Supreme Court Allows Superfund Cleanup Cost Recovery

On June 11, 2007, in U.S. v Atlantic Research Corp., the United States Supreme Court solved a portion of the puzzle that has confounded so-called potentially responsible parties (PRPs) since the Court’s decision in Cooper Industries, Inc. v Aviall Services, Inc. in 2004.

In Coopers v Aviall, the Court limited a PRP’s ability to obtain contribution from other PRPs under the Federal Superfund Law, also known as CERCLA, to instances in which the PRP had either settled with the government or had been sued for cost recovery by a third party. The Court did not resolve whether one could sue another PRP for cost recovery or whether cost recovery claims under CERCLA were only for the government or an innocent person. (Many courts had previously so limited cost recovery claims). PRPs that had voluntarily cleaned up sites were left wondering whether they could sue others under federal law if they had paid more than their share. In U.S. v Atlantic Research the Court sided with Atlantic Research, and against the government, and ruled that a PRP may bring a cost recovery claim against other PRPs, including the government, to recoup Superfund-related costs.

Atlantic Research leased property at the Department of Defense’s Shumaker Naval Ammunition Depot. Atlantic Research retrofitted rocket motors for the Navy, including cleaning solid propellant from the motors and burning it. Residual wastewater and burned fuel contaminated groundwater at the site. Atlantic Research cleaned the site and sued the U.S. for cost recovery under §107(a) of CERCLA and for contribution under §113(f). Following Coopers v Aviall, the trial court threw out the contribution claim because Atlantic Research had neither settled with the government, nor been sued. The U.S., as defendant, then moved to dismiss the cost recovery claim, arguing that only the government or an innocent party can seek cost recovery under §107. The trial court agreed, but the appellate court reversed.

In a unanimous decision, the Supreme Court said that the government argument “makes little textual sense” and noted that the “plain” terms of §107 provide Atlantic Research with a cause of action against other PRPs, including the government. The Court drew a bright line distinction between an action for “contribution” and an action for “cost recovery.” It said that §113 of CERCLA authorizes a contribution action by PRPs with common liability stemming from a suit or government settlement. The contribution action can only be brought within two years after the suit or settlement to the extent the PRP has been compelled to pay an inequitable distribution of a common liability. By contrast, §107 permits recovery of a PRP’s voluntarily incurred clean-up costs within six years of its incurrence of these costs. So, if a PRP is forced through suit or government settlement to reimburse more than its equitable share of a third party’s response costs, it may seek contribution under §113. If it voluntarily incurs its own costs cleaning up a site, it may seek cost recovery under §107. In a footnote, the Court acknowledged that this illustration did not explain exactly what happens when a court decision or government agency settlement compels a PRP to incur clean-up costs. Are these compelled costs of response recoverable under §113(f) with its two-year statute of limitations, or §107(a) with its six-year statute of limitations, or both? So, while in both Coopers v Aviall and now U.S. v Atlantic Research the Supreme Court has opined that the language of the Federal Superfund statute is “plain” in describing when a contribution claim is warranted, mysteries remain.

This case should not have a significant effect on cases brought under state statutes. There may, however, be some confusion raised by the interpretation in U.S. v Atlantic Research that “contribution” is solely for recovering compelled costs. Oregon state law has previously been interpreted to allow for contribution toward voluntarily incurred costs.

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