The US Court of Appeals for the Eleventh Circuit has joined a growing chorus of courts holding that parties who incur Superfund cleanup costs under a judicial consent decree or administrative consent order with a governmental entity are limited to pursuing a claim for contribution, and cannot assert a claim for cost recovery. The Eleventh Circuit thus becomes the latest court to address an issue left unresolved by the US Supreme Court when it last addressed the competing litigation vehicles set forth in the federal Superfund act, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).1
Five years ago the Supreme Court left the environmental world hanging on the question of whether Superfund costs incurred pursuant to a consent decree may be sought via the cost recovery provision of Section 107 of CERCLA, or must be sought via a claim for contribution under Section 113. While originally ducked by the US Supreme Court in footnote six of Atlantic Research,2 multiple circuit courts since have limited such parties to using Section 113 as their exclusive remedy. And on March 6, the Eleventh Circuit followed suit. This issue is of particular significance to parties who are considering entering into judicial consent decrees or administrative consent orders that require cleanup of contaminated sites, as the decision to do so may limit their ability to seek recovery under Section 107 and to impose joint and several liability on other parties.
The Eleventh Circuit ruling upheld the Northern District of Alabama’s holding in Solutia that a Section 113(f) contribution claim is the exclusive remedy for a potentially responsible party which incurs compelled cleanup costs pursuant to a judgment, consent decree or other settlement agreement giving rise to a cause of action under Section 113(f).3 Under the premise that CERCLA must “be read as a whole,”4 the Eleventh Circuit reasoned that allowing a party subject to a consent decree to “simply repackage its Section 113(f) claim for contribution as one for recovery under § 107(a)” would undermine the structure of CERCLA remedies.5 Parties would be able to circumvent the different statutes of limitations that attach to Section 113(f) contribution claims and Section 107(a) recovery claims. And parties could thwart the contribution protection afforded to parties that settle their liability with US EPA. Finally, allowing a Section 107(a) claim by a party with contribution protection under a judicially approved settlement would allow for the imposition of joint and several liability on others who would be barred from asserting any Section 113(f) counterclaims. These factors would combine to destroy CERCLA’s statutorily created settlement incentive.6
Like the Eleventh Circuit, other federal courts addressing this issue have held that Section 107 is not an available remedy when a potentially responsible party is entitled to assert a contribution claim under Section 113 because it has entered into a judicial consent decree or administrative consent order with a governmental entity. In Agere Systems, the Third Circuit held that, because the plaintiff had entered into a judicially approved settlement with US EPA to resolve its significant liability and was thus immune to a Section 113 counterclaim from the defendant, it would be “perverse” to allow the plaintiff to recover all of its costs from the defendant under Section 107.7 According to the Third Circuit, such a result is at odds with the primary goal of CERCLA to make polluters pay. The Second Circuit similarly held that where an administrative consent order with the state environmental agency settled the plaintiff’s CERCLA liability so as to give rise to contribution rights under Section 113(f)(3)(B), “only [that subsection],” and not Section 107(a), “provide[d] the proper procedural mechanism for [the plaintiff’s] claims.”8 The Eighth Circuit similarly held that Section 113(f) provides the “exclusive remedy for a liable party compelled to incur response costs pursuant to an administrative or judicially approved settlement under §§ 106 or 107,” including a consent decree.9
In the meantime, parties who are considering seeking costs under Section 107 should keep in mind that entering into a judicial consent decree or administrative order on consent that creates a cause of action under Section 113(f) may limit their ability to recover under Section 107 for at least those costs attributable to the judicial consent decree or administrative order on consent. Of course, the potential loss of a remedy under Section 107 must be balanced against the benefits to be gained under a judicial consent decree or administrative consent order such as contribution protection.
1 Solutia etalv. McWane, No. 10-15639 (11th Circ. March 6, 2012).
2 United States v. Atl. Research Corp., 551 U.S. 128, 139 n.6 (2007).
3Solutia, Inc. v. McWane, Inc., 726 F. Supp. 2d 1316, 1341-42 (N.D. Ala. 2010), aff’d per curiam, No. 10- 15639 (11th Cir. March 6, 2012).
4 Solutia et al v. McWane, No. 10-15639, at 11 (quoting Atl. Research, at 135).
5 Id. at 11.
6 Id. at 11-12.
7 Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 60 F.3d 227-28 (3rd Cir. 2010).
8 Niagara Mohawk Power Corp. v. Chevron USA, Inc., 596 F.3d 112, 124 (2d Cir. 2010)
9 Morrison Enter., LLC v. Dravo Corp., 638 F.3d 594, 603 (8th Cir. 2011).