Classifying CERCLA claims: a critique of Pinal Creek v. Newmont Mining.

• Author: Taylor, Tamara A.

1. INTRODUCTION

   Last year, in Pinal Creek Group v. Newmont Mining Corp. (Pinal Creek),(1) the Ninth Circuit decided an important issue of hazardous waste law--what cause of action is available to a potentially responsible party (PRP) who has cleaned up a hazardous waste site and wishes to recover some of the cleanup costs from other PRPs. The statute governing the issue is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).(2) Despite what appears to be a straightforward statutory scheme, federal courts differ over whether section 107, providing a right to recover response costs,(3) or section 113, providing a right to contribution,(4) is the correct cause of action where the plaintiff is also potentially responsible for site contamination.

   Pinal Creek arose from an effort to remediate the Pinal Creek Drainage Basin, located in Central Arizona, one hundred kilometers east of Phoenix.(5) Copper has been mined in the basin for over a century, first in underground mines, and beginning in 1948, in open-pit mines. In 1984, the United States Geological Survey began researching acidic metal contamination in the basin. Their initial efforts focused on a plume of acidic groundwater in the regional alluvium, but expanded to investigations of streamflow contamination and transport interactions between streamflow and shallow groundwater. In the late 1980s, the basin was placed in the Water Quality Assurance Revolving Fund, a state version of the federal Superfund program.

   At the same time, three mining companies formed the Pinal Creek Group to reduce contaminant sources and to remediate existing contamination. In the process, they incurred over $1 million in response costs without any help from other mining companies that contributed to the waste. After their requests for help were denied, the Pinal Creek Group sued in federal district court to recover response costs under subsection 107(a) and contribution under section 113.(6)

   Sections 107 and 113, however, provide two different causes of action. In particular, PRPs who have incurred substantial cleanup costs want to use section 107's cost recovery action to impose joint and several liability on other PRPs, and to make the defendants assert a contribution counterclaim against them for their proportionate shares of liability. To illustrate this, a corporation that has incurred $1 million cleaning up a contaminated river could sue in cost recovery and shift that entire amount onto other corporations that contributed to the contamination. The defendant corporations would then have to counterclaim or bring a contribution suit under section 113 in the amount for which the plaintiff corporation was liable.

   On the other hand, defendant-PRPs want courts to limit plaintiff-PRPs to contribution actions, where each PRP's liability is several, extending only to each party's share of the costs. Thus, a corporation that voluntarily cleaned up a site could only ask for the amount for which it could prove other corporations were liable. It could not ask for the total amount of costs incurred. Although this approach will probably result in a similar outcome as a cost recovery action coupled with a contribution counterclaim, there may be some important differences.

   Most importantly, the limitations periods for the two causes of action are different. The statute of limitations for a contribution action is only three years,(7) whereas the period for a cost recovery action can be up to six years.(8) The events triggering each period are also different. A cost recovery action for a remedial action accrues from the date of on-site construction.(9) A contribution action, on the other hand, accrues from the date of the judgment order, administration order, or settlement agreement.(10) If a PRP sues under cost recovery, it is clear when the limitations period begins. However, if a PRP sues under contribution and none of the events in subsection 113(g) have occurred, then the statute of limitations arguably never begins to run for that PRP.

   In addition, the burdens of proof are different for the two causes of action. With joint and several liability, the burden is on the defendant.(11) The defendant can only escape strict liability by showing that his harm is divisible.(12) Several liability, however, imposes the burden on one PRP to show the amount of damages for which another PRP is responsible,(13) Given these differences between the two causes of action, it is easy to see how PRPs would strongly advocate one action or the other, depending on whether they were the plaintiff or defendant. The placement of the burden of proof could ultimately decide the case.

