The United States Supreme Court just handed down an important case regarding private party “cost recovery” actions under CERCLA. In U.S. v. Atlantic Research Corp., the Court determined that potentially responsible parties (“PRPs”) may freely sue other PRPs for cost recovery of funds expended cleaning up contaminated sites regardless of whether the government sued to compel clean-up. The case is important because in Cooper Industries v. Aviall Services, Inc., 543 U.S. 157 (2004), the Supreme Court ruled that a PRP could only sue another PRP for “contribution” after the federal government had brought suit to compel cleanup. The Aviall Court held that a cause of action for “contribution” under CERCLA § 113 was available only after the government had initiated an action under CERCLA § 106 or § 107. Prior to Atlantic Research, courts which construed Aviall were split regarding whether an independent private cause of action existed under § 107. Thus, after Aviall, a private party who had conducted a cleanup was potentially left without a CERCLA remedy if it voluntarily cleaned up a site and later sought to recover costs from other responsible parties. Aviall did not address whether a separate, implied cause of action existed under § 107’s cost recovery provisions.

Atlantic Research is important because it makes clear that an implied “cost recovery” action exists for private parties under CERCLA § 107, even where “contribution” actions are unavailable because the government has not initiated an action against private parties. Atlantic Research clarifies how CERCLA’s § 107 and § 113 complement one another and that private party cost recovery actions brought under § 107 do not have to follow the requirements for “contribution” called for by CERCLA § 113.

The facts of Atlantic Research are typical for environmental litigation. Atlantic Research was a Department of Defense contractor who leased property and retrofitted rockets at a naval ammunition depot. In the process of retrofitting rockets, wastewater and burned fuel contaminated the depot’s soil and groundwater. Atlantic Research cleaned up the contamination and then sued the United States as a PRP to recover costs Atlantic Research spent cleaning up the site, arguing that it could seek recovery of costs under CERCLA § 107. At issue was whether general language found in § 107(a)(4)(B), which provides that responsible parties are liable for “costs of response incurred by any other person . . .,” was sufficient to create a statutory private cause of action absent an express provision conferring jurisdiction like that found in § 113.

The trial court dismissed the case because it found that based upon Aviall, § 113 contribution actions were the only allowable avenue for private parties to recover costs under CERCLA. Atlantic Research had pled a claim under § 113 but later dropped it because it had not been sued by the government and, therefore, under the Court’s Aviall holding could not bring the claim. The appellate court disagreed and determined that § 113 was not “the exclusive route by which PRPs may recover cleanup costs” and that an implied cost recovery claim existed under § 107(a)(4)(B) which allowed for PRPs to pursue cost recovery suits against other PRPs.

In reaching this conclusion, the Court differentiated a “contribution” cause of action under § 113 from a “cost recovery” cause of action under § 107. The United States had argued that § 107 and § 113 overlapped and that by allowing an implied § 107 action parties could, among other things, circumvent a shorter limitations period, equitable distribution of liability, and settlement bar limitations established under § 113. The Supreme Court reasoned, however, that § 107 and § 113 allow for “clearly distinct remedies”—§ 107 being the avenue to recover costs that were actually incurred voluntarily, while § 113 allows for claims seeking “costs of reimbursement . . . pursuant to a legal judgment or settlement,” where one party paid more than its fair share of settlement.

This decision is significant. It fosters the redevelopment of brownfield sites because it enables landowners or other PRPs to move forward with site clean-up and then seek recovery from other PRPs for those costs without first having to have been sued by the government. Importantly, however, the decision makes clear that the implied cost recovery claim pertains only to out-of-pocket costs actually expended. Given the length of time it takes to conduct certain clean-ups, it may be necessary for parties to file sequential suits to address the extensive cash outlay associated with a long-term remedy.