Court: Court of Appeals for the Eighth Circuit; August 11, 2006; Federal Appellate Court
Atlantic Research Corporation seeks partial reimbursement from the United States for environmental cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The core issue is whether CERCLA permits a party that has voluntarily cleaned up a contaminated site to recover costs from another liable party. The court holds that CERCLA § 107 allows such a claim. Atlantic, which retrofitted rocket motors from 1981 to 1986, incurred costs while investigating and cleaning contamination at its Camden, Arkansas facility due to burned rocket propellant. Initially, Atlantic sought recovery through CERCLA § 113(f), but was barred by the Supreme Court's decision in Cooper Industries, Inc. v. Aviall Services, Inc., which stated that contribution claims could only arise during or after a CERCLA civil action. Following this, Atlantic amended its complaint to focus solely on § 107(a) and federal common law. The government moved to dismiss based on a previous Eighth Circuit decision, Dico, Inc. v. Amoco Oil Co., which prohibited liable parties from claiming under § 107. However, the court finds Dico distinguishable and its rationale undermined by Aviall, allowing Atlantic's appeal to proceed. The court reviews the case de novo, emphasizing the need to adhere to Congressional intent in interpreting federal statutes.
CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) was enacted by Congress to promote the cleanup of hazardous waste sites and assign cleanup costs to responsible parties. Under CERCLA, those who contaminate a site are strictly liable for cleanup costs incurred by others, including government entities. The Act allows for federal and state recovery of cleanup costs from liable parties under Section 107(a)(4)(A), while private parties can recover costs through Section 107(a)(4)(B) and Sections 113(f)(1) and 113(f)(3)(B), which were added later.
Courts, particularly in the Eighth Circuit, have ruled that liable parties seeking reimbursement for cleanup costs must use Section 113(f)(1) and cannot utilize Section 107 for this purpose. The current analysis considers the implications of these rulings in the context of the Aviall decision. Section 107(a) identifies liable parties and specifies the types of costs for which they are responsible, while Section 113 addresses contribution claims among liable parties, allowing for equitable allocation of response costs. The Supreme Court has noted that the remedies under Sections 107 and 113 are "similar and somewhat overlapping," yet remain "clearly distinct." Both sections require proof of similar elements, as established in relevant case law.
Section 107(a) and Section 113 of CERCLA provide different remedies with distinct procedures and scopes. Section 107(a) has a six-year statute of limitations, allowing a plaintiff to recover full response costs from all liable parties, including those that have settled their CERCLA liabilities with the government. Before the enactment of SARA in 1986, courts debated the existence of a contribution right under Section 107, noting the Supreme Court's reluctance to imply rights of action. SARA clarified this by explicitly establishing the right to contribution in Section 113, which is more limited: it has a three-year statute of limitations, allows recovery only for costs exceeding a party's equitable share, and excludes recovery from parties that have already settled.
The introduction of Section 113 created tension, as courts recognized that litigants might prefer the more favorable provisions of Section 107, potentially rendering Section 113 ineffective. To address this, courts began to interpret and apply Sections 107 and 113 together, aiming to distinguish between them. This interpretation effectively narrowed the application of Section 107, reserving it primarily for "innocent" plaintiffs who could invoke statutory defenses. As a result, courts directed liable parties towards Section 113 to maintain its intended constraints, thereby preserving its legal significance and preventing parties from circumventing its provisions.
In pre-Aviall jurisprudence, Section 113 of CERCLA was assumed to be accessible to all liable parties, even those not involved in a CERCLA action. However, claims for costs voluntarily incurred by liable parties under Section 113 were often barred by settlements. Courts consistently ruled that liable parties could not use Section 107 for direct recovery, implying that Section 107 incorporated a claim for contribution available through the combined operation of Sections 107 and 113. The case of Dico, Inc. exemplified this trend, where Dico sought to recover cleanup costs under both Sections 107 and 113 after being compelled to clean a contaminated site. The district court dismissed Dico's Section 107 claim, affirming that Dico, as a liable party, could not recover full costs under that section, consistent with the narrow interpretation shared by other circuits.
The Supreme Court's ruling in Aviall significantly impacted this framework. Aviall Services, Inc. undertook cleanup efforts for contaminated sites without a prior CERCLA action against it and later sought recovery from Cooper Industries under both Sections 107 and 113. The district court ruled against Aviall, stating that Section 113 relief required a preceding enforcement action under Section 106 or 107. The Fifth Circuit’s initial affirmation was later reversed en banc. The Supreme Court ultimately clarified that a claim under Section 113 could only be pursued in the context of a specified civil action, establishing that the phrase "during or following" creates a condition precedent for such claims.
A court permitting a Section 113 contribution claim without a preceding Section 106 or 107 action would negate the precondition of Section 113. The court referenced the Supreme Court's Key Tronic decision, which identified that while the remedies under Sections 107 and 113 are similar in allowing cost recovery among private parties, they are fundamentally distinct. Dissenting Justices Ginsburg and Stevens interpreted Key Tronic differently, suggesting that it did not address the viability of a Section 107 claim against other liable parties. They posited that Aviall's amended complaint did not abandon the Section 107 claim and would have allowed it to proceed, a matter the majority sidestepped.
