For the second time in three years, the US Supreme Court has sharply changed the course of Superfund litigation. In a unanimous June 11, 2007 decision in United States v. Atlantic Research, the Court held that "the plain language" of CERCLA §107 "authorizes cost-recovery actions by any private party" including those partially responsible for the contamination at issue. Eleven courts of appeal had once ruled otherwise, holding that liable parties were limited to seeking contribution under Section 113 of the statute. The Court's ruling constitutes a reversal of fortune for working parties, whose ability to seek contribution had been restricted by the Court in its 2004 Cooper Industries v. Aviall Services decision.
The Atlantic Research case involved a lawsuit by a company that had contracted with the US government to retrofit rocket motors, voluntarily cleaned up the resulting pollution and then sued the Department of Defense to recover part of the environmental costs. In finding that Atlantic Research had a viable claim under Section 107, the Court concluded that the plain language of the statute provided a cause of action under Section 107 for those who voluntarily incur cleanup costs, regardless of their own liability. The Court held that CERCLA creates two legal rights – one for "any" person who has directly incurred remedial costs and another for persons seeking to recover part of a disproportionate payment made to a third party pursuant to a CERCLA lawsuit or settlement. While it acknowledged that these claims would sometimes overlap, the Court concluded that "costs incurred voluntarily are recoverable only by way of §107(a)(4)(B), and costs of reimbursement to another person pursuant to a legal judgment or settlement are recoverable only under §113(f)."
As in Aviall, the Atlantic Research decision raises more questions than it answers. For example, the ruling declined to address whether parties who incur costs pursuant to a judicial consent decree – standard CERCLA practice – should be viewed as volunteers with standing under Section 107 or parties compelled to conduct a cleanup relegated to seeking contribution under Section 113. The Court likewise simply "assume[d] without deciding that §107(a) provides for joint and several liability." Another key question is what will become of parties who have entered into government settlements to obtain CERCLA "contribution protection," or immunity from claims by other private parties. As the Court acknowledged, the statutory provision creating that protection "does not by its terms protect against cost-recovery liability." That finding may spur a new wave of claims against parties who had settled with the government by plaintiffs who claim their rights under Section 107 are not extinguished by the conferral of contribution protection. Key burden of proof and liability allocation issues also remain open.
The net result may well be an increased number of CERCLA claims litigated under ambiguous, rapidly evolving standards in conjunction with an active disincentive for government settlements. In short, CERCLA litigation has just become even more complex.
Squire Sanders environmental trial lawyers have extensive insight into the rapidly evolving world of Superfund litigation and would be pleased to discuss the strategic implications of those changes on your business. If you have questions or concerns, please contact any of the Squire Sanders environmental lawyers listed in this Alert or the one with whom you are most familiar.