june 2007

U.S. Supreme Court Holds That PRPs Who Voluntarily Incur Cleanup Costs May Now Pursue Recovery Of Such Costs Under CERCLA Section 107(A)

BACKGROUND

The U.S. Supreme Court has issued a significant ruling concerning cost recovery actions following voluntary environmental cleanups. In United States v. Atlantic Research Corp., the Court held that Section 107(a) of CERCLA – the federal Superfund law – grants parties who are potentially responsible for environmental contamination (PRPs) the ability to bring a federal lawsuit against other PRPs for recovery of environmental cleanup costs that have been incurred without governmental compulsion.

This ruling answers the question left open in a 2004 case, Cooper Industries v. Aviall Services, in which the Court found that PRPs who voluntarily undertake cleanups of contaminated sites could not sue for contribution under Section 113(f) of CERCLA. Section 113(f) permits PRPs to bring a federal contribution lawsuit against other responsible parties for their allocable share of the cleanup costs, but only during or following a lawsuit against them by the government or another private party, or as a result of a settlement with the federal or state government. In Cooper Industries, the Court’s finding did not address whether Section 107(a) might permit parties who voluntarily incur cleanup costs to nevertheless sue.

Addressing this open issue, the Court reasoned that, by its terms, Section 107(a) does not exclude PRPs from its scope, and consequently ruled that Section 107(a) is available to PRPs who voluntarily incur cleanup costs and seek to recover such costs from other PRPs.

The Court distinguished Sections 107(a) and 113(f) by ruling that Section 107(a) provides a remedy for parties who themselves incur cleanup costs, while Section 113(f) is reserved for parties who do not themselves incur cleanup costs but are found liable to another party for costs incurred by that other party. Though not explicit in the ruling, the Court’s reasoning is consistent with the proposition that Section 107(a) is available to any party who itself incurs cleanup costs, whether voluntarily or not. Although the Court did not decide whether Section 107(a) is available to PRPs compelled to clean up a site, the Court’s reasoning may be interpreted by some to support this conclusion.

Significantly, this ruling may make available to certain PRPs the longer statute of limitations of Section 107(a). Before the Cooper Industries decision, PRPs typically looked to Section 113(f) with its three year statute of limitations for relief. As a result of the ruling in Atlantic Research, PRPs incurring costs voluntarily may now look to Section 107(a) with its six year statute of limitations.

WE RECOMMEND

If you are a PRP and are voluntarily undertaking an environmental cleanup, you may now have a remedy to recover some or all of your costs. Conversely, if someone asserts a CERCLA Section 107(a) cost recovery claim against you, you may still consider a counterclaim for contribution under Section 113(f).

Additionally, if you previously incurred cleanup costs and are beyond the three year statute of limitations of Section 113(f), or if you believed, prior to this ruling, that you were precluded from recovery of those costs under CERCLA, you should evaluate whether you now have a viable claim under Section 107(a). If you have any questions concerning these issues, please contact David B. Farer or Daniel L. Schmutter.