Denying Private Attorney Fee Recovery Under Cercla: Bad Law and Bad Policy

• Jurisdiction: United States,Federal
• Citation: Vol. 17 No. 01
• Publication year: 1993

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 17, No. 1FALL 1993

Denying Private Attorney Fee Recovery Under CERCLA: Bad Law and Bad Policy

Karen M. McGaffey(fn*)

I. Introduction

In 1980, Congress enacted the Comprehensive Environmental Response Compensation and Liability Act (CERCLA)(fn1) to require and to encourage the cleanup of property contaminated by hazardous substances. The statute establishes a strict liability regime under which anyone falling within several broad categories of responsible parties is required, without regard to fault, to pay for cleaning up the hazardous substances.(fn2)

The CERCLA statutory scheme incorporates public and private enforcement mechanisms. The federal government may enforce the statute's requirements either by ordering responsible parties to clean up contamination(fn3) or by cleaning up contamination itself and then recovering its costs from responsible parties.(fn4)

Recognizing the inherent budgetary and political limitations of federal enforcement, Congress authorized private enforcement of CERCLA's requirements.(fn5) Section 107(a)(4)(B) makes responsible parties liable for "any other necessary costs of response incurred by any other person consistent with the national contingency plan."(fn6) Whether a private party is entitled to recover its attorneys' fees under CERCLA depends on whether Congress intended to include litigation expenses and attorneys' fees in the phrase "necessary costs of response."

In Stanton Road Associates v. Lohrey Enterprises,(fn7) a divided panel of the Ninth Circuit held that private parties could not recover their attorneys' fees in cost recovery actions brought pursuant to CERCLA section 107(a)(4)(B).(fn8) In reaching its decision, the court expressly rejected reasoning previously adopted by the Eighth Circuit.(fn9) The court's holding in Stanton Road represents a step backward for hazardous waste law. The court avoided any serious analysis of CERCLA's language and legislative history by almost ritualistically invoking the American Rule against fee shifting. The court's decision also undermines CERCLA's broad remedial purposes by eliminating an important incentive to clean up hazardous substances voluntarily.

This Article argues that the Ninth Circuit decision in Stanton Road was wrong. Section II of this Article describes the majority and dissenting opinions in Stanton Road. Section III argues that the majority misread Supreme Court precedent, leading it to adopt an excessively formalistic approach to statutory construction. It argues that the majority should have used traditional approaches to statutory construction and that those approaches would have produced a different result. Finally, the Article concludes by arguing that the Ninth Circuit's decision distorts the intent of Congress in enacting CERCLA and hinders private efforts to clean up hazardous waste.

II. The Ninth Circuit's Holding in Stanton Road

Stanton Road presented the CERCLA attorney fee issue to the Ninth Circuit in a relatively straightforward and uncomplicated form. The defendant, Lohrey Enterprises (Lohrey), owned and operated a dry cleaning plant on property next to property owned by the plaintiff, Stanton Road Associates (Stanton Road). Hazardous chemicals spilled onto Stanton Road's property during the dry cleaning plant's operation. Stanton Road brought an action against Lohrey seeking response costs and declaratory relief under CERCLA.(fn10) Stanton Road prevailed at trial and recovered $77,374 for costs incurred in cleaning up the contamination and $126,198 in attorneys' fees.(fn11) Stanton Road also obtained a declaratory judgment holding Lohrey liable for the future costs associated with cleaning up the contamination, which were expected to exceed one million dollars.(fn12) On appeal, Lohrey challenged the district court's award of attorneys' fees under CERCLA.(fn13)

Judge Alarcon, joined by Judge Sneed, wrote the majority's opinion, reversing the district court's award of attorneys' fees.(fn14)

The majority's analysis began with the American Rule, which provides that a prevailing party is generally not entitled to recover its attorneys' fees.(fn15) The majority argued that under the Supreme Court's holdings in Alyeska Pipeline Service Co. v. Wilderness Society(fn16) and Runyon v. McCrary,(fn17) a federal court may award attorneys' fees to a prevailing party only if Congress has expressly and unambiguously departed from the American Rule and authorized the award of fees.(fn18) The majority concluded that CERCLA contained no such unambiguous, express authorization.(fn19)

Two provisions of CERCLA are relevant in determining whether a private party may recover its attorneys' fees. Section 107(a) provides the following:Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section-

(1) the owner and operator of a vessel or a facility,

(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,

(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances, and

(4) any person who accepts or accepted any hazardous substance for transport. . . shall be liable 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;

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

(C) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release; and

(D) the costs of any health assessment or health effects study carried out under section 9604(i) of this title.(fn20)

Section 101(25) defines response as follows:The term "respond" or "response" means remove, removal, remedy, and remedial action; all such terms (including the terms "removal" and "remedial action") include enforcement activities related thereto.(fn21)

The majority concluded that although these sections authorize recovery of the costs related to "enforcement activities," the sections do not "explicitly authorize the payment of attorneys' fees."(fn22) The majority compared the statute's reference to enforcement activities with its other references to "legal . . . costs"(fn23) and "attorney . . . fees"(fn24) and concluded that "Congress has repeatedly demonstrated that it knows how to express its intention to create an exception to the American Rule."(fn25) The majority acknowledged that, in a general sense, a private response cost action is an enforcement action, but the majority explained that the Ninth Circuit had never considered whether a private cost action is an enforcement activity in the context of an attorneys' fees award under section 107(a)(4)(B).(fn26)

Finally, the majority refused to consider the policies and purposes underlying CERCLA. Relying on Alyeska, the majority explained that "[w]e cannot imply authority to award attorneys' fees because we determine that such a rule would enhance public policy."(fn27)

Judge Canby dissented, arguing that private cost recovery actions are properly seen as enforcement activities within the CERCLA scheme.(fn28) He noted that the majority failed to give any meaning to Congress' decision to amend CERCLA in 1986 to add enforcement activities to the definition of response costs.(fn29) Judge Canby concluded that the award of attorneys' fees furthered CERCLA's basic purposes of encouraging the prompt cleanup of hazardous waste sites and imposing the cost of cleanups on the responsible parties.(fn30)

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