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Federal Court Holds That Parties Working Under a CERCLA Consent Decree Are Limited to a Section 113 Contribution Action
Federal Court Holds That Parties Working Under a CERCLA Consent Decree Are Limited to a Section 113 Contribution Action
V&E Environmental Law Update E-communication, July 15, 2010
On July 2, 2010, Magistrate Judge Greene of the Northern District of Alabama issued an order dismissing the CERCLA Section 107 claims asserted by the successors to the former Monsanto Corporation, Solutia, Inc., and Pharmacia Corp., in connection with their ongoing cleanup of PCBs and other hazardous substances in Anniston, Alabama (Memorandum Opinion, Solutia, Inc. and Pharmacia Corp. v. McWane, Inc. et al., Civil No. 1:03-cv-1345-PWD (N. D. Ala. July 2, 2010) (Mem. Op.)). This decision addressed an important issue left open by the United States Supreme Court in the Atlantic Research case: whether costs incurred by a party working under an administrative or judicial settlement are recoverable under CERCLA Section 107, Section 113, or both (See United States v. Atlantic Research Corp., 551 U.S. 128, 139 n.6 (2007)).
The court’s opinion joins the growing weight of case law holding that such parties are limited to a Section 113 contribution claim. This limitation to Section 113 has significant implications for CERCLA liability, most significantly in reducing the prospects for a “working” potentially responsible party (PRP) to impose joint and several liability on other PRPs and strengthening the defense of contribution protection for parties that have settled with the federal or state government.
In 2002, Solutia and Pharmacia entered a “partial consent decree” with the United States, committing them to perform certain investigation and remediation activities to address PCBs and other hazardous substances. In 2003, Solutia and Pharmacia brought a CERCLA action attempting to recover the costs incurred pursuant to this consent decree, asserting both Section 107 cost recovery claims and Section 113 contribution claims. The defendants in this action had operated foundries or other types of industrial facilities in the Anniston area. In 2005, EPA entered an Administrative Order on Consent (AOC) with a number of these defendants; that AOC provided those defendants with contribution protection and a Section 122(g) de minimis settlement for PCB contamination in Anniston. In 2008, the court dismissed the Section 113 contribution claims on the basis of contribution protection, but allowed the Section 107 cost recovery claim to proceed based on its interpretation of the Supreme Court’s Atlantic Research opinion.
A number of the defendants sought reconsideration of that decision, based on additional developments in the factual record and the evolving post-Atlantic Research case law, which largely concluded that parties working under administrative or judicial settlements could not assert a Section 107 claim, but were instead required to proceed for contribution under Section 113 of CERCLA (See Mem. Op. at 40-42). Vinson & Elkins, representing defendant Phelps Dodge Industries, took the lead in briefing and arguing this issue. Based on these arguments, the court granted the defendants’ request for reconsideration and held that Solutia and Pharmacia were not entitled to assert a Section 107 claim; because this was the sole remaining claim in the case, the defendants were awarded summary judgment.
In a lengthy opinion, the court analyzed the key CERCLA issues and the state of the case law before Atlantic Research and recognized that Atlantic Research left open the question of whether a party can proceed under Section 107 for work done pursuant to a CERCLA consent decree. The court also recognized that, for the most part, the post-Atlantic Research courts considering the issue had concluded that for costs “compelled” by a CERCLA settlement, the Section 113 contribution remedy was the exclusive remedy available to such a party (See Mem. Op. at 40-41). In ultimately agreeing with these decisions, the court concluded that “Congress intended § 113(f) contribution to serve as the exclusive remedy for a party to recoup its own costs in performing a cleanup pursuant to a judgment, consent decree, or settlement that gives rise to contribution rights under § 113(f)” (Id.at 42). The court reasoned that Congress had expressly provided for contribution liability to be based on equitable apportionment and to provide settling parties with contribution protection against such claims; accordingly, Congress could not have intended to allow parties to circumvent such limitations merely by asserting a Section 107 claim that would cover the same costs (Id. at 47).
The court then looked to whether the partial consent decree at issue provided Solutia and Pharmacia with the right to seek contribution under Section 113. The court concluded that they had such a right, based on the court’s analysis of the statutory language and an earlier opinion of the Eleventh Circuit, which allowed a contribution claim to proceed on the basis of a similar settlement (Id.at 51-52). Importantly, for purposes of determining that Solutia and Pharmacia were limited to a Section 113 claim, it did not matter that certain defendants had a contribution protection defense to those claims (Id. at 47-8 n. 18). The court reviewed the language of the relevant consent decree provisions, and concluded that all of the costs for which Solutia and Pharmacia sought recovery were, in fact, recoverable under Section 113, and therefore not recoverable under Section 107.
As noted above, this decision is consistent with the weight of the post-Atlantic Research case law regarding the availability of claims under Section 107 and 113 of CERCLA. Significantly, the court determined that a plaintiff that had incurred costs working under a settlement agreement could not circumvent the defense of contribution protection under Section 113(f)(2) by seeking recovery under Section 107. This decision also confirms that a party that has incurred response costs pursuant to a settlement agreement giving rise to a Section 113 contribution claim may not attempt to impose joint and several liability against other parties using Section 107. Rather, such a party is limited to a Section 113 contribution claim, which contemplates several liability and equitable allocation under settled principles of law.
For more information, please contact Vinson & Elkins lawyers Ben Lippard, Molly Cagle, or Kevin Gaynor. Visit our website to learn more about V&E's Environmental practice or e-mail one of the practice contacts.
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