In its 2004 decision in Cooper Industries v. Aviall, the Supreme Court turned upside down many years of settled CERCLA jurisprudence establishing that a PRP only has contribution claims against other PRPs under Section 113(f)(1) and not direct cost recovery claims under Section 107(a). A decision earlier this week by the Eighth Circuit, Morrison Enterprises v. City of Hastings, coupled with the Supreme Court's 2007 decision in Atlantic Research, provides clear guidance on when a PRP suing another PRP must assert a contribution claim and when he must assert a direct cost recovery claim.

In Atlantic Research, the Supreme Court had held that a PRP which voluntarily undertook response actions can seek to recover the costs of that voluntary cleanup work by bringing a Section 107(a) cost recovery action against other PRPs. At the center of the Court’s reasoning was the inability of a volunteer to seek contribution since voluntary cleanup actions by definition lack the compulsion of a government enforcement action which Aviall found to be the sine qua non of a contribution action under Section 113(f)(1).

Morrison Enterprises establishes the converse proposition: that a PRP which has been compelled by the government to undertake cleanup work or to pay responses costs can recover all or part of its costs only in a claim for contribution under Section 113(f)(1) and not under Section 107(a). Specifically, Morrison Enterprises involved a claim by a PRP which had been the subject of a Section 107 enforcement action and agreed to perform certain cleanup work in a Consent Order that resolved that enforcement action. The PRP then sought to recover some or all of the costs of its Consent Order work in a Section 107 cost recovery claim against another PRP. The Eighth Circuit ruled that “response costs incurred pursuant to such administrative settlements following a suit under § 106 or § 107(a) are not incurred voluntarily… The district court correctly concluded [that the PRP] could not maintain a cost-recovery action under § 107(a).” The failure by the PRP to assert a contribution action instead of a direct cost recovery action was fatal to that PRP’s claim.

Morrison Enterprises and Atlantic Research provide useful guidance to PRPs as to when to assert a direct cost recovery action and when a contribution action. However, those decisions do not resolve all of the problems unleashed by Aviall, particularly with respect to how a settling party can obtain finality, which was the subject of several cases that Seth Jaffe and I blogged about last fall -- Ashland v. Gar Electroplating and Emeryville v. Sherwin Williams. While PRPs now may be able to figure out when they have a Section 107(a) claim and when they have a contribution claim, those PRPs still cannot count on courts to construe CERCLA’s contribution scheme to ensure that settling parties will have meaningful protection from future claims.