CERCLA Cost Recovery and Contribution

1
CERCLA Cost Recovery and Contribution

• by
• David L. Wallis, Esq.
• Gallagher Kennedy
• Phoenix, AZ

2
Outline of Presentation

• Overview of CERCLAs cost-recovery framework
• United States Supreme Courts decisions in
  Cooper Industries, Inc. v. Aviall Services, Inc.
  and United States v. Atlantic Research Corp.
• Survey case law applying CERCLA 107(a) and
  113(f) in the wake of these decisions
• Outstanding Issues

3
Legal Framework of CERCLA Cost Recovery

• CERCLA 107(a) provides that the United
  States, a State, an Indian Tribe or any other
  person may recover its response costs from a
  responsible person through a so-called
  cost-recovery claim if the following conditions
  are satisfied the site is a facility, there is
  a release or threatened release of a hazardous
  substance, the release or threatened release
  caused the party to incur response costs, and the
  response costs are not inconsistent with the
  National Contingency Plan (NCP).

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Legal Framework of CERCLA Contribution

• CERCLA 113(f)(1) provides that any person may
  seek contribution from any PRP during or
  following any civil action under 106 or 107(a)
  of CERCLA.
• CERCLA 113(f)(3)(B) provides for a right of
  contribution for a person who has resolved its
  liability to the United States or a State for
  some or all of a response action or for some or
  all of the costs of such action in an
  administrative or judicially approved settlement.

5
Aviall

• The Supreme Court held that the plain language
  of CERCLA 113(f)(1) allows a "potentially
  responsible party" (PRP) to seek contribution
  only "during or following" a "civil action" under
  CERCLA 106 or 107(a).

6
Atlantic Research

• The Supreme Court held that under the plain
  terms of CERCLA 107, a potentially responsible
  party (PRP) in Atlantic Researchs situation can
  recover incurred cleanup costs from other PRPs
  where there is no corresponding legal action
  (suit or settlement) by EPA or a state under
  CERCLA 106 or 107.

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Post Atlantic Research

• ITT Industries CERCLA 107(a) can be used by
  a PRP that entered into an administrative
  settlement with EPA.
• EPAs Position CERCLA 107(a) does not apply
  to parties that have contribution rights under
  CERCLA 113.

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CERCLA 113(f)(3)(B)

• Majority Approach The settlement must be with
  EPA or a State with delegated CERCLA authority
  and follow CERCLA 122 settlement procedures.
• Minority Approach The settlement can be with EPA
  or a State without delegated CERCLA authority so
  long as the State settles its CERCLA claims.

9
Outstanding Issues

• Implications of CERCLA 107(a) joint and several
  liability
• Use of both CERCLA 107(a) and 113(f) by the
  same PRP
• Contribution protection against CERCLA 107(a)
  cost recovery claims
• Settlement of State CERCLA claims