Contaminated Sites Cost Recovery under CERCLA

• Pages: 397-466

CHAPTER 9

397

Contaminated Sites Cost

Recovery under CERCLA

STEPHEN T. PARKINSON, GLENN A. HARRIS,

AND KRISTI FAVARD

I. Introduction

In 1980, Congress enacted a statutory scheme to pay for the cleanup

of sites contaminated with hazardous substances. The Comprehen-

sive Environmental Response, Compensation, and Liability Act of

1980 (CERCLA or Superfund) imposes liability for cleanup costs

on four categories of persons considered potentially responsible

parties (PRPs). These categories are: (1) persons who are current

owners and operators of the contaminated site, (2) persons who were

owners or operators of the site at the time of the release of the haz-

ardous substances, (3) persons who arranged for the disposal or

treatment of the hazardous substances released at the site, and (4)

persons who transported the hazardous substances to the contami-

nated site. CERCLA empowers the government to recoup the cost

of cleanup from PRPs. CERCLA also provides rights of cost recov-

ery for private parties who incur cleanup costs consistent with the

National Contingency Plan (NCP), 40 C.F.R. Part 300 (1995), the

companion regulations setting forth cleanup procedures.

CERCLA also provides several defenses for otherwise liable

parties. These defenses include: (1) contamination by acts of God,

war, or third parties; (2) contamination by passive migration; (3)

“bona fide” purchasers of contaminated property; (4) persons hold-

ing property in trust; and (5) certain parties acquiring ownership

through the exercise of a security interest.

398 CHAPTER 9

Over the past 27 years, the courts have worked to further define

the scope of liability of CERCLA’s private cause of action. Cases

have raised the following important issues: (1) Who may bring a

private cause of action; (2) what constitutes substantial compliance

with the NCP; (3) what constitutes “release” of a “hazardous sub-

stance”; and (4) when do statutory defenses apply. The courts also

have developed an equitable procedure for allocating cleanup re-

sponsibility among several liable parties.

This chapter examines these issues, but it is not intended to be a

primer on basic Superfund liability. Instead, this chapter focuses on

the main arguments and defenses that have arisen in CERCLA liti-

gation, and how the courts have ruled. The chapter also looks at

recent amendments to CERCLA that provide additional defenses to

liability that have not yet been fully addressed by the courts. The

scope of this chapter is limited to CERCLA, although many states

have parallel Superfund statutes. There also are common-law claims,

such as trespass and nuisance, that arise from the release of hazard-

ous substances. Claims based on state statutes and common law

often are pleaded in addition to CERCLA cause of action.

II. Who Can Bring a Claim: The Impact of Aviall Services

and Atlantic Research on CERCLA Claims

Two recent Supreme Court decisions, Cooper Industries, Inc. v. Aviall

Services, Inc.,1 and United States v. Atlantic Research Corp.,2 marked

a radical change in CERCLA jurisprudence and displaced more than

two decades of Superfund practice. Private parties had brought hun-

dreds of CERCLA lawsuits under Sections 107(a) or 113(f), seek-

ing recovery of some or all the costs they incurred in cleaning up

contaminated sites, even though these parties were not first sued by

the United States or an individual state.3 Cooper Industries changed

course by holding that a private party who had not been sued first

by the United States or an individual state under CERCLA Sections

106 or 107 could not seek contribution under Section 113(f)(1) from

other PRPs for remediation costs it incurred. Atlantic Research held

that PRPs, other than the United States, a state, or an Indian tribe,

may bring cost-recovery actions against other PRPs under Section

107(a), but this case raised uncertainty about how Sections 113(f)(1)

and 107(a) would work together in practice. Neither case addressed

Contaminated Sites Cost Recovery under CERCLA 399

how these new rules should be applied in situations where PRPs

conduct cleanups and seek recovery from nonparticipants.

A. The Decisions

In Cooper Industries, Cooper Industries, Inc. (Cooper) sold prop-

erty to Aviall Services, Inc. (Aviall) in 1981. Aviall later discovered

environmental contamination on the property and spent approxi-

mately $5 million remediating the contamination. Subsequently,

Aviall brought a civil action against Cooper seeking recovery of

Cooper’s equitable share of Aviall’s environmental response costs.

Aviall’s original complaint asserted a claim for cost recovery under

CERCLA Section 107(a), a separate claim for contribution under

CERCLA Section 113(f)(1), and state-law claims. Aviall later

amended its complaint to eliminate the Section 107(a) claim in re-

sponse to an opinion of the U.S. Court of Appeals for the Fifth Cir-

cuit holding that PRPs, such as Aviall, could not bring a Section 107

claim for joint and several liability.4

Cooper moved for summary judgment, arguing that Aviall could

not state a claim under CERCLA Section 113(f)(1) because Aviall

had not been sued under CERCLA Section 106 or Section 107(a).

The district court agreed and dismissed Aviall’s federal claim. A

divided panel of the U.S. Court of Appeals for the Fifth Circuit af-

firmed, and an en banc panel reversed by a divided vote. The Su-

preme Court granted certiorari and reversed the en banc panel, thus

affirming the dismissal.

The U.S. Supreme Court based its decision on the plain lan-

guage of CERCLA Section 113(f)(1): “Any person may seek con-

tribution 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.”5 The Court held that the words during or following mean

that Section 113(f)(1) contribution claims only may be brought if

there is an underlying Section 106 or Section 107(a) civil action.6

The Court rejected Aviall’s argument that the savings clause of Sec-

tion 113(f)(1) preserved its cause of action. Instead, the Court held

that the savings clause neither established a separate cause of action

for a private party nor expanded Section 113(f)(1) to authorize con-

tribution actions not brought “during or following” a Section 106 or

107(a) civil action.7