Quote of the Day - I remember on Tuesday morning picking up newspapers, and I saw headlines, 'New Orleans Dodged the Bullet.'
Voluntarily cleaning up contamination could get you into trouble, as MIPTC reported about the Cooper Industries v. Aviall case decided by the U.S. Supreme Court last year. The problem hinged on your ability to recover cleanup costs from others who contributed to the contamination because you voluntarily undertook the cleanup. While the ruling intuitively does not make sense, the Court ruled that section 113 of CERCLA does not allow you - who voluntarily cleaned up contaminated property - to recover costs in excess of your share from other liable parties because the statute doesn't allow it. Your remedy? Talk to the legislature and get the law changed.
In that situation, the only remaining hope for cost recovery under federal law lay in two other portions of this cost recovery statute, CERCLA sections 106 and 107. The Supreme Court left that option open, and part of that question has just been answered by the Eighth Circuit Court of Appeals.
Yes you can. Even though before we said you couldn't.
That's right, back in 2003, the Eighth Circuit, in a case from Iowa where my alma mater is located, had ruled in Dico v. Amoco Oil that recovery for voluntary cleanup was not allowed under section 107 if you had voluntarily cleaned up contaminated property. The Circuit called it directing traffic, saying that the only remedy open to a party in that situation was under section 113. Before we go too far, it may be helpful to do a quick recap of these two sections.
Here's the basic statutory structure of CERCLA (the Atlantic case gives a very good summary complete with relevant case cites). Section 107 has a six-year statute of limitations and under that section, a party can obtain 100% reimbursement of its costs from other potentially liable parties.* Before being able to use section 107, however, the government had to either name that party in CERCLA cleanup action or settle with that party.
On the other hand, section 113 limits the statute of limitations to three years and allows only contribution, but only in amounts in excess of their equitable share, and not at all from parties who have settled with the government. Obviously, section 107's remedies are much more powerful, but the courts have directed traffic between the two sections, and most rulings limited volunteers to recovery under section 113. The Supreme Court's ruling in Aviall, however, foreclosed that remedy to volunteers.
With that, back to the ruling. After having decided Dico and the intervening (note subtle foreshadowing here) Supreme Court's ruling, anyone voluntarily cleaning up contamination and trying to obtain financial contribution from other potentially responsible parties was looking for trouble. The Eighth Circuit, perhaps recognizing the consequences of such a hard-and-fast rule, sidestepped its 2003 opinion in Dico v. Amoco Oil Co. How can a court just gloss over such recent, on-point precedent?
Let's look at the facts facing the Eighth Circuit.
Atlantic Research Corporation voluntarily cleaned up a site contaminated from rocket propellant for which it was partly responsible. It sought contribution to those cleanup costs from the United States government, which Atlantic alleged was also partly responsible. Not wanting to spend tax dollars, the government sought to dismiss Atlantic's case. It didn't bring a CERCLA cost-recovery action against Atlantic or settle with the company. The government was then in a position to cite Cooper Industries v. Aviall (no section 113 recovery) and Dico v. Amoco (no section 107 recovery) and convinced the district court to dismiss Atlantic's case. Atlantic appealed.
Faced with the Supreme Court's Availl ruling and the Eighth Circuit's Dico ruling, things looked bad for Atlantic. As foreshadowed above, however, the Circuit decided the the Supreme Court's ruling in Cooper Industries v. Aviall gave them a reasonable basis to reexamine and then disregard their prior ruling. The problem lie in whether a "liable party recover costs advanced, beyond its equitable share, from another liable party in direct recovery, or by § 107 contribution, or as a matter of federal common law," according to the issue as framed by the Circuit.
The Circuit finally saw the problem created by the interplay of the two statutes, and the government's ability to avoid liability by simply doing nothing. In other words, for property where the government was partly liable for cleanup (think closed military bases), the government wouldn't bring a lawsuit against the volunteer and refuse to settle with that volunteer, and then after the volunteer cleaned up the contamination, simply move to dismiss the case because section 107 didn't allow recovery, and the Supreme Court had barred recovery under section 113.
No one would have any incentive to voluntarily clean up contaminated property, which frustrates the entire purpose of CERCLA. The Circuit ruled that parties who have not faced a CERCLA action, and are thereby barred from recovery under § 113, retain their access to § 107, the more powerful of the sections.
But don't get your hopes up and think that you can recover 100% of your costs, even if you're liable. You can't, the Circuit ruled. But you can recover any costs expended above your fair share of the cleanup costs.
And that's good news.
* The Eighth Circuit takes issue with the continued use of the term, "Potentially Responsible Parties" both because the Supreme Court's decision in Aviall gutted the viability of PRPs and because that term does not appear in the CERCLA statute. The Court believes that the term, abbreviated as "PRP" was "developed" by the courts. Courts shouldn't claim this credit. When CERCLA was enacted, the government, courts, attorneys and parties were all working with the statute.
MIPTC believes that the alphabet soup agency of the government, the USEPA invented the term in 1980 just after the statute was enacted. Not much of the Internet was citable in 1980, but in research MIPTC conducted in paper libraries (yes, it's shocking), the term appears in early USEPA directives. The Eighth Circuit called them "Liable Parties," which the Circuit believed more accurately tracks the terminology of the statute. MIPTC believes a more appropriate term is Potentially Responsible Parties as "Potentially Liable Parties" or "PLPs."