a three judge panel of the Fifth Circuit in Aviall held that a PRP who voluntarily cleaned up a property (i.e., the party had neither been subject to an action under Section 106 or 107, nor settled its liability with the government) could not bring a contribution claim pursuant to Section 113(f). The Supreme Court agreed, but left open the question of whether a PRP may recover its costs pursuant to cost recovery or an "implied" right to contribution under Section 107(a). Atlantic Research answers the first question, holding that any private PRP that has not been subject to an action under Section 106 or 107 or settled its CERCLA liability with the government may pursue a cost recovery action under Section 107(a). The Court left open the question of whether a PRP may sue for contribution pursuant to Section 107(a).

The Court explained that Sections 107(a) and 113(f) provide relief to parties who are situated in different procedural circumstances. Response costs incurred "voluntarily" by a private PRP are recoverable only by way of Section 107(a)(4)(B). Costs paid to reimburse another party for that party's response costs pursuant to a legal judgment or settlement are recoverable only under Section 113(f). The Court noted that there may be some overlap between Sections 107(a) and 113(f). For example, a PRP could, itself, incur response costs, but do so pursuant to the terms of a consent decree following an action under Section 106 or 107(a). The Court expressly left open the question of whether such "compelled costs of response" — as distinguished from voluntarily incurred response costs and compelled reimbursement costs — are recoverable under Section 107(a), 113(f), or both. Based on the body of cases in this area, we believe that a party could recover "compelled costs of response," but the courts will need to determine whether this right would be a right to contribution under Section 107(a), 113(f), or both, or a right to cost recovery under Section 107(a).

While the Atlantic Research decision provides some clarity with respect to the ability of a PRP to recover its response costs, the decision raises a question as to the scope of protection afforded to PRPs under CERCLA's settlement bar. The Court, in dicta, acknowledged that there will be instances where a PRP settles its CERCLA liability with the government, but then is sued by another PRP for cost recovery under Section 107(a). Because the CERCLA settlement bar (codified in Section 113(f)(2)) provides protection only (at least on its face) for claims for contribution, a PRP that has settled its liability with the government might not be protected by the settlement bar from claims asserted by another PRP for cost recovery under Section 107(a). In that situation, the Court suggested, a settling PRP would not be able to raise the settlement bar as a defense, but instead would be left to argue the impact that its settlement should have on reducing its potential liability to the other PRP. While the Court acknowledged this limitation of Section 113(f)(2) (i.e., that the bar applies to only contribution actions and not cost recovery actions), we do not expect that fact patterns will frequently arise where this limitation will make a difference. Section 113(f)(2) provides contribution protection to a settling PRP for matters addressed in the settlement. Since a PRP can sue under Section 107(a) only if it actually incurs response costs (not if it reimburses another party for the other party's response costs), it is difficult to see how a settling PRP will be able to establish the settlement bar as its settlement could not address matters being addressed by another PRP.

Please contact us if you would like to discuss the Atlantic Research decision and its implications for your business.

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