CERCLA Cost Recovery and Contribution and a Primer on Natural Resource Damages Law: Regulation, Litigation, and Basic Economic Principles

• Author: Ira Gottlieb, Nathan Howe, Rick Dunford, and Cynthia Betz
• Pages: 189-256

189

CHAPTER 5

CERCLA Cost Recovery and

Contribution and a Primer on

Natural Resource Damages Law:

Regulation, Litigation, and Basic

Economic Principles

Ira Gottlieb, Nathan Howe, Rick Dunford, and Cynthia Betz

I. INTRODUCTION

Comprehensive Environmental Response, Compensation, and Liability Act (CER-

CLA): The main goal of this part of the chapter is to provide a discussion of statu-

tory and case law core concepts that arise most frequently and pervade practice.

In doing so we give the reader a narrative explanation of how these concepts are

practically woven together in practice areas that we often confront in daily prac-

tice, focusing on recovery actions between private parties, but without trying to

be too wide-ranging or delve into the many topics and nuances that can arise (e.g.,

National Priority List listing, definitions, National Contingency Plan consistency,

defenses). We also address some key policy (guidance) changes that have occurred

in the last several years, particularly with the rise of urban sediment sites.

Natural Resource Damages (NRD): In this part of the chapter we address key

concepts related to natural resource damage claims. After providing basic back-

ground, an explanation of key concepts concerning statutes/common law claims,

and the assessment process (including damage determination and valuation), we

briefly address allocation, the restoration process itself, and some of the innova-

tions and issues that have arisen post-Deepwater Horizon. We also briefly address

climate change and some of the suits and citizen efforts that have arisen in the last

ten years.

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190 • Environmental Litigation

II. CERCLA’S LIABILITY SCHEME

The engine powering CERCLA’s liability scheme is the central policy premise that

those who are responsible for contamination will be held strictly accountable for

the costs of remediation.1 Courts have invoked this purpose as the basis for many

decisions interpreting CERCLA’s liability provisions throughout its history. For

instance, CERCLA is construed to impose strict liability on potentially responsible

parties (PRPs), and as a result, there is no knowledge requirement, or even the

need to prove that a PRP was negligent in its handling or discharge of hazardous

substances.2 Moreover, CERCLA exposes PRPs to joint and several liability at the

receiving end of cost recovery actions, placing the burden on PRPs to recoup costs

from other PRPs when they have paid more than an equitable share.3 Additionally,

liability under CERCLA is generally retroactive, and therefore PRPs are subject to

liability for contamination that occurred before its enactment in 1980.4

Regardless of the positive remedial policy goals underlying CERCLA, the prac-

tical realities and complex nature of environmental contamination can lead to

severely inequitable outcomes among those grappling with liability and damages

issues. This is particularly true when parsing the responsibility of PRPs for multi-

party sites. The difficulty of this task, and the resultant potential for disagreements

and inequity, is aggravated by the sometimes substantial and even enormous costs

that need to be borne upfront, and for many years, before questions of apportion-

ment and allocation of responsibility for those costs are addressed and resolved.

This situation can be even more complicated when one or more PRPs will be insol-

vent, or are otherwise unavailable, thus resulting in further inequitable results.

Complicating matters further, the design and language of CERCLA does not afford

great clarity into issues that inevitably arise in such complex situations, and leave

in its wake a convoluted series of court interpretations that are occasionally incon-

sistent, at least among some federal circuits.

Although many questions arise regarding the administration of the Superfund

program of the Environmental Protection Agency (EPA), and the implementation

of removal and remedial activities, because of the high costs of environmental

1. See the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, Pub.

L. No. 96-510, 94 Stat. 2767 (1980) (CERCLA, also commonly known as Superfund) and the Superfund

Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (1986) (SARA).

2. See, e.g., Pakootas v. Teck Cominco Metals, Ltd., 452 F.3d 1066, 1078 n.18 (9th Cir. 2006); In re Bell

Petrol. Servs., 3 F.3d 889, 897 (5th Cir. 1993); United States v. Aceto Agric. Chems. Corp., 872 F.2d 1373,

1377 (8th Cir. 1989).

