Since the Second Circuit Court of Appeals decided Niagara Mohawk Power Corp v. Chevron U.S.A., Inc., 596 F.3d 112 (2d Cir. 2010), a number of other Circuits have followed the Second Circuit’s holding that parties who enter into a consent decree with the U.S. Environmental Protection Agency (“EPA”) following an EPA enforcement action and then seek recovery of cleanup costs from other potentially responsible parties (“PRPs”) are limited to a contribution claim under § 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); they may not bring a cost recovery action under § 107(a) of CERCLA for those same costs. See, e.g., Morrison Enter., LLC v. Dravo Corp., 638 F.3d 594, 603 (8th Cir. 2011); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir. 2010). See also Periconi, LLC Environmental Law Blog, here, here, and here for a summary of the Niagara Mohawk case. The most recent decision in line with the Second Circuit is the Eleventh Circuit’s decision in Solutia, Inc. v. McWane, Inc., Case No. 10-15639 (11th Cir. Mar. 6, 2012).
Solutia v. McWane Decision
In the Solutia v. McWane case, the two Plaintiff companies had entered into a partial consent decree with EPA as part of resolving an EPA enforcement action for cleanup of sites contaminated with lead and PCBs. After directly incurring millions of dollars in cleanup costs pursuant to the consent decree with EPA, the Plaintiffs filed claims under both § 107(a) (cost recovery action) and § 113(f) (contribution action) of CERCLA seeking to recover cleanup costs from other PRPs (who had entered into a separate settlement agreement with the EPA). Consistent with decisions from other federal courts of appeals around the country, the Eleventh Circuit concluded that, when a party incurs cleanup costs pursuant to a consent decree following a CERCLA lawsuit brought by EPA or a state environmental agency under either CERCLA §106 or § 107, the party is limited to a § 113(f) contribution action against other PRPs. The Plaintiffs could not bring a § 107(a) cost recovery claim against the other PRPs.
So, in the Solutia v. McWane case, because they had entered into the partial consent decree with EPA, the Plaintiffs’ sole remedy was to seek a contribution claim under CERCLA § 113 against the other PRPs, but since those PRPs had entered into a separate settlement agreement with EPA for the contamination, the Plaintiffs were statutorily prohibited from bringing a contribution claim against them under CERCLA § 113(f)(2). Thus, because a § 107(a) cost recovery claim was not available to the Plaintiffs by the court’s decision, and because their sole § 113 contribution claim was barred as to the other PRPs under CERCLA, the Plaintiffs had no remedy to recover any cleanup costs in this case.
Why It Matters
While the distinction between being allowed to bring a cost recovery action under § 107(a) and a contribution claim under § 113 may seem like a purely technical distinction, there are actually very important differences, which include:
- § 107(a) claims allow plaintiffs to impose joint and several liability on other PRPs; § 113 claims are subject to specific allocation of fault between plaintiffs and defendants.
- § 107(a) claims are not subject to the contribution protection bar available against § 113 claims; once a PRP has settled with EPA, other PRPs are prohibited from bringing § 113 claims, but not § 107 claims, against them.
- § 107(a) claims are subject to longer statutes of limitations than § 113 claims.
Voluntary vs. Mandatory Cleanup Costs – It Makes a Difference
Finally, it is important to recognize that the Eleventh Circuit’s decision in Solutia v. McWane also followed the Second Circuit’s holding in Niagara Mohawk Power Corp v. Chevron U.S.A., Inc. in that its decision is limited to situations where a plaintiff’s response and cleanup costs were incurred pursuant to a consent decree entered as a result of an enforcement action by the government. It does not apply to parties that incur response and/or cleanup costs voluntarily under consent orders that did not result from a governmental enforcement action. In those circumstances, the party may bring a § 107(a) cost recovery action against other PRPs, as well as a § 113 claim.
Thus, the take-away lesson from the Solutia v. McWane case is to make sure your settlement with the State expressly settles your CERCLA liability: to do this, the settlement should take into account the liability of all PRPs, and not be a partial consent decree, or else you run the risk of being precluded from seeking contribution should those other PRPs separately settle with the government.
If you are subject to potential liability under CERCLA, please contact us.