Contractors should beware that the Sixth Circuit’s guidance on CERCLA-related topics continues to be murky, including, in particular, what constitutes a CERCLA settlement triggering the running of the 3-year limitations period for contribution claims. On November 5, 2015, the U.S. Court of Appeals for the Sixth Circuit issued a ruling in the case of Florida Power Corp., dba Progress Energy Florida, Inc., v. FirstEnergy Corp., interpreting two Administrative Orders by Consent for Remedial Investigation/ Feasibility Study (AOCs). The Court of Appeals held that the AOCs were not CERCLA settlements and, as a result, Florida Power’s contribution claims were not untimely. There is a significant dissent in this case, and all of the judges appear to agree that the Sixth Circuit’s decisions in this area have not provided adequate guidance to the regulated community.

Florida Power’s predecessor owned and operated two coal gasification plants in Florida which became subject to the cleanup and remedial investigation provisions of CERCLA (a.k.a a Superfund). Florida Power entered into separate AOCs and also paid EPA’s past response costs. EPA issued three Records of Decision for one site and a Consent Decree requiring the agreed cleanup was approved by the local federal court in 2009. EPA’s action on the second site is apparently still awaiting final agency action.

In December 2011, Florida Power filed a CERCLA contribution action against FirstEnergy, the successor in interest to a former owner-operator of these sites.  FirstEnergy sought dismissal of the action on the ground that the CERCLA statute of limitations barred the litigation. The district court agreed, largely on the basis of a recent Sixth Circuit ruling on CERCLA contribution actions, Hobart Corporation, et al., v. Waste Management of Ohio, Inc., et al., 758 F.3d 757 (6th Cir. 2014). Under Hobart, the effective date of a CERCLA settlement agreement triggers the running of the 3-year statute of limitations.

On appeal, the Court of Appeals considered whether the two AOCs were “administrative or judicially approved settlements” within the meaning of CERCLA’s statute of limitations. The Court of Appeals concluded that they were not because they did not resolve Florida Power’s cleanup liability; the resolution of that liability was conditioned upon the Florida Power’s performance of the terms of the AOC, and therefore did not take immediate effect. In addition, the AOCs contained language to the effect that Florida Power had not conceded its liability at the site; the Orlando AOC provided that participation by Florida Power in this AOC “shall not be considered an admission of liability.” Finally, neither settlement was entitled an “administrative settlement.”  As a result, Florida Power’s contribution claims against the successor in interest were not time barred. When acquiring certain property, contractors should beware of the risk of contribution claims that may not be time barred.