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Supreme Court Issues Key Ruling Affirming CERCLA Cost Recovery Rights But Leaving Questions To Be Answered

Beveridge & Diamond, P.C., June 12, 2007

On June 11, 2007, the Supreme Court held that Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) provides potentially responsible parties (PRPs) with a cause of action against other PRPs to recover cleanup costs at contaminated sites. The Court’s unanimous decision in United States v. Atlantic Research Corporation, 551 U.S. ___ (2007), resolves an issue left undecided in Cooper Industries v. Aviall, 543 U.S. 157 (2004), by holding that PRPs that have incurred necessary CERCLA response costs may institute an action under CERCLA Section 107(a)(4)(B) against other PRPs to recover those costs. 

The key issue in Atlantic Research was the meaning of the phrase “any other person” in Section 107(a)(4)(B) to whom CERCLA PRPs may be held liable for cost recovery. The Court interpreted Section 107(a)(4)(B) in relation to the portion of the statute that immediately precedes it, Section 107(a)(4)(A), which “permits suit only by the United States, a State or an Indian tribe.” Slip op. at 5. Thus, the Court held the phrase “any other person” in Section 107(a)(4)(B) includes PRPs (i.e., any person other than the U.S., a State or an Indian Tribe) that have incurred necessary CERCLA response costs. Id. at 5-6.  In so doing, the Court rejected the U.S. Government’s position that the phrase “any other person” was to be read in contrast to the four categories of PRPs enumerated in Section 107(a)(1-4) and therefore included only so-called “innocent parties.” Id. at 5-7.

Additionally, the Court distinguished cost recovery under Section 107(a) from contribution under Section 113(f), noting that the former permits a PRP to recover costs it has incurred to clean up a site, while the latter allows a PRP to obtain reimbursement for costs paid to another party under a settlement agreement or judicial order under Section 106 or 107 that are in excess of its proportionate share of liability. Id. at 8-9. The Court’s ruling clearly upholds the rights of PRPs under Section 107 to seek recovery of costs that they incur in undertaking necessary cleanups of contaminated sites and, in so doing, is likely to promote voluntary cleanup activity on the part of PRPs.

In its language distinguishing cost recovery from contribution actions, however, the Court did not address all of the circumstances that can arise at a Superfund site. Presumably PRPs that receive and comply with a unilateral administrative order (which may not qualify as a “civil action”) under Section 106 can now pursue other PRPs under Section 107(a). Will PRPs that perform response action and incur response costs pursuant to a settlement agreement with the United States be limited to a Section 113 contribution action, even though they are incurring rather than reimbursing costs -- the same costs they would be incurring if they had received a unilateral administrative order? Which statute of limitations will apply? In addition, by unequivocally distinguishing between cost recovery and contribution actions, the Court was compelled to state that the protection against contribution actions provided by Section 113(f)(2) does not extend to Section 107 actions. Does this mean that early settlors with the United States at a site will remain exposed to litigation by other PRPs who perform response action at the site, thus greatly reducing one of the benefits of early settlement? These and other questions will ultimately be resolved in court or by legislative action.

To view a copy of the Supreme Court ruling, please click here.

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For more information regarding the implications of the Atlantic Research decision, please contact Karl Bourdeau (202) 789-6019, Steve Jawetz (202) 789-6045, Dan Krainin (212) 702-5417, or Jimmy Slaughter (202) 789-6040.




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