In a unanimous decision issued last week, the United States Supreme Court ruled that those that voluntarily clean up contaminated sites can recover the costs for doing so, whether or not they are potentially responsible for that contamination, pursuant to CERCLA, the Comprehensive Environmental Response, Compensation and Liability Act (the “Act”), also known as Superfund. In United States v. Atlantic Research Corp., No. 06-562 (551 U.S. ___, 2007), the Supreme Court made clear that the “plain language” of Section 107 of the Act does not limit the ability to recover costs incurred for environmental cleanup to innocent parties.

Prior to last week’s decision, the U.S. Circuit Courts of Appeal were split on whether potentially responsible parties, or PRPs (those owners, operators, transporters, and arrangers for transport, who are strictly liable under CERCLA), who incurred costs for voluntarily cleaning up contaminated sites could recover those costs in a Section 107 cost recovery action where such PRPs were barred from seeking contribution under Section 113 of the Act because they had not been sued or had not been the subject of an enforcement action by the Government.


CERCLA provides two potential avenues for a party’s recovery of environmental cleanup costs at contaminated sites. Under Section 113, a party can potentially seek an apportionment of costs for cleanup among liable parties in an action for contribution. Under Section 107, a party that itself incurs costs for an environmental cleanup could potentially seek the recovery of those costs from others responsible for the contamination. In December 2004, the Supreme Court, in Cooper Industries, Inc. v. Aviall Services, Inc. (543 U.S. 157, 2004), limited the ability of parties to seek contribution under Section 113 to when those parties were subject to an enforcement action or other civil action. In addition, prior to Aviall, Circuit Court precedent limited the ability to recover costs under Section 107 to innocent parties, or non-PRPs. Potentially responsible parties that incurred cleanup costs and which had not been sued, nor been the subject of an enforcement action, were potentially without a remedy under CERCLA.

In Aviall, the Supreme Court had ruled that those PRPs who voluntarily cleaned up a site could not sue others for their fair share of the liability under Section 113 unless they themselves had been sued. The Court reasoned that the plain meaning of “during or following any civil action” in Section 113 required this result. In deciding that Aviall was foreclosed from recovering its cleanup costs from Cooper because it had not been sued, the Court discussed, but did not decide, whether PRPs could sue other PRPs under Section 107. Justice Thomas, writing for the Court, stated that, in view of the importance of the Section 107 issue, the lack of briefing and Circuit Court precedent holding otherwise, the Court was not prepared to resolve the issue based solely on dictum in an earlier Supreme Court case. In Key Tronic Corp. v.United States (511 U.S. 809, 1994), which addressed whether attorneys’ fees were “necessary costs of response” within the meaning of CERCLA Section 107(a)(4)(B), the Court stated that § 107 “unquestionably provides a cause of action for [PRPs] to seek recovery of cleanup costs.”

Following Aviall, the Second, Eighth and Seventh Circuit Courts of Appeal ruled that Section 107 was not limited to innocent parties; PRPs could seek the recovery of costs under Section 107. (Consol. Edison Co. of N.Y. v. UGI Utils., Inc., 423 F.3d 90 (2d Cir. 2005); Atlantic Research Corp. v. United States, 459 F.3d 827, 835 (8th Cir. 2006); Metro. Water Reclamation Dist. v. N. Am. Galvanizing & Coatings, Inc., 473 F.3d 824 (7th Cir. 2007)). On the other hand, the Third Circuit, refusing to reconsider its prior precedent, ruled that PRPs were limited to seeking contribution under Section 113. (E.I. Dupont De Nemours & Co. v. United States, 460 F.3d 515 (3d Cir. 2006)). Section 107, according to the Third Circuit, was limited to innocent parties. However, last week’s Supreme Court decision resolves this divide. PRPs can seek the recovery of costs for a voluntary cleanup under Section 107.

