On July 23, in ASARCO LLC v. Union Pacific Railroad Company, et al. No. 13-1435 (10th Cir.), the Tenth Circuit rejected the notion that settlement requirements are different in the bankruptcy context.  Section 113 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §9613, provides a statutory right of contribution for any party who has paid more than its fair share of cleanup costs or natural resource damages to recover from other liable parties on an equitable basis.  However, CERCLA also sets a three-year statute of limitations for bringing such contribution claims.  The statute of limitations provides:

 No action for contribution for any response costs or damages may be commenced more than 3 years after–

(A) the date of judgment in any action under this chapter for recovery of such costs or damages, or

(B) the date of an administrative order under section 9622(g) of this title (relating to de minimis settlements) or 9622(h) of this title (relating to cost recovery settlements) or entry of a judicially approved settlement with respect to such costs or damages.

 42 U.S.C. § 9613(g)(3) (emphasis added).

In a series of post-bankrupty cases, Asarco LLC (Asarco) has argued that for purposes of accrual of a contribution claim, a bankruptcy settlement is not a “judicially approved settlement” until the date of the final court action fixing the amount to be paid and by whom.  Therefore, where a CERCLA settlement has been reached in the context of a Chapter 11 bankruptcy reorganization, Asarco argued that the accrual date cannot be until the bankruptcy plan of reorganization becomes effective and the actual amount to be paid is fixed and the payment is authorized to be made.  In the case of Asarco’s bankruptcy, that position, if judicially supported, would have extended the contribution claim limitations period by over a year. 

However, affirming the arguments of appellees, Union Pacific Railroad Company and Pepsi-Cola Metropolitan Bottling Co., Inc., addressing Asarco’s contribution claims with respect to the Vasquez Site near Denver, Colorado, the Tenth Circuit, in the first appellate opinion on the issue[1], rejected the notion that settlement requirements are different in the bankruptcy context.  The presiding judge, writing for the panel stated that “ASARCO’s argument does not reflect the plain language of the statute.” The statute of limitations begins on the “date of . . . entry of a judicially approved settlement with respect to such costs or damages.” The court concluded that the bankruptcy court’s approval of the Vasquez Site Settlement on June 5, 2009, was a “judicially approved settlement” under CERCLA § 113(g)(3).

 The court states there is nothing in the term “judicially approved settlement” or the text of CERCLA § 113 to indicate that there is any special or different rule that would apply in the bankruptcy context.  “Here, a judicially approved settlement was entered on June 5, 2009, and therefore this action, brought more than three years after that date, is untimely.”

 The Tenth Circuit also dispatched Asarco’s subrogation argument finding that “nothing in the bankruptcy plan supports the contention that there was a dissolution of one ASARCO and the formation of a new corporation named ASARCO.”  Accordingly, the Tenth Circuit affirmed the district court’s dismissal of both Asarco’s direct contribution and subrogation contribution claims against Union Pacific and Pepsi. 

[1]Three district courts have already concluded that the date the judicially approved settlement agreement was entered is the proper date, not the date the bankruptcy plan was approved or became effective. ASARCO LLC v. Goodwin, No. 12-cv-3749 (S.D.N.Y. Sept. 18, 2013), appeal pending, No. 13-3954 (2d Cir.); ASARCO LLC v. Xstrata PLC, No. 2:12-CV-527-TC, 2013 WL 2949046, at *3-4 (D. Utah June 14, 2013); and ASARCO LLC v. Atlantic Richfield Co., No. CV 12-53-H-DLC, 2012 WL 5995662, at *2 (D. Mont. Nov. 30, 2012).