Squaring the CERCLA: Federal Court in DC Weighs in on Interplay Between Action for Response Costs and Action for Contribution

One of the many pitfalls in Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) compliance is navigating the interplay between cost recovery actions under CERCLA § 107(a) and contribution actions under CERCLA § 113(f). In general, parties who incur costs to respond to environmental contamination gain a cause of action under § 107(a) against other potentially responsible parties (PRPs). On the other hand, parties who have been held liable for cleanup costs through some government action may seek contribution from other responsible parties under § 113(f). Thus, when coupled together, the remedies available under sections 107(a) and 113(f) serve to ensure that PRPs pick up the tab for the cleanup costs that occur with respect to hazardous waste sites and that PRPs share the costs in an equitable manner. However, courts have almost universally agreed that the remedies are mutually exclusive, i.e. that CERCLA plaintiffs cannot seek to advance claims under both sections against the same defendant at the same time.

The strength of that general framework is often tested by the way parties and government entities act in the real world. For example, parties often enter into consent decrees or administrative orders by consent with the EPA wherein the parties agree to shoulder some response costs in exchange for a promise from the EPA not to sue and to release them from liability. Those decrees and orders often provide that the parties do not admit to any liability, but the EPA retains the right to sue if the parties do not comply with the agreement and fulfill their response obligations. Decrees and settlements on such terms are common, and they make sense for both sides.

However, those settlements leave open an important question: does a party who enters such an agreement have a cause of action against other PRPs under § 107(a), or only under § 113(f)? The answer to that question is important for two main reasons. First, the statute of limitations for a § 107(a) action is much longer than the statute of limitations for § 113(f). Second, PRPs’ liability under § 107(a) is joint and several—meaning any one PRP may be held liable for the whole amount of the response costs — while PRPs’ liability under § 113(f) is only several, meaning PRPs are liable only for response costs attributable to their own site or operations.

Courts determine whether parties’ agreements with EPA give rise to causes of action for response costs or contribution on a case-by-case basis, interpreting individual agreements according to their terms. Each decision — and the reasoning behind it — has an effect on subsequent decisions. The latest entry in that line of decisions came from the federal district court for Washington, D.C. in Government of Guam v. United States. There, the court held that the agreement at issue contained “reservations of rights, conditional covenants, and express disclaimers of liability”, and that it therefore did not resolve the government of Guam’s liability to the United States. As a result, Guam did not have a contribution claim under § 113(f), but instead had an action for response costs under § 107(a). The court’s decision was dependent on the particular provisions of the agreement between Guam and the United States, but its importance in the larger scheme of CERCLA liability likely means that the ruling will be appealed, and another federal appellate court will weigh in on the issue.

We will keep you up to date as the case develops.

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