U.S. Supreme Court Issues Landmark CERCLA Decision Allowing Cost Recovery of Voluntarily Incurred Cleanup Costs—But Some Issues Remain

On June 11, 2007, the United States Supreme Court issued a landmark environmental decision in United States v. Atlantic Research Corp., Case Number 06-562 (“Atlantic Research”). In a unanimous decision, the Court held that a potentially responsible party (PRP) can bring a cost recovery action under section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), to recover response costs incurred responding to environmental contamination from other PRPs.

Atlantic Research resolves an issue left open by the Supreme Court in another decision involving CERCLA, Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004). There, the Court found that CERCLA section 113(f)(1) allows PRPs to assert a contribution action against other PRPs, but only in limited circumstances (i.e. after being sued under CERCLA sections 106 or 107(a) or after entering an administrative or judicially approved settlement with the United States or a State). That decision left PRPs with the threat of being unable to recover response costs from other PRPs under CERCLA if they opted to incur these costs voluntarily.

In Atlantic Research, the Court found that the “plain language” of the statute “authorizes cost-recovery actions [under section 107(a)] by any private party, including PRPs.” In so ruling, the Court drew a clear delineation between CERCLA sections 107(a) and 113(f), emphasizing that these sections provide two “clearly distinct” remedies. Section 107(a) permits recovery of cleanup costs, but does not create a right to contribution, which is reserved specifically for section 113(f) actions. Section 107(a) permits parties, including PRPs, to recover cleanup costs they themselves have incurred voluntarily. On the other hand, section 113(f) allows PRPs to assert a contribution action against fellow liable parties to recover amounts they have paid to others in reimbursement of cleanup costs. But, they may do so only after being sued under CERCLA sections 106 or 107(a) or after settling with the government.

With its decision in Atlantic Research, the Court removed a significant impediment to voluntarily conducted cleanups. Such cleanups, if undertaken early and under a thoughtful process, can be more efficient and economical than non-voluntary cleanups. However, Atlantic Research likely will encourage more cost recovery litigation.

The decision also creates new issues. Perhaps most importantly, Atlantic Research may undermine one of the primary incentives PRPs had to resolve government CERCLA claims through settlement by undermining the protection settling PRPs receive under the section 113(f)(2) contribution bar. Also, arguably, Atlantic Research opens the door for PRPs to impose joint and several liability against other PRPs under section 107(a). Finally, although conceding that sections 107(a)(4)(B) and 113(f) overlap in some circumstances, the Court declined to determine the result for cases that do not fit neatly into one section or the other. These remaining issues could have significant impacts for PRPs (both plaintiffs and defendants) in future actions.

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The information in this newsletter is not intended to provide specific legal advice. You should consult with an attorney and not rely on any information contained herein regarding your specific situation.