The statute of limitations (“SOL”) for seeking contribution under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) is three years from the date of “entry of the judicially approved settlement.” But what happens if that judicially approved settlement was not based on CERCLA, and did not resolve CERCLA claims? According to a recent federal court decision, so long as the settlement resolved environmental liability for costs related to a cleanup action – even if that cleanup action was taken pursuant to a state superfund law or another federal statute like the Clean Water Act – CERCLA’s three year statute of limitations for contribution will apply.
The facts of the case, ASARCO LLC v. Atlantic Richfield Co. (D. Mont., No. 12-cv-53, Aug. 28. 2014), are not uncommon in the world of environmental liability and have some in the field wondering if the decision will pave the way for contribution actions under federal statutes that do not contain express contribution provisions.
In 1998, ASARCO LLC entered into a consent decree with EPA pursuant to the Resource Conservation and Recovery Act (RCRA) and the Clean Water Act which required it to take certain actions to remediate a former lead smelting site. Eleven years and one bankruptcy later, ASARCO entered into a second settlement with EPA, this time expressly pursuant to CERCLA, resolving, among other things, its CERCLA liabilities at the same lead smelting site. Within three years of the CERCLA settlement, ASARCO sought contribution from the Atlantic Richfield Company, who then argued in court that ASARCO’s claim against it had expired three years after the original 1998 consent decree, and not three-years after the more recent 2009 agreement. Agreeing with Atlantic Richfield Company, the Montana District Court held that so long as the party seeking contribution has resolved its liability for a cleanup activity that qualifies as a “response action” under CERCLA, even if that action was not taken pursuant to CERCLA, then the three-year CERCLA SOL will apply to contribution actions seeking reimbursement for costs associated with that cleanup activity.
The District Court noted that this issue has divided the Second and Third Circuit Courts of Appeal, with the Second Circuit requiring that the liability resolved must be for a “response action” taken pursuant to CERCLA, while the Third Circuit allows that agreements resolving liability for response actions taken pursuant to other state and federal statutes may serve to trigger the CERCLA SOL. Though more recently the Second Circuit seems to have back-tracked from its original position, quoting from an EPA amicus brief that endorsed the Third Circuit’s interpretation.
A wide range of cleanup activities taken pursuant to state superfund laws or other federal environmental laws may constitute “response actions” under CERCLA. For example, the removal of certain types of fill from a wetland to allow for its restoration, or the closure of leaking underground storage tanks holding substances other than petroleum under RCRA, are the types of cleanup actions that may constitute “response costs” under CERCLA and be subject to CERCLA’s three-year SOL.
More importantly, because other federal environmental statutes like RCRA do not provide for express rights of contribution, this decision may provide the basis for parties that have settled under RCRA, for example, to avail themselves of the contribution provisions of CERCLA, thereby expanding the scope of contribution actions generally.