In Asarco v. Union Pac. R.R. Co., 2014 U.S. App. LEXIS 15285 (8th Cir. 2014), the Eighth Circuit affirmed the lower court in Asarco LLC v. Union Pac. R.R. Co., 2013 U.S. Dist. LEXIS 108852 (D. Neb. Aug. 2, 2013), dismissing the contribution, breach of contract, and declaratory judgment claims brought by Asarco against Union Pacific concerning the Omaha Lead Superfund Site (OLS). Asarco tried to circumvent Union Pacific’s CERCLA Section 113(f)(2) contribution protection, arguing a breach of the parties’ tolling agreement.
Writing for the Eighth Circuit, Chief Judge Riley referred to Asarco’s litigation as a “collateral attack” and noted that “all of Asarco’s claims are prohibited contribution claims even though some are disguised—like wolves ‘clad, so to speak, in sheep’s clothing,’ Morrison v. Olson, 487 U.S. 654, 699 (1988) (Scalia, J., dissenting)—as breach of contract claims.” *11. Stating further, the “district court correctly concluded that UP neither waived the Act’s contribution protection nor breached the tolling agreement by invoking that protection.” *14. The Court’s opinion is replete with CERCLA statutory interpretations and guidance for the CERCLA practitioner.
In bankruptcy, Asarco settled the United States’ and Nebraska’s OLS CERCLA § 107(a) claims of more than $400 million for $214 million. Planning a contribution action against Union Pacific, Asarco instead suggested a tolling agreement to Union Pacific so Asarco could intervene in litigation against US EPA filed by Union Pacific under the Freedom of Information Act (FOIA Litigation) to prevent US EPA from destroying exculpatory OLS documents. Union Pacific had already obtained a temporary restraining order against US EPA. The tolling agreement “reserve[d] all rights and defenses which they may have, except as set forth in th[e tolling agreement], to contest or defend any claim or action the other Party may assert or initiate…”
Before the agreement was signed, the US requested mediation in the FOIA Litigation. The tolling agreement did not address settlement by Union Pacific. Asarco entered the agreement nonetheless. The mediation was successful resulting in a CERCLA complaint and consent decree settlement and dismissal of the FOIA Litigation. Asarco did not comment in response to the Federal Register notice of the settlement, nor ultimately did it seek to intervene in the CERCLA case. Rather, after the consent decree was approved, Asarco sued Union Pacific for breach of the tolling agreement. The case was dismissed on Union Pacific’s F.R.C.P. 12(b)(6) motion. For the first time on appeal, Asarco raised an estoppel argument seeking to prevent Union Pacific from asserting contribution protection.
The Eight Circuit first considered whether Union Pacific’s consent decree protected it from Asarco’s claims. In the context of § 113(f)(2), the Court examined the consent decree’s “matters addressed” provision: “all response actions taken or to be taken and all response costs incurred or to be incurred…at or in connection with the Site, by the United States or any other person.” *11. It concluded “[a]s a matter of law… the Act protects UP from Asarco’s contribution action…. We see nothing untoward in UP’s natural desire to receive the benefits of settlement conferred by Congress. The Act’s protections apply even in cases where the settling party is involved in pending contribution litigation.” * 11-12.
The Court emphasized that CERCLA provides a remedy for settling parties that are on the verge of losing response cost contribution rights to the government—the remedy is not collateral attack—rather “[t]he Act channels parties…into the settlement proceedings” during the notice and comment period or by intervention in the CERCLA litigation to approve the settlement. The Court likened Asarco’s failure to object through either of these means to the “hapless petitioner in Marbury [v. Madison., 5 U.S. 137, 164 (1803)].” *13.
As to whether the tolling agreement had been breached, the Court then determined that federal law governs whether a federal statutory right is waivable. Rejecting the notion that CERCLA contribution protection cannot be waived, the Court concluded that under CERCLA, waiver is “governed by federal rule dependent on state law.” *15. Citing to cases involving private agreements of indemnity and cost apportionment, the Court found there is “no reason to treat waiver of § 9613(f)(2) differently from indemnification under § 9607(e), given that both involve parties’ private allocation of costs through contract.” *17. Applying Nebraska law which defines waiver as “an intentional relinquishment or abandonment of a known right or privilege,” *18, the Court determined that the tolling agreement did not waive Union Pacific’s contribution protection. Even if the protection were known at the time of signing, because contribution protection is statutory, Nebraska law requires waiver to be “clear and unequivocal.” *21. The Court concluded there was no breach “because nothing in the tolling agreement prevented UP from obtaining protection under the Act.” *22.
If your client is a potentially responsible party (“PRP”) at a CERCLA site and is contemplating a tolling or any other agreement regarding that site with another PRP, any waiver in the agreement should be explicit, all other rights and defenses should be preserved, and consider including an express preservation of the right to settle with the government and § 113(f)(2) contribution protection.
Further, preserve your arguments by raising them at the earliest possible time. In closing, the Court gave short shrift to Asarco’s estoppel claim since it had not been raised with the district court. Expounding, the Court stated “[h]aving thus…failed to mention estoppel, Asarco should not be surprised neither the district court nor UP searched the record to uncover vague extra-contractual allegations. ‘Judges are not like pigs hunting for truffles buried in briefs’ or the record.” *24.