Settling Parties In Government Consent Orders Have CERCLA Claims For Contribution Not Cost Recovery

To the extent there was any remaining uncertainty, the Sixth Circuit has now made crystalline that a party settling some or all of its liability under CERCLA with the United States or a state has a contribution claim under Section 113 and not a cost recovery action under Section 107. Additionally, that contribution claim must be brought within three years of the date of any judgment entering the settlement or of any administrative order memorializing the settlement. No “if, ands, or buts.”

The Sixth Circuit decision was Hobart Corporation v. Waste Management of Ohio, Inc. It involved three PRPs who entered into an Administrative Settlement Agreement and Order on Consent with the US EPA to perform the RI/FS at an Ohio Landfill and to pay certain of the government’s costs. Almost four years later, the settling parties first brought an action against other PRPs who had also used the landfill. That action asserted both cost recovery and contribution claims. Noting that a PRP could not pursue both a CERCLA cost recovery and a contribution action, the Sixth Circuit ruled that the settling parties had only a contribution action – a conclusion that was hardly surprising given that the Consent Order expressly recited that

“The Parties agree that this Settlement Agreement constitutes an administrative settlement for purposes of Section 113(f)(3)(B) of CERCLA pursuant to which [the settling PRPs] have … resolved their liability to the United States….”

While conceding that there was some ambiguity as to the types of administrative orders that might be subject to the three year statute of limitation for contribution in Section 113(f)(3)B), the court nonetheless ruled that the settling parties’ contribution claim was time-barred.

Given CERCLA’s strong policy preference for early settlements, the decision might strike some as a harsh result akin to shooting the volunteers. Presumably, however, the court took the view that the settling parties reasonably should have known in light of Aviall that they might be limited to a contribution claim and thus should have acted prudently to assert their claim within the three year contribution statute of limitations.  In any event, everyone’s now been warned.

 

Topics:  CERCLA, Consent Order, Contribution Claims, EPA, Settlement

Published In: Administrative Agency Updates, Civil Procedure Updates, Environmental Updates, Commercial Real Estate Updates, Toxic Torts Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP - Environmental Law | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »