The Common Law of Liable Party CERCLA Claims.

Author:Pidot, Justin R.

Table of Contents Introduction I. Environmental Remediation of Contaminated Sites A. Liable Parties B. Cleanups C. Recoverable Costs D. Statutory Contribution II. Evolution of CERCLA Lawsuits A. 1980-1986: Establishing Joint and Several Liability in Government Suits B. 1986-2004: Limiting PRPs to Statutory Contribution Claims C. 2004-2007: Reestablishing PRP Cost Recovery Rights III. Settlement Incentives at Risk A. The Nature of Unilateral Administrative Orders B. The Exclusivity of the Contribution Remedy IV. The Nature of PRP Cost Recovery Actions A. Scant Judicial Attention to the Nature of PRP Cost Recovery Claims B. Inherent Flexibility of Cost Recovery Liability C. Contribution, Not Joint and Several Liability, Is the Appropriate Common Law Rule for PRP Cost Recovery Actions 1. The common law of joint and several liability 2. The common law of contribution 3. PRP cost recovery actions as common law contribution claims V. Restoring CERCLA Settlement Incentives A. The Virtue of PRP Cost Recovery Suits as Contribution Claims B. The Permissibility of Construing PRP Cost Recovery Actions as Contribution Claims 1. The lessons of Cooper Industries and Atlantic Research 2. The remaining vitality of private party cost recovery claims under section 107(a) and statutory contribution claims under section 113(f) Conclusion Appendix A Introduction

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or the Act) of 1980 transformed environmental law by imposing joint and several strict liability on those responsible for contaminating the environment. (1) The Act pursues two primary goals: (1) ensuring the effective and efficient cleanup of contaminated sites; and (2) shifting the cost of cleaning up those sites to the parties responsible. (2) Under the auspices of CERCLA, the U.S. Environmental Protection Agency (EPA) has ensured remediation of thousands of sites across the country, and state agencies have remediated thousands more. (3) Government agencies then bring "cost recovery" claims under CERCLA seeking reimbursement from the parties responsible for contamination. (4) As a result of this work and those lawsuits, properties once too polluted to use have become vibrant and productive once more, (5) and billions of dollars of taxpayer funds have been recovered. (6)

Much work remains. The EPA has identified thousands more sites requiring cleanup, (7) and the agency receives, on average, more than (1000) reports of releases of hazardous substances into the environment each year. (8) As of fiscal year (2013), more than (39) million people--about (13) % of the nation's population--lived within three miles of a site the EPA has designated as a priority for efforts to address contamination. (9)

Contaminated sites can pose complex, costly problems. Consider, for example, the Lower Passaic River in New Jersey. Approximately 100 industrial facilities released more than 100 different hazardous substances into the river, including polychlorinated biphenyls (PCBs), dioxin, heavy metals, pesticides, and other contaminants. (10) The effects of these substances on human health and the environment can be severe. The EPA estimated that consumption of fish from the Lower Passaic River may lead to four additional incidents of cancer per 1000 people and cause other health problems as well. (11) Contaminants also harm benthic invertebrates and fish along with birds and mammals that feed in and along the river. (12) The multifaceted approach to remediation the EPA selected includes dredging 3.5 million cubic yards of contaminated sediment and constructing an engineered cap along the river bottom to prevent remaining contaminants from entering the aquatic ecosystem. (13) The effort is anticipated to cost $1.3 billion and take six years to complete. (14) After implementation of the remedy, the EPA estimates that the additional risk of cancer will decrease significantly from four in 1000 to between one in 10,000 and one in 1 million people. (15)

Despite the ongoing need, the EPA's financial resources and political will are in jeopardy. Congress has routinely underfunded the EPA's work cleaning up contaminated sites, (16) and the Trump Administration has threatened the EPA with dramatic further cuts of funding and staff. (17) While Scott Pruitt, the EPA Administrator, has identified the CERCLA program as among those he supports, (18) it's hard to imagine that he will authorize the agency to issue orders requiring uncooperative polluting industries to engage in cleanups costing hundreds of millions of dollars or more. (19)