   The courts have also advanced strong arguments concerning whether liability should stem from section 107, section 113, or both. The Seventh Circuit and a number of district courts have allowed PRPs to bring cost recovery actions.(14) However, the trend among the federal circuit courts is to limit PRPs to contribution claims, or to view the sections as working in conjunction, but essentially allocate liability like a contribution claim.(15) In Pinal Creek, the Ninth Circuit followed the circuit court trend in holding that section 107 determines liability while section 113 apportions that liability among responsible parties,(16) essentially limiting a PRP to a contribution action.(17)

   This Chapter evaluates the analysis used by the Ninth Circuit and the ultimate conclusion it reached. To begin with, Part II explains how the problem of classifying a PRP's claim for response costs arose. Part III then surveys the varying solutions courts have adopted to resolve this problem. Part IV of this Chapter gives a summary of the Ninth Circuit's analysis and conclusion in Pinal Creek. Through an in-depth analysis in Part V, this Chapter concludes that PRPs such as the Pinal Creek Group should be allowed to bring cost recovery actions, but subject to contribution actions or counterclaims.

   The justification for this conclusion is that a party whose liability has not been determined, as section 113 requires, cannot sue for contribution. Thus, even if a party is a PRP, it must bring a section 107 action and defendants must in turn bring a section 113 contribution counterclaim or action in order to recoup costs above their share. The statutory language of section 113 is the best support for this conclusion. It implies that a judgment order, administrative order, or judicially approved settlement decree must establish liability before a party can shift that liability onto someone else. Traditional notions of contribution law, and the policy goals behind CERCLA, support this conclusion as well.

2. ORIGINS OF THE PROBLEM OF PRP LIABILITY

   1. CERCLA's Joint and Several Liability

      In 1980, Congress enacted CERCLA in order to clean up hazardous waste sites quickly,(18) In furthering this goal, Congress created a cause of action in section 107 which allows any person who cleaned up a site to recoup "any ... necessary costs of response incurred by any other person" so long as the costs are consistent with the national contingency plan.(19) Courts have interpreted this section as allowing for the imposition of joint and several liability on any one of the numerous parties Congress designated, unless that party can distinguish its harm from others.(20) Given the difficulty in dividing harm when many sources contributed to a site's contamination over many years before a right of contribution was created, a court could impose the total cost of cleanup on one party.(21)

   2. The Emergence of Contribution

      To remedy the harsh effects of joint and several liability, courts began creating contribution rights under section 107 of the 1980 version of CERCLA.(22) CERCLA defendants and the government both argued for a right to seek some degree of reimbursement, and courts generally found such a right.(23) The courts justified this implied right to contribution by first looking to the language of subsection 107(a)(4)(b), which enables a PRP to recover its response costs from other PRPs. Courts then looked to subsection 107(e), which preserves any cause of action that a PRP has against any other person.(24) Other courts relied on the federal common law of contribution as justification because Congress clearly implied such authority in CERCLA's legislative history.(25) Some courts relied on CERCLA's goal of promoting settlement as justification for the implied right.(26) Finally, some courts looked to the Restatement (Second) of Torts or simply relied on their discretionary power to equitably apportion damages.(27)

      Congress codified the judicial recognition of an implied right of contribution under section 107 by expressly adopting a contribution action in subsection 113(f) of the 1986 Superfund Amendments and Reauthorization Act (SARA).(28) That subsection allows any person to seek "contribution from any other person who is liable or potentially liable under section 107(a) of this title, during or following any civil action under section 106 of this title or under section 107(a) of this title."(29) It also allows any settling party, one "who has resolved its liability to the United States or a State for ... some or all of the costs of [a response] action in an administrative or judicially approved settlement," to seek contribution from a nonsettling party.(30) Thus, section 113 allows a party whose liability was resolved in a civil action or settlement decree to recoup some of those costs above its share.

   3. The Cumulative Effect of Sections 107 and 113

      For courts in some jurisdictions, one effect of the addition of subsection 113(f) has been the creation of two types of liability they can impose on a defendant-PRP. First, courts have allowed PRPs who have incurred substantial cleanup costs to sue under subsection 107(a).(31) This places joint and several liability on defendant-PRPs for the totality of their costs, but gives defendants a...