July 27, 2011 Articles

Proper Recovery of "Compelled" Costs of Response under CERCLA

The question of "compelled" costs that are neither incurred voluntarily nor incurred by reimbursing another party was left open by the Supreme Court. It has now been answered.

By M. Camila Tobon – July 27, 2011

When the U.S. Supreme Court decided United States v. Atlantic Research Corp., 551 U.S. 128 (2007), the Court settled a long-standing judicial debate over when potentially responsible parties (PRPs) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601, et seq., could pursue other PRPs for “cost recovery” instead of “contribution.” The Court concluded that parties that had voluntarily incurred response costs in cleaning up hazardous substance contamination could pursue other PRPs through a “cost recovery” action under section 107 of the statute. But parties that had reimbursed response costs through satisfying a settlement agreement or court judgment could only bring a claim against other PRPs for “contribution” under section 113 of the statute.

But what about “compelled” costs of response that are neither incurred voluntarily nor incurred by reimbursing another party? The Supreme Court declined to decide this question in Atlantic Research, leaving open whether parties that had settled their liability under sections 106 or 107 through a consent agreement, and thus incurred costs pursuant to the consent agreement, could recover from other potentially responsible parties under section 107, or section 113, or both. As the Court stated, “[i]n such a case, the PRP does not incur costs voluntarily but does not reimburse the costs of another party.”

Recently, in Morrison Enterprises, LLC v. Dravo Corp., 638 F.3d 594 (8th Cir. Neb. 2011), the Eighth Circuit answered the question left open by Atlantic Research, concluding that Morrison Enterprises and the City of Hastings, Nebraska, could not sue Dravo Corp. for cost recovery under section 107 because they had previously settled their liability under sections 106 and 107 through a series of agreements on consent (AOC) and consent decrees (CD) and, thus, were not incurring costs voluntarily to remediate groundwater contamination at the Hastings Ground Water Contamination Superfund Site. Because contribution under section 113 was the exclusive remedy available to Morrison and Hastings, summary judgment granted in favor of Dravo was affirmed.

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