Congress recognized that environmental remediation could be costly and contentious. It amended CERCLA only six years after the statute's enactment to reduce litigation and create incentives for liable parties, referred to as potentially responsible parties (PRPs), to enter settlements with federal and state agencies to fund and carry out necessary cleanup activities. (20) These incentives are created by interlocking provisions that on the one hand authorize contribution lawsuits among PRPs to spread cleanup costs--which this Article will refer to as statutory contribution claims--and on the other hand protect settling parties from contribution lawsuits. (21) PRPs have responded well. The Government Accountability Office (GAO) found that between 1994 and 2007, the number of CERCLA cases filed annually decreased by about one-half, a result attributed in part to changes in the EPA's "enforcement process to further promote settlements with responsible parties, especially settlements negotiated prior to filing a case in court." (22)

Since 2007, the success of the settlement approach to CERCLA has been under threat. Previously, settling PRPs could rest easy in the knowledge that the statute protected them from any future lawsuit brought by another PRP, a result derived from courts' uniform view that all PRP lawsuits were governed by the statutory right to contribution codified by sections 113(f)(1) and 113(f)(3)(B). (23) In two decisions, Cooper Industries, Inc. v. Aviall Services, Inc. (24) and United States v. Atlantic Research Corp., (25) the Supreme Court upended CERCLA litigation by first limiting claims under section 113(f) to PRPs that have either been sued under CERCLA or entered a settlement with the United States or a state, (26) and second authorizing other PRPs to pursue claims under a different section of CERCLA, section 107(a), which enables suits for cost recovery. (27) In the wake of these cases, PRPs faced the prospect that even if they entered a settlement with the government, they might be vulnerable to a cost recovery suit brought by other PRPs and dragged into litigation that could last years or even decades. (28)

This Article reveals that contrary to the fears of regulators and settling parties, allowing PRP cost recovery claims under section 107(a)(4)(B)(29) will not destabilize settlement incentives. (30) Courts have long recognized that common law liability principles govern the nature of cost recovery claims. (31) When government entities bring such claims on behalf of taxpayers, the common law requires imposition of joint and several liability. (32) Those same common law principles treat claims brought by PRPs differently; because PRPs are joint tortfeasors, the common law of contribution governs their claims. (33)

Surprisingly, few courts have considered how common law principles apply to cost recovery actions brought by PRPs. Some courts have simply assumed that such claims would involve joint and several liability, believing that the common law would treat all cost recovery suits the same. (34) Others have concluded that the Atlantic Research decision forecloses treating PRP cost recovery actions as contribution actions. (35) These analyses, while superficially appealing, overlook important distinctions drawn by common law liability rules and fail to recognize the limited nature of the holding in Atlantic Research.

This Article takes up the task of thoroughly analyzing common law liability rules and applying them to PRP cost recovery lawsuits. This analysis lays bare that such claims are claims for contribution, not claims for joint and several liability. To establish the basis for that conclusion, this Article proceeds in five Parts. Part I provides an overview of CERCLA and the problems caused by the contaminated sites it was designed to address. Part II describes the evolution of judicial interpretations of CERCLA, a story necessary to understanding the gap in the case law this Article fills. Part III examines contemporary issues that provide context for thoroughly exploring the nature of PRP cost recovery suits and the importance of doing so. Part IV examines the flexible, yet underanalyzed, nature of CERCLA's cost recovery provision and the common law principles that govern joint and several liability and contribution. As it demonstrates, PRP cost recovery claims, unlike government suits, should involve contribution, not joint and several liability. Part V explains the benefits of recognizing the true nature of PRP cost recovery claims and that existing precedent does not foreclose that result. It also explains that properly construing PRP cost recovery actions as common law contribution claims will not undermine the vitality of statutory contribution claims.

Others have offered incisive critiques of Atlantic Research and Cooper Industries on both theoretical and practical grounds, generally concluding that Congress should act to fix the mess the Supreme Court has created. (36) A legislative fix, however, is unnecessary. This Article charts a course by which courts, and advocates before courts, can hew closely to Congress's purpose of penalizing intransigence and rewarding cooperation through CERCLA's interlocking liability and settlement provisions. All courts must do is more fully apply established common law principles of liability to define the...

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