The current issue is whether a liable party can recover excess costs from another liable party through direct recovery, Section 107, or federal common law. The Second Circuit is the only court to have examined this issue since Aviall, concluding that Section 107 allows a liable party to recoup voluntarily incurred response costs from another. The court distinguished its ruling from Bedford Affiliates, which had denied such a claim. It found that it no longer made sense to consider Section 113 as the only means for liable parties to recover cleanup costs, particularly given the distinct nature of the remedies under Sections 107 and 113.
The court aligned with the Second Circuit's perspective, asserting that Section 113 should not be viewed as the exclusive remedy for liable parties. It concluded that Atlantic, having filed its suit prior to a CERCLA enforcement action, could pursue recovery under Section 107 for costs exceeding its equitable share. The court emphasized that the remedies under Sections 107 and 113 are distinct and rejected any categorical limitation that would deny a liable party access to Section 107 remedies. It affirmed that "any other person" in Section 107 encompasses any individual or entity outside of the government or recognized tribes.
Control Data Corporation establishes that Atlantic qualifies as a "person" under CERCLA and has incurred necessary response costs, thereby invoking the applicability of Section 107. The Second Circuit clarifies that Sections 107(a) and 113(f)(1) provide distinct mechanisms for cost recovery for liable parties under varying procedural circumstances. A liable party may initiate a cost recovery action under Section 107 if they have incurred necessary costs without having been sued or settled their liability under Sections 106 or 107. While Section 107 allows for full cost recovery, some pre-Aviall cases argued against this for liable parties, suggesting that Congress intended only innocent parties to recover fully. The consensus is that liable parties cannot recover 100% of their costs under Section 107, but they may seek recovery of "any other necessary costs of response" as stipulated in Section 107(a)(4)(B).
Furthermore, if a plaintiff seeks excessive recovery under Section 107, defendants can counterclaim for contribution under Section 113(f). Allowing Atlantic's claim under Section 107 aligns with CERCLA's text and purpose. Additionally, the text of Section 107(a)(4)(B) implies a right to contribution, which Congress intended to create, as evidenced by CERCLA's language, legislative history, and purpose. Contribution is essential to CERCLA's framework, aimed at encouraging private cleanup efforts by allowing parties to recover costs from others. Initially, issues of contribution were left to federal courts to develop, but Congress explicitly enacted a right to contribution in Section 113 during the 1986 revisions, affirming its intention to allow private parties to seek contribution without eliminating existing rights under Section 107.
The text analyzes the interpretation of Section 113 of CERCLA, emphasizing that it does not eliminate the right to seek contribution under Section 107. The saving clause in Section 113 explicitly states that it does not diminish the right of any person to pursue a contribution action in the absence of a civil action under Sections 106 or 107. Legislative history supports this interpretation, indicating Congress intended to clarify, not replace, existing contribution rights. If Congress had meant for Section 113 to fully replace Section 107 in all situations, it would have stated so clearly.
The language of Section 107 is interpreted as supporting both cost recovery and an implied right to contribution. Even volunteer remediators, who act without government initiation, may pursue implied contribution claims under Section 107. The text argues that allowing a contribution claim under Section 107 for parties like Atlantic does not render Section 113 meaningless, as liable parties subject to enforcement actions are still required to utilize Section 113.
The resolution harmonizes the sections of CERCLA and aligns with its goal of encouraging voluntary cleanups. Denying Atlantic a recovery option would contradict CERCLA’s purpose and lead to an unjust outcome, especially since the United States is a liable party in this case. The government’s argument that allowing recovery under Section 107 would undermine Section 113 is countered by the notion that it would shield the government from its pollution liabilities by avoiding cleanup actions. The text underscores that Congress acknowledged the government's dual role by waiving sovereign immunity in the context of CERCLA.
Atlantic undertook environmental remediation voluntarily, recognizing the negative environmental impacts, and will not be penalized for this choice, particularly since the ultimate enforcement authority rests with the United States. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the U.S. is responsible for its share of liability. The court affirms that Congress established the U.S.'s liability two decades ago and did not create a means for the government to evade its obligations by neglecting enforcement. The public's right to a safe environment overrides the government's sovereign immunities. A private entity that voluntarily cleans up a site and may face liability can seek direct recovery or contribution from another liable party under CERCLA's provisions. The district court's judgment is reversed. The document also notes that the district court dismissed the case based on a motion from the government, assuming favorable facts for Atlantic. Additionally, it clarifies terms and references prior case law regarding liability and the implications of the Supreme Court's decisions on existing precedents, particularly concerning the definitions and rights under CERCLA. The court concludes that Atlantic has a statutory right to pursue recovery, making further common law claims unnecessary for resolution at this stage.
