The federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), better known as Superfund, provides private parties with two types of claims to recover costs associated with investigating and remediating contaminated sites – a cost recovery claim under CERCLA Section 107(a), 42 U.S.C. § 9607(a), and a contribution claim under Section 113(f), 42 U.S.C. § 9613(f). A party has a claim for contribution under CERCLA Section 113(f)(3)(B) if that party has “resolved its liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement.” A party can therefore settle its liability for a contaminated site with the EPA or a state government, and then seek to recover a portion of the costs of that settlement from other potentially responsible parties who contributed to the contamination at the site. But, CERCLA imposes a 3-year statute of limitations on Section 113 contribution actions, which begins to run from the date of entry of the administrative or judicially approved settlement. While at first, this may appear to be a cut-and-dry statute of limitations, there is ample case law exploring the nuances of what it means for a party to have “resolved” its liability with the government such that the 3-year statute of limitations begins to run. Last month, the United States Courts of Appeals for the Ninth Circuit added to that growing body of case law, in Asarco, LLC v. Atlantic Richfield Co., 866 F.3d 1108 (9th Cir. 2017).
The Asarco case involves the cleanup of the East Helena Superfund Site located in an industrial area in the City of East Helena where Asarco historically operated a lead smelting plant and a zinc fuming plant that was previously operated by Atlantic Richfield’s corporate predecessor, Anaconda Mining Company. Operations from these facilities resulted in soil and groundwater contamination from lead, arsenic, and other heavy metals. EPA added the site to the National Priorities List in 1984, identified both Asarco and Anaconda as potentially responsible parties, but sought remediation action only from Asarco. In 1998, EPA filed a civil penalty action against Asarco under the Resource Conservation and Recovery Act (“RCRA”) and the federal Clean Water Act, and sought to have Asarco “conduct corrective action” at the site under RCRA. Asarco settled by entering into a consent decree that was approved by the Montana federal district court. This 1998 RCRA consent decree required Asarco to take “corrective measures” to “remediate, control, prevent, or mitigate the release, potential release or movement of hazardous waste or hazardous constituents into the environment or within or from one media to another.”
Ultimately, Asarco did not complete its cleanup obligations under the 1998 RCRA consent decree, and later filed for Chapter 11 bankruptcy in 2005. EPA and the state of Montana filed proofs of claims in the bankruptcy under CERCLA, that were ultimately resolved by way of a 2009 CERCLA consent decree that established a $99.294 million custodial trust for the cleanup. The language of the 2009 CERCLA consent decree stated that this payment “fully resolved and satisfied” Asarco’s obligations under the 1998 RCRA consent decree.
Three years later, in June 2012, Asarco brought a CERCLA 113 contribution action against Atlantic Richfield as the corporate successor to Anaconda , and sought contribution towards the $99.294 million 2009 CERCLA consent decree. Atlantic Richfield defended the case and filed a summary judgment motion on the basis that the 3-year statute of limitations for CERCLA contribution claims was long past – arguing that it had begun to run when Asarco executed the 1998 RCRA consent decree. The United States District Court for the District of Montana agreed with Atlantic Richfield, and dismissed the case.
Asarco appealed the decision to the Ninth Circuit, which reversed, vacated the summary judgment ruling and remanded the case for further proceedings. The Ninth Circuit held that a non-CERCLA settlement agreement could satisfy the requirement for “resolving liability,” which is a prerequisite to a CERCLA Section 113(f)(3)(B) contribution claim, and that the 1998 RCRA consent decree required Asarco to undertake “response actions” within the meaning of CERCLA’s contribution scheme.
But, as they say, the devil was in the details. The Ninth Circuit held that the specific language of the 1998 RCRA consent decree did not “resolve” Asarco’s liability for three reasons. First, the language of the release was limited to resolving the federal government’s claims for civil penalties, even though the original complaint sought both civil penalties and injunctive relief by way requiring future remediation to be completed. Second, the language of the 1998 RCRA consent decree had numerous references to Asarco’s continued legal exposure, by virtue of multiple reservations of rights that would allow EPA to bring future RCRA, CERCLA, or other statutory actions against Asarco. Finally, and perhaps most importantly, the 1998 RCRA consent decree expressly stated that even if Asarco fully complied with the terms of the agreement “Asarco is not released from liability, if any for the costs of any response actions taken or authorized by EPA under any applicable statute, including CERCLA.”
As the Ninth Circuit held, 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.” . . . Accordingly, Asarco could not have brought a contribution action pursuant to the 1998 RCRA Decree and the corresponding laminations period did not run with that agreement.
Asarco’s Section 113 contribution claim was therefore not time barred by the 1998 RCRA consent decree.
In contrast, the 2009 CERCLA consent decree entered as part of Asarco’s Chapter 11 bankruptcy proceedings did fully “resolve” Asarco’s liability for all of its response costs at the East Helena Superfund Site. The 2009 CERCLA consent decree included a covenant not to sue that was immediately effective, and specifically included EPA’s agreement not to sue Asarco for any claims under CERCLA, RCRA, or the Clean Water Act. The agreement also capped Asarco’s total financial obligations for the contamination at the $99.294 million that Asarco had paid into the bankruptcy trust accounts, and provided Asarco with protection against third-party contribution claims under CERCLA
What the Asarco case makes clear is that the specific language included in any settlement agreement with EPA that attempts to resolve CERCLA or similar liabilities is crucial, and will often be dispositive of whether a party has right to a CERCLA Section 113 contribution claim, and when the corresponding 3-year statute of limitations has been triggered. The Asarco case adds to a growing split among the federal circuit on these issues that seems poised to one day be decided by the United States Supreme Court.