3. Like strict liability, CERCLA is also not explicit in this regard, but courts have construed Section

107(a) to include joint and several liability under common law tort principles, except in limited cir-

cumstances when the harm is divisible. Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599,

613–14 (2009) (discussing and reaffirming the approach to joint and several liability initially recognized

in United States v. Chem-Dyne Corp., 572 F. Supp. 802, 810–11 (S.D. Ohio 1983)).

4. See Gould, Inc. v. A & M Battery & Tire Serv., 933 F. Supp. 431, 438 (M.D. Pa. 1996) (noting federal

district courts have uniformly determined CERCLA to have retroactive effect, with but a single excep-

tion). This comports with one of the primary reasons CERCLA was created, which was to remediate

abandoned hazardous waste sites and historic contamination.

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CERCLA Cost Recovery and Contribution • 191

remediation, the one issue that spawns intense litigation is cost recovery and con-

tribution. CERCLA provides distinct rights and remedies depending on whether a

plaintiff is a government agency, or a private party. CERCLA presently provides two

avenues of recoveries for response costs. The first is referred to as cost recovery,

provided under Section 107(a), and is available to government, private parties, and

most recently PRPs. The second avenue, provided under Section 113(f), empowers

PRPs to seek contribution from other PRPs for their proportionate share of costs.

The interplay between 107(a) and 113(f) in circumstances where PRPs seek to

recoup costs from other PRPs has been the source of much confusion over recent

years. While these two avenues are described as “complementary yet distinct”

remedies,5 the relationship between them remains murky, and determining where

the boundary of one ends and the other begins is no simple task. This confusion is

largely the product of the U.S. Supreme Court’s closely related decisions in Aviall

and Atlantic Research, which severely disrupted established norms in this area.

These decisions and their impact are discussed later in this chapter.

Even more recently, the change of administrations at the White House in 2017

brought renewed attention to the Superfund program, though it is unclear to what

extent these changes may alter the liability scheme applicable to private parties.

In May 2017, the newly minted and now former EPA Administrator, E. Scott Pruitt,

announced his commitment as head of the agency to restore Superfund and related

cleanup efforts “to their rightful place at the center of the agency’s core mission.”6

Then-Administrator Pruitt commissioned a Superfund Task Force “to provide rec-

ommendations on an expedited time frame on how the agency [could] restructure

the cleanup process,” among other things.7

Two months later, in July of 2017, that Superfund Task Force released its

report, which included “42 specific and detailed recommendations to streamline

and improve the Superfund program,”8 which were noted to be possible “with-

out legislative change.”9 Among the proposals included “high attention” to long-

standing NPL sites; third-party investment in NPL cleanups; acceleration of

5. See Cooper Indus. v. Aviall Servs., Inc., 543 U.S. 157 (2004); United States v. Atl. Research Corp.,

551 U.S. 128, 138 (2007).

6. See Memorandum from E. Scott Pruitt, EPA Adm’r, Prioritizing the Superfund Program (May

22, 2017), https://www.epa.gov/sites/production/files/2017-05/documents/prioritizing_the_superfund

_program_memo_5-22-2017.pdf.

7. Id.

8. See News Release, U.S. Envtl. Protection Agency, EPA Announces Superfund Task Force Recom-

mendations (July 25, 2017), https://www.epa.gov/newsreleases/epa-announces-superfund-task-force-

recommendations (last visited Feb. 14, 2019).

9. See U.S. Envtl. Protection Agency, EPA Superfund Task Force Recommendations (July 25, 2017),

https://www.epa.gov/sites/production/files/2017-07/documents/superfund_task_force_report.pdf. How-

ever, former administrator Pruitt’s response to the recommendations did note that “[s]ome of the task

force’s recommendations will require future administrative actions, such as rulemakings or the issu-

ance of guidance, by the agency for them to come to fruition.” See Memorandum from E. Scott Pruitt,

EPA Adm’r, Receipt of Superfund Task Force Report and Next Steps for Revitalizing the Superfund

Program (July 25, 2017), https://www.epa.gov/sites/production/files/2017-07/documents/receipt_of

_superfund_task_force_report_and_next_steps_for_revitalizing_the_superfund_program_memo.pdf.

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