Cercla Comes Full Circle in Arc - November 2007 - Natural Resources and Environmental Law

• Publication year: 2007
• Pages: 65

36 Colo.Law. 65 Colorado Lawyer 2007.

2007, November, Pg. 65. CERCLA Comes Full Circle in ARC - November 2007 - Natural Resources and Environmental Law

The Colorado Lawyer
November 2007
Vol. 36, No. 11 [Page 65]

Articles
Natural Resources and Environmental Law
CERCLA Comes Full Circle in ARC
by Scott H. Reisch, Jennifer E. McClister

Natural Resource articles are sponsored by the CBA Environmental Law, Water Law, and Mineral Law Sections. The Sections publish articles of interest on local and international topics.

Article Editors:

Melanie Granberg (Environmental), Denver, Gablehouse Calkins & Granberg, LLC - (303) 572-0050, mgranberg@gcgllc.com; Kevin Kinnear (Water), Boulder, Porzak Browning & Bushong LLP - (303) 443-6800, kkinnear@pbblaw.com; Joel Benson (Mineral), Denver, Davis Graham & Stubbs LLP - (303) 892-7470,joel.benson@dgslaw.com

About the Authors:

Scott H. Reisch is a partner with Hogan & Hartson LLP, where he specializes in environmental law - (303) 899-7300, shreisch@hhlaw.com.

Jennifer E. McClister is an associate with Hogan & Hartson LLP, where she specializes in environmental law - (303) 899-7300, jemcclister@hhlaw.com.

On June 11, 2007, the U.S. Supreme Court held in U.S. v. Atlantic Research Corp. (ARC) that potentially responsible parties may bring cost recovery actions under section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). This article examines the case law leading up to ARC, the rationale behind the Court's decision and how ARC may affect CERCLA actions in the future.

Prior to December 2004, one of the few consolations available to a party caught in the joint and several liability scheme established by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, also referred to as Superfund)(fn1) was the knowledge that CERCLA offered a broad statutory right to contribution against other potentially responsible parties (PRPs).(fn2) In Cooper Industries v. Aviall,(fn3) the U.S. Supreme Court removed much of that comfort by construing CERCLA in a way that dramatically limited parties' rights to sue for contribution under section 113 of CERCLA.

The Court revisited CERCLA's liability provisions last term in Atlantic Research Corp. v. United States (ARC).(fn4) In an opinion that hearkens back to some of the earliest court decisions construing CERCLA, the Court held that a PRP who was barred from seeking contribution under section 113 of CERCLA following Aviall instead could sue other PRPs for cost recovery under section 107 of CERCLA. Recent lower court decisions generally had reserved section 107 cost recovery actions for government agencies and innocent private parties, and barred PRPs performing voluntary cleanups from bringing such actions.

This article summarizes the jurisprudence leading up to the ARC decision and examines the basis for the Court's holding in ARC. It also describes some of the likely practical impacts of ARC on clients and practitioners.

Pre-ARC Claims Among PRPs

The principal causes of action available to private parties under CERCLA are for: (1) cost recovery under section 107(a); and (2) contribution under section 113(f). The scope of these claims was the subject of debate in the courts well before the ARC case.

Section 107(a) Claims

As originally enacted in 1980, CERCLA did not explicitly authorize contribution actions among PRPs. Instead, section 107(a) authorized causes of action against the parties enumerated in section 107(a)(1) through (4) - that is, current and former owners and operators, generators, and transporters - for:

(A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan; [and]

(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan. . . .(fn5)

Many courts interpreted section 107(a)(4)(B) as authorizing a PRP who had incurred cleanup costs to bring a cost recovery action against other PRPs.(fn6) In addition, because courts construed section 107(a) as imposing joint and several liability,(fn7) they found that section 107(a) included an implied right to contribution, so that a PRP who otherwise might bear too high a burden could offset its liability by obtaining recovery from joint tortfeasors.(fn8) Despite the fact that district courts first addressed these issues shortly after CERCLA's enactment, the scope of the private cause of action under section 107(a)(4)(B) and the existence of an implied right to contribution continued to be debated in the courts for the next twenty years.

Section 113(f) Claims

In 1986, Congress amended CERCLA by enacting the Superfund Amendments and Reauthorization Act (SARA).9 SARA added section 113 to CERCLA and thereby explicitly authorized a PRP to sue another PRP for contribution:

(1) Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title. . . . Nothing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under section 9606 of this title or section 9607 of this title. . . .

(3)(B) A person who has resolved its liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement may seek contribution from any person who is not party to a settlement referred to in paragraph (2).(fn10)

The enactment of an explicit statutory right to contribution under section 113 quelled interest in an implied right of contribution under section 107, but lead to additional litigation over whether section 107(a)(4)(B) or section 113 was the appropriate basis for a PRP to obtain recovery of its cleanup costs from other PRPs. Ultimately, a string of circuit court decisions held either that section 113 set forth the exclusive cause of action for a PRP seeking recovery from another PRP, or that a plaintiff's claim under section 107 against another PRP was "governed by" section 113.(fn11)

The pre-SARA cases holding that a PRP can bring a cost recovery action under section 107, as distinct from a contribution action, were largely ignored in the case law that evolved after SARA. Instead, courts directed PRPs to section 113, and reserved section 107(a)(4)(B) for "innocent landowners" and other private parties who were not PRPs.(fn12) At the same time, courts read section 113 broadly, so that it was available to any PRP seeking to recover cleanup costs, regardless of whether those costs were incurred voluntarily by the PRP, pursuant to a settlement agreement with the Environmental Protection Agency (EPA) or a state, or in connection with litigation under section 107.(fn13) However, much of this changed with the Aviall decision.

The Aviall Decision

In Aviall,(fn14) the Court considered whether a plaintiff PRP can bring a statutory claim for contribution under section 113(f) in the absence of a civil action under sections 106 or 107 of CERCLA. Lower courts had read section 113 as permissive, because the statute says "[a]ny person may seek...