Under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) a responsible party that settles with the government via a consent decree to cleanup or pay for remediation has three years to pursue CERCLA contribution claims against other non-settling responsible parties. It has been less than clear whether this three-year period is triggered by a settlement with the Environmental Protection Agency (EPA) under another federal statute, such as the Resource Conservation and Recovery Act (RCRA) — or with a state agency, for example under the Washington Model Toxics Control Act (MTCA) or the Oregon Hazardous Waste and Hazardous Materials statute. A new Ninth Circuit decision, Asarco LLC v. Atlantic Richfield Company, has answered the question by holding that a settlement with a state or federal agency under another environmental law besides CERCLA can start the running of the three-year time limit for a contribution claim, provided the agreement requires a party incur response costs and resolves that party’s liability to the government.
In Asarco, the question was whether a 1998 RCRA consent decree by Asarco or a 2009 CERCLA consent decree, both involving the company’s smelter in East Helena, Montana, triggered Asarco’s right to seek contribution against other responsible parties under CERCLA § 113(f)(3)(B). In 2012, Asarco sued Atlantic Richfield for contribution, but the U.S. District Court in Montana dismissed the case because more than three years had elapsed since the 1998 RCRA settlement. The Ninth Circuit reversed and held that 1) § 113(f)(3)(B) does not limit the necessary predicate for a contribution action to CERCLA settlements; 2) the 1998 RCRA agreement required Asarco to pay response costs, but 3) the 1998 RCRA agreement did not trigger the three-year period for Asarco to bring a claim because it did not resolve Asarco’s liability to the government. Thus, it was not until the 2009 CERCLA settlement, when Asarco did resolve its liability to the government, that the three-year period to bring a contribution action began to run.
The two key issues were whether a non-CERCLA settlement can trigger the contribution right, and what constitutes “resolving liability to the government.” On the first issue, the Ninth Circuit aligned with the Third Circuit, which had ruled in 2013 that a consent decree under Pennsylvania’s state environmental statutes was sufficient to start the three-year period running in which to bring a CERCLA contribution claim. This differs from the approach taken by the Second Circuit, which held in 2005 that § 113(f)(3)(B) creates a contribution right only when liability for CERCLA claims is resolved.
On the second issue, whether a settlement resolves a party’s liability to the government, some cases have held that there is no resolution of liability when a consent decree reserves the right of the environmental regulatory agency to bring an enforcement action and conditions a covenant not to sue on a party’s satisfactory performance of their obligations. The Ninth Circuit in Asarco ruled that a settlement agreement must determine a responsible party’s compliance obligations “with certainty and finality for at least some of its response actions or costs as set forth in the agreement.” A right by the government to enforce compliance or condition a release from liability on performance does not undermine the certainty or finality of the resolution. Nor would a settling party’s refusal to concede liability bar a determination of finality.
In the case of Asarco, the court said that the 1998 RCRA decree did not release the company from response costs, only civil penalties, and it contained numerous references to Asarco’s continued legal exposure. The court said: “Simply put, the 1998 RCRA Decree did not just leave open some of the United States’ enforcement options, it preserved all of them. Because the Decree did not settle definitively any of Asarco’s response obligations, it did not “resolve [Asarco’s] liability.”
The takeaway from the Ninth Circuit’s decision is that any environmental settlement with a government agency, whether it rises under CERCLA, RCRA, or a state environmental statute, can start the running of the three-year period for bringing a CERCLA § 113(f)(3)(B) contribution claim against a non-settling party. While the determination is on a case-by-case basis, the more the language of the agreement points to “certainty and finality,” the more likely it is that the settlement will trigger the limitations period.