United States v. Atlantic Research Corporation

At issue in Atlantic Research Corp. was the ability of Atlantic Research to recover costs that it voluntarily incurred after cleaning up soil and groundwater contamination caused by the retrofitting of rocket motors it conducted under contract with the U.S. Government. Atlantic Research sought to recover those costs from the Government under Sections 107 and 113. After Aviall, Atlantic Research amended its complaint to seek relief under Section 107 and the federal common law. The district court granted the Government’s motion to dismiss Atlantic Research’s Section 107 claim based on prior Circuit Court precedent that limited Section 107 claims to innocent parties. Atlantic Research appealed that decision to the Eighth Circuit, arguing that the Court’s decision in Aviall changed the CERCLA landscape, undermining Circuit Court precedent that limited Section 107 to innocent parties. The Eighth Circuit agreed with Atlantic Research and held that the plain language of Section 107(a)(4)(B) allowed a liable party to bring a cost recovery action under Section 107 if it had incurred necessary costs of response, even when it had neither been sued nor in any other context had settled its liability under Sections 106 or 107. Moreover, the Circuit Court made clear that parties that had been sued under Sections 106 or 107 must use Section 113, “thereby ensuring its continued vitality.”

The Eighth Circuit described the Section 113/Section 107 distinction in Circuit Court precedent prior to Aviall, as mere “traffic-directing.” It stated that, although on its face Section 107(a)(4)(B) is available to “any… person,” in practice courts gradually steered liable parties away from Section 107 and required them to use Section 113. The Eighth Circuit ruled that in light of Aviall, it “no longer makes sense to view [Section] 113 as a liable party’s exclusive remedy,” because there is “no such limitation in Congress’s words.” Significantly, the Eighth Circuit also commented on the Government’s suggested reading of Section 107. The Circuit Court stated that if the Government’s view were adopted, “the government could insulate itself from responsibility for its own pollution by simply declining to bring a CERCLA cleanup action or refusing a liable party’s offer to settle. This bizarre outcome would eviscerate CERCLA whenever the government, itself, was partially responsible for a site’s contamination.”

The Government appealed this decision to the Supreme Court. It argued that the “plain meaning” of Section 107 limited the ability to recover costs to innocent parties. In other words, “any other person” in Section 107(a)(4)(B) (“Subparagraph B”) refers to any person not identified in Sections 107(a)(1)-(4). Sections 107(a)(4)(1)-(4) identify those persons who are strictly liable under CERCLA, or PRPs (owners, operators, transporters and arrangers). The effect of this interpretation would limit Section 107 actions to the persons listed in Section 107(a)(4)(A) (“Subparagraph A”), namely the United States Government, a State, or an Indian tribe, and additionally, persons who are not PRPs. Atlantic Research, on the other hand, argued that Subparagraph B in Section 107 provides a cause of action to anyone except the United States, a State, or an Indian tribe, those persons listed in Subparagraph A.

Reasoning that the “Government’s interpretation makes little textual sense[,]” the Court agreed with Atlantic Research and affirmed the Eighth Circuit’s decision. It explained that statutes “must be read as a whole.” By virtue of their relationship, Subparagraph B can only be understood with reference to Subparagraph A. Thus, according to the Court, the phrase “any other person” in Subparagraph B “means any person other than [the] three” in Subparagraph A (the United States, a State, or an Indian tribe). “Consequently, the plain language of Subparagraph (B) authorizes cost recovery actions by any private parties, including PRPs.” The Court concluded that “[b]ecause the plain terms of [Section] 107(a)(4)(B) allow a PRP to recover costs from other PRPs, the statute provides Atlantic Research with a cause of action.”

The Court also addressed the Government’s argument that allowing a Section 107 claim would undercut the objectives of Section 113 because PRPs could choose between Sections 107 and 113. According to the Government, because of its more generous provisions, including a longer statute of limitations, allowing PRPs to pursue a Section 107 remedy would render Section 113 superfluous. Referring to its decision in Aviall, Justice Thomas, writing for the Court, again explained that the two CERCLA provisions provide “clearly distinct” remedies. The Court explained that Sections 107 and 113 complement each other by providing remedies to “persons in different procedural circumstances.” Section 107 permits a cost recovery action by a party that has itself incurred cleanup costs, while Section 113 permits equitable apportionment of costs among liable parties, including the party initiating the Section 107 cost recovery claim.

The Court also rejected the Government’s argument that allowing PRPs to pursue a Section 107 remedy would eviscerate the settlement provision of Section 113(f)(2) of the Act, which bars contribution claims against parties that settle their CERCLA liability with the federal government or a state. The Court explained that the Section 113 settlement provision does not explicitly bar a Section 107 cost recovery action. According to the Court, following a Section 107 action, a settlement can be considered a factor in apportioning costs in a Section 113 contribution counterclaim.