Parties Seeking Contribution Under CERCLA May Not Bring a Simultaneous Cost Recovery Claim

The Eleventh Circuit Court of Appeals, joining a number of other federal appeals courts, recently held that a party seeking contribution under CERCLA section 113[1] may not simultaneously seek cost recovery under CERCLA section 107.[2] The decision came in the case of Solutia, Inc. Pharmacia Corp. v. McWane, Inc. (Solutia).[3]

The issue presented by Solutia was one left undecided by the U.S. Supreme Court in United States v. Atlantic Research Corp,[4] in which the Court addressed the interplay between cost recovery claims under CERCLA section 107 and contribution claims under CERCLA section 113.[5] In Atlantic Research, the Court held that “the remedies available under §§ 107(a) and 113(f) complement each other by providing causes of action ‘to persons in different procedural circumstances.’”[6] Left undecided was the question of whether a party that had a contribution claim under section 113 could also bring a claim for cost recovery under section 107. This issue was squarely presented – and rejected – in Solutia.

The Eleventh Circuit had previously held that a consent decree gives a party a right of contribution under section 113(f) in Atlanta Gas Light Co. v. UGI Utilities, Inc.,[7] but it had not determined whether such parties might also proceed under section 107(a). In holding that they could not, the Eleventh Circuit joined decisions already issued by the Eighth Circuit,[8] Third Circuit,[9] and Second Circuit,[10] each of which had held that section 113(f) provides the “exclusive remedy for a liable party compelled to incur response costs pursuant to an administrative or judicially approved settlement under §§ 106 or 107.”[11] Though not cited by the Eleventh Circuit, the Sixth Circuit’s decision in ITT Indus., Inc. v. BorgWarner, Inc., is also consistent with these cases.[12]

Limiting liable parties to contribution under section 113 and barring claims under section 107 has a number of implications. Unlike section 107(a), which imposes joint and several liability, section 113(f)’s right of contribution only allows allocation of responsibility between the contribution plaintiff and the defendants. In addition, section 113(f)(2) does not allow a plaintiff to seek contribution from parties who have previously settled their liability to the United States or a state. This was the basis for the settling defendants’ motion in Solutia. Finally, the statutes of limitation differ depending on whether a plaintiff is proceeding under section 107 or section 113.[13]

Background

The cleanup addressed in Solutia was an outgrowth of the Monsanto Company’s production of polychlorinated biphenyl’s (PCBs) at a plant in downtown Anniston, Alabama from 1929 to 1971. In 1997, Monsanto spun off Solutia as a separate company. In 2000, Monsanto merged with Pharmacia & Upjohn, Inc., resulting in the creation of Pharmacia Corp.[14] EPA brought an enforcement action against Solutia & Pharmacia in 2002, and Solutia & Pharmacia entered into a Partial Consent Decree (PCD) with EPA in August 2003. Under the PCD, Solutia & Pharmacia retained the right to seek contribution from other potentially responsible parties for cleanup costs at the site.

Nearly two years after the PCD was approved, the EPA entered into a separate settlement agreement with the “Foothills Community Partnership,” under which a number of other PRPs settled their liability with EPA.[15] After initially contending that the settlement resulted in a suspension of their obligations under the PCD, Solutia & Pharmacia ultimately entered a stipulation with EPA under which it agreed to clean up portions of the site, and then brought a contribution action under section 113(f) and cost recovery action under section 107(a) against the settling defendants and two other PRPs which had not been parties to the Foothills Community Partnership settlement.[16]

The settling defendants under the Foothills Community Partnership settlement sought summary judgment on both Solutia & Pharmacia’s section 107 and section 113 claims, while the non-settling defendants moved for summary judgment on section 107 only. After initially granting the settling defendants’ motion and dismissing the section 113 claims, but preserving the section 107 claims, the magistrate judge to whom the motions were presented vacated his ruling and entered summary judgment against Solutia & Pharmacia on its section 107 claims. The judge based his decision on cases decided since Atlantic Research, finding that, because the PCD and stipulation between Solutia & Pharmacia and EPA provided Solutia with contribution rights under section 113(f), it could not seek to recover those same costs under section 107(a).

The Interplay Between § 107(a) and § 113(f) Claims

In Atlantic Research, the Supreme Court held that both section 107 and section 113 provide PRPs with rights of action to recover cleanup costs. Costs that are incurred voluntarily by a party are recoverable under section 107(a)(4)(B), even if the claimant is not entirely innocent itself. See Atlantic Research, 551 U.S. at 138. Claims brought under section 107(a) impose joint and several liability on the defendants found liable under that section. Id. at 140 n. 7.

By contrast, if a party is forced to reimburse a third party for its cleanup costs, either under a judgment or pursuant to settlement, then the contribution plaintiff may only seek contribution for those costs under section 113(f). See Cooper Indus., Inc. v. Aviall, Inc., 543 U.S. 157, 166 (2004).[17] Unlike section 107(a), which imposes joint and several liability, section 113(f)’s right of contribution flows from the common law concept that a party seeking contribution has “paid more than his or her proportionate share,” making allocation between the plaintiff and defendants the appropriate remedy. Atlantic Research, 551 U.S. at 138.

In Atlantic Research, the Supreme Court declined to decide whether a party that directly incurs cleanup costs pursuant to a consent decree could bring an action to recover those costs under section 107(a). See 551 U.S. at 139 n. 6. The Court identified but did not decide the problem that arises where a party “does not incur costs voluntarily [as required under § 107(a)] but does not reimburse the costs of another party [as required under § 113(f)].” This was the issue presented in Solutia.

In Solutia, the Eleventh Circuit held that such claims may only be pursued under section 113(f).[18] In doing so, the court rejected Solutia & Pharmacia’s argument that there is no language in either section that suggests that section 107(a) and section 113(f) are mutually exclusive remedies, finding that the statute had to be “read as a whole,”[19] and that, in doing so, it was apparent that the remedies are “clearly distinct”: “If a party subject to a consent decree could simply repackage its § 113(f) claim for contribution as one for recovery under § 107(a), then the structure of CERCLA remedies would be completely undermined.”[20] This would also allow circumvention of the differing statutes of limitation, as well as thwarting the contribution protection provided to defendants who had settled with EPA.[21]

The Eleventh Circuit reasoned that letting contribution plaintiffs pursue cost recovery under section 107 “would allow parties, like Solutia & Pharmacia, to impose joint and several liability on Defendants, and other similarly situated parties … [who] would then be barred from asserting any § 113(f) counterclaims, because Solutia & Pharmacia have already entered into a judicially approved settlement with the EPA.”[22]

Conclusion

Each of the Circuit Courts that have addressed the issue have held that a PRP which is pursuing contribution after having been compelled to incur response costs under either a consent decree or UAO may only seek to recoup those costs via a contribution action under section 113(f), and may not proceed to recover those same costs under section 107.

For more information, please contact Steve Jones or any member of our Waste Cleanup or Litigation practice groups.