United States v. Atlantic Research Corporation (2007) __ U.S. ___ [http://www.supremecourtus.gov/opinions/06pdf/06-562.pdf].

By Randy Visser and Olivier Theard

In a boon to private parties who undertake to voluntarily clean-up contaminated sites, the Supreme Court in United States v. Atlantic Research Corporation established that parties who undertake clean-up efforts may bring cost recovery actions under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against potentially responsible parties (PRPs).  Before this decision, there was a split in the circuit courts regarding whether private parties could recover costs of clean-up, or whether their exclusive remedy was a contribution action which could only be brought after they were sued by the government.  The Supreme Court, in a unanimous opinion by Justice Thomas, ruled that a private party may sue for cost recovery even if that party has not been sued or paid a judgment or settlement to the government.

Factual and Procedural Background

Atlantic Research retrofitted rocket motors on property leased from the Defense Department.  Atlantic voluntarily cleaned up certain contamination on the site and then sued the United States to recover some of its costs.  The government claimed that Atlantic’s sole remedy was a contribution action, and the trial court dismissed Atlantic’s claim on that basis.  The Eighth Circuit reversed, holding that Atlantic could maintain a CERCLA cost recovery action.  The Supreme Court upheld the Eighth Circuit.

Legal Analysis

CERCLA section 113(f) allows a private party to recover contribution from other PRPs after the government has sued to either recover its costs or force a party to undertake a clean-up.  Section 107(a) authorizes suits by PRPs against other PRPs to recover costs of clean-up.  A prior Supreme Court decision, Aviall Servs., Inc. v. Cooper Industries, Inc., 312 F.3d 677, 681 (2002), held that a private party could seek contribution from other PRPs under Section 113 only after being sued by the government.  Circuit Courts after Aviall struggled with whether a private party still had the right to sue under Section 107(a) to recover costs of cleaning up a site, or if a Section 113(a) contribution claim was the party’s exclusive remedy. 

The Supreme Court in Atlantic Research decided that a Section 113(f) was not the exclusive remedy, and determined that a party could sue to recover voluntarily incurred costs under Section 107(a) even absent a prior suit by the government.

The decision was based on statutory interpretation.  Section 113(f) allows a party to seek contribution from other PRP’s with common liability.  In contrast, section 107(a) allows recovery of any costs the party has actually incurred to clean up a site, regardless of a finding of liability to a third party.  Thus, the two offer complementary remedies.

Significant Issues Remain to be Decided

Atlantic Research leaves open at least one major issue concerning settlements of suits under Section 113(f).  This section includes a "settlement bar" which provides that any party who resolves its liability with the government is immune from subsequent contribution claims.  This "settlement bar" does not apply to recovery actions brought under section 107, which poses a problem for entities seeking to settle actions with the government.  It appears that the Atlantic Research decision disincentivizes settlements because those who settle with the government under Section 113(f) may still have to litigate potential claims by private entities under Section 107(a).  The Supreme Court suggested that district courts will impose equitable principles to protect (at least in part) parties who have already settled under Section 113(f), and that defendants can cross-claim under Section 113(f), but this issue figures to be prominent in future litigation.

Another potentially significant issue is whether and to what extent PRPs that perform work pursuant to a consent decree or administrative order can recover clean-up costs.

For more information concerning this decision, please contact Randolph Visser or Olivier Theard.  Randolph C. Visser is a partner in the Construction, Environmental, Real Estate and Land Use Litigation practice group in the firm’s Los Angeles office. Mr. Visser has over three decades of air quality experience and founded and co-chairs the Firm’s Global Climate Change Team.  Mr. Theard practices in the Business Trial Practice Group and Environmental Litigation Practice Group in the Los Angeles office of Sheppard, Mullin, Richter and Hampton LLP.