Does a consent decree under the Clean Water Act (“CWA”) trigger a three-year limitation period to bring a contribution claim under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) when the consent decree makes no mention of CERCLA? The Supreme Court answered no in its recent, unanimous decision in Territory of Guam v. United States, No. 20-382, 2021 WL 2044537 (U.S. May 24, 2021). This revives the potential for Guam to seek contribution from the U.S. Navy (“Navy”) for its share of a $160 million cleanup bill.
The decision is also a win for other parties whose CERCLA cost recovery actions might otherwise be torpedoed by a defendant’s stealthy defense that a non-CERCLA settlement previously entered into by the plaintiff settled its CERCLA liability and triggered the ability of a “must-use” section 113(f) claim whose statute of limitations clock had expired. The Guam case is also a cautionary tale both for regulated entities incurring cleanup costs for which they will later seek cost recovery or contributions, and for entities potentially subject to such actions.
Background. The Navy built the Ordot Landfill on the island of Guam during World War II and used it for the disposal of munitions and toxic wastes for decades. The United States then unilaterally conveyed the contaminated site to Guam, which later used it for municipal waste disposal.
As built by the Navy, the landfill was unlined and uncapped such that rain and surface water would percolate through the landfill, pick up hazardous substances, and ultimately discharge to the Pacific Ocean.
After CERCLA’s enactment in 1980, Guam requested that the site be addressed under CERCLA, but the U.S. Environmental Protection Agency (“EPA”) decided that remedial action under CERCLA was “inappropriate” and “unnecessary,” and that the site would be better addressed through CWA enforcement. Although EPA opted to address the site under the CWA, EPA could have proceeded under CERCLA based on the facts of the site and the requirements for CERCLA liability under section 107(a) (e.g., a “disposal” of CERCLA “hazardous substances”).
In 2002, the United States (EPA) sued Guam under section 309 of the CWA, and the parties entered into a 2004 CWA consent decree requiring Guam to pay a penalty, design and install a cover, and close the landfill. The United States’ (EPA’s) decision to address the site under the CWA and not CERCLA was beneficial to the United States (Navy) in that, although the United States can be a “potentially responsibility party” under CERCLA, Section 309 of the CWA does not authorize penalties against the United States for past conduct.
Guam’s remediation of the Ordot Landfill began in 2013 and is ongoing, with total costs expected to exceed $160 million.
In 2017, Guam sued the United States under CERCLA section 107(a) seeking recovery of its remediation costs based on the Navy’s decades-long use of the dump for disposing of hazardous substances.
The United States moved to dismiss, arguing that the 2004 CWA consent decree — although not mentioning CERCLA once — triggered the availability of a CERCLA section 113(f)(3)(B) contribution claim.
Section 113(f)(3)(B) allows any party that has “resolved its liability to the United States or a State for some or all of a response action” in a “judicially approved settlement” to seek contribution from non-settling parties. The resolution of liability triggers the start of a three-year statute of limitations clock for that contribution claim.
The United States argued that, for Guam, the statute of limitations clock for its section 113(f) action began in 2004 and ended in 2007, leaving that claim time-barred. And because federal courts of appeals have uniformly found that a party having both a section 107(a) cost recovery claim and a section 113(f) contribution claim must use the latter avenue only, Guam was required to bring the section 113(f) claim while it was still viable and could not bring the section 107(a) claim after the section 113(f) claim was time-barred.
The U.S. District Court for the District of Columbia sided with Guam. The D.C. Circuit reversed, acknowledging that circuit courts are split on the issue, but finding that section 113(f)(3)(B) “does not require a CERCLA-specific settlement” because another subsection of 113(f) does have CERCLA-specific language and therefore Congress, in not explicitly specifying CERCLA-specific liability in section 113(f)(3)(B), must have intended that broader liability could trigger the contribution action provided for therein. The court then concluded that Guam’s 2004 CWA consent decree had resolved Guam’s liability for a CERCLA “response action” because Guam agreed to undertake actions that would qualify as CERCLA “response actions.”
The U.S. Supreme Court’s Opinion. The questions before the Court were (1) whether a non-CERCLA settlement can trigger a contribution action under CERCLA section 113(f)(3)(B); and (2) whether a settlement that expressly disclaims any liability determination and leaves the settling party exposed to future liability can trigger a CERCLA section 113(f)(3)(B) contribution claim.
The Court decided the case by answering the first question, and so did not reach the second. Rather than agreeing with the D.C. Circuit’s negative inference based on the lack of explicit reference to CERCLA-specific liability in section 113(f)(3)(B), the Court interpreted that provision within the “interlocking language and structure” of the section “113(f) family of contribution provisions,” all of which focus on “contribution,” which is a “tool for apportioning the burdens of a predicate ‘common liability’ among the responsible parties.” The Court concluded that the “most obvious place to look” for that common liability is “CERCLA’s reticulated statutory matrix of environmental duties and liabilities.”
The Court thus concluded that a resolution of CERCLA-specific liability is required to trigger the availability of the contribution action under section 113(f)(3)(B), and noted that interpreting 113(f)(3)(B) “to authorize a contribution right for a host of environmental liabilities arising under other laws would stretch the statute beyond Congress’ actual language.”
Implications and Takeaways. Beyond the rejoicing in Guam that must have followed the Court having saved the island from alone shouldering a $160 million cleanup bill, the case provides a new degree of clarity for CERCLA and broader lessons to be learned by regulated entities.
Above all, despite the spotlight of clarity provided by the Guam case, CERCLA remains a murky, complex, and confusing terrain with plenty of expensive traps for the unwary. As one court put it, “[W]ading through CERCLA’s morass of statutory provisions can often seem as daunting as cleaning up one of the sites the statute is designed to cover.”