Last month, the D.C. Circuit, reversing a lower court decision, held that Guam was time-barred from pursuing its claims under CERCLA against the US Navy for the cleanup of the Ordot Dump on the island. Government of Guam v. United States of America, No. 1:17-cv-02487 (D.C. Cir. 2020). Of particular interest was the D.C. Circuit's determination that a 2004 Consent Decree entered into between EPA and Guam to resolve claims under a statutory scheme other than CERCLA, the Clean Water Act, nevertheless sufficiently “resolved” Guam’s liability for at least some remediation costs, giving rise to a contribution claim under Section 113 of CERCLA, bringing the D.C. Circuit in line with a majority of other federal appellate courts that have examined the issue.
For almost thirty years the Navy disposed of military wastes - including DDT and Agent Orange - in the Ordot Dump on the island before relinquishing control of the landfill back to the territory of Guam. As early as 1983, the dawn of CERCLA, the dump was listed on the National Priorities List, and in 1988, a ROD was issued designating the Navy as a potentially responsible party. Nevertheless, Guam alone was left to deal with the landfill and the remediation effort.
In 2002, the EPA sued Guam under the Clean Water Act for discharges of untreated leachate from the dump, which was still in use but had never been lined nor properly capped. EPA and Guam eventually entered into a consent decree of that action in 2004 (the 2004 Consent Decree) pursuant to which the landfill was eventually closed and a dump cover system installed.
In 2017, Guam initiated an against the Navy to recover its removal and remediation costs, pleading a cost recovery claim under 107(a) or, as an alternative, a contribution claim under section 113(f). In an argument familiar to Superfund practitioners, the Navy moved to dismiss, contending that (a) Guam could not have both a 107 and a 113 claim, (b) the 2004 Consent Decree was a settlement which triggered Guam’s contribution claim, and (c) Guam’s contribution claim was barred by the statute of limitations, which ran three years from the entry of the 2004 Consent Decree. The District Court agreed with the Navy’s first premise but held that the 2004 Consent Decree did not resolve Guam’s liability under CERCLA and hence Guam possessed a 107 claim that was not time-barred.
Although recognizing that its ruling appeared to be a harsh one, the D.C. Circuit reversed. It agreed with the lower court (and with all other federal appellate courts that had decided the issue) that Sections 107 and 113 of CERCLA are mutually exclusive, so that Guam could not pursue both avenues of relief against the Navy for its clean-up costs. But it went on to hold that the 2004 Consent Decree did give rise to a contribution claim which accrued at the time of its entry, thus dooming Guam’s action.
First, the Court addressed whether the United States, in the form of the Navy, was a “party to the settlement” between the United States, in the form of EPA, and Guam, since a claim under 113 exists only against those who are not parties to the settlement. While the United States often invokes the concept of the “unitary executive” to immunize itself from liability, here the Navy argued that because the 2004 Consent Decree had not “resolved [the Navy’s] liability to the United States” and it did not receive any protection from further liability, it was not “a party” to the Consent Decree in the manner contemplated by Section 113(f)(3)(B). The D.C. Circuit agreed, allowing it to continue to the next step of the analysis, whether the 2004 Consent Decree resolved Guam’s liability for “some or all” of the costs of a response action.
Unfortunately for Guam, the Court held that the 2004 Consent Decree qualified as a settlement of liability under CERCLA giving rise to a contribution claim. The D.C. Circuit first agreed with the Third, Seventh, and Ninth Circuits that settlement agreements that arise from liability under other statutory schemes can still resolve a party's CERCLA liability and trigger a contribution claim. The Court then went on to find that because the 2004 Consent Decree required Guam to construct a cover over the landfill and eliminate the discharges of untreated leachate - obligations that are considered remedial actions under CERCLA – the Consent Decree resolved Guam’s liability for “some” remediation costs. As a result, Guam was precluded from bringing a section 107, and its 113 was barred by the statute of limitations as the 2004 Consent Decree was entered into more than three years prior to the filing of the action.
The Circuit Court then rejected all of Guam’s alternative arguments as to why the 2004 Consent Decree did not trigger a contribution action, many of which have been pursued by CERCLA plaintiffs in other cases. These rejected arguments included that the EPA broadly reserved its rights in the 2004 Consent Decree and thus liability under CERCLA was not resolved; that Guam’s liability would not be “resolved” until it fully implemented the requirements of the 2004 Consent Decree; that Guam’s disclaimer of liability in the 2004 Consent Decree must be interpreted to mean that Guam did not resolve liability it did not acknowledge having; and that since the claims in the 2002 suit by EPA did not expressly involve “hazardous substances,” it could not be a settlement of CERCLA liability.
As the Court notes, EPA has since changed its settlement language to include an express statement that such an agreement does or not settle CERCLA liability. However, given the large volume of historical settlements and the fact that half of the Circuits remain undecided, this issue is one to be watched.