PRP Contribution Claims Under CERCLA Strategies for Cost Recovery - - PowerPoint PPT Presentation

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PRP Contribution Claims Under CERCLA

Strategies for Cost Recovery Against Other Potentially Responsible Parties

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUES DAY, S EPTEMBER 13, 2011

Today’s faculty features: Glenn A. Harris, Partner, Ballard Spahr, Cherry Hill, N.J. Michael W. S teinberg, S enior Counsel, Morgan Lewis & Bockius, Washington, D.C.

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Glenn A. Harris, Esq. Michael W. Steinberg, Esq. B l B ll d S h S h M L M L i Ball llar ard d Spa pahr Morgan

• rgan L

Lew ewis

harrisg@ballardspahr.com msteinberg@morganlewis.com 856-761-3440 (202) 739-5141

OVER ERVIEW VIEW

Slide Slide No. No. I I Contribution Contribution Claims Claims I. Contribution Contribution Claims Claims *Their *Their Varieties, rieties, Availability ailability, Pr Pros

• s and

and Cons

• ns

7 II. II. Recent Case La cent Case Law w De Developments lopments *Cour *Courts “Directing s “Directing Traf affic” t c” to Either § Either § 107 or

• r § 113

33 33 III. III. Discussion Discussion of

• f Current

Current Issues Issues 76 76 IV IV Question Question and and Answ Answer er Session Session 77 77 IV IV. Question Question-and and-Answ Answer er Session Session 77 77

6

Ho How impor w important is contribution? ant is contribution?

 “Contribution Contribution” as used here means any legal theory  Contribution Contribution as used here means any legal theory by which a PRP recovers cleanup costs from other PRPs  Important to PRPs as the primary defense against unfairness of joint and several liability to EPA  Oth t l t itig t f i h t b  Other tools to mitigate unfairness have not been widely available or highly effective:

• Divisibility of harm (although this is in flux after

Divisibility of harm (although this is in flux after Burlington Northern)

• Mixed funding
• EPA orphan share funding policy

7

Ho How im w impor

• rtant is contribution?

tant is contribution? (cont’d)

(cont’d)

p

 Important to EPA because contribution is essential  Important to EPA because contribution is essential to achieve settlements that will maintain the historic high rate (~70%) of PRP-lead cleanups  Especially important now as EPA has no budget to perform cleanups except at orphan sites  S EPA d th PRP h h d i t t i  So EPA and the PRPs have a shared interest in an effective contribution framework  But don’t assume that EPA will help you obtain But don t assume that EPA will help you obtain contribution from other PRPs at your site!

8

Varie rieties of ies of contribution claims contribution claims

 CERCLA § 107(a) cost recovery  CERCLA § 107(a) cost recovery  CERCLA § 113(f) contribution following litigation or settlement under §§ 106 or 107

• § 113(f)(1) for costs incurred in an action under §§

106 or 107 § 113 f 3 f

• § 113(f)(3) for costs incurred in settlements with EPA
• r a State

 State law State law

• Statutory (e.g., New Jersey Spill Act)
• Common law (e.g., equitable contribution among

tortfeasors)

9

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 Rapidly shifting case law makes this terrain  Rapidly shifting case law makes this terrain difficult to navigate  For example, 2 recent decisions by the Second Circuit on the § 107/§ 113 split appear to be directly contradictory

• In the first case decided in 2009 the court allowed a
• In the first case, decided in 2009, the court allowed a

PRP to bring a § 107 cost recovery claim but not a § 113 contribution claim

• In the second case, decided in 2010, the court allowed

a similarly situated PRP to bring a § 113 contribution claim but not a § 107 cost recovery claim § y

10

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

(cont’d) (cont’d)

W. W.R. G Grace v

• v. Zotos,

, 59 F 59 F.3d 3d 85 (2d 85 (2d Cir ir. . 2009) 2009) Niagar Niagara Moha a Mohawk v wk v. Che Chevron ron, , 596 F 596 F.3d 3d 11 112 (2d 2 (2d Cir ir. . 20 2010) suit by current owner following settlement with NY DEC; DEC d bli d suit by former owner following settlement with NY DEC; DEC d bli d consent order obligated plaintiff to perform RI/FS and RD/RA; orders released all claims under NY law, but consent orders obligated plaintiff to perform RI/FS and RD/RA; order released all claims under both CERCLA and , made no mention of CERCLA NY law

11

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

(cont’d) (cont’d)

W. W.R. G Grace v

• v. Zotos,

, 559 F 559 F.3d 3d 85 85 (2d (2d Cir ir. . 2009) 2009) Niagara Niagara Moha Mohawk v wk v. Che Chevro ron, , 596 F 596 F.3d 3d 11 112 (2d 2 (2d Cir ir. . 20 2010) § 113 claim rejected because AOC makes no reference to CERCLA; “there is a risk the § 113 claim allowed because AOC recites that DEC releases its CERCLA claims against ; EPA will take later actions or select different remedies that could expose the PRP to additional liabilities” plaintiff upon completion of the work [N B : Isn’t there the same risk additional liabilities” [N.B.: Isn t there the same risk as in Zotos that “EPA will take later actions”?]

12

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

W R W R G G Z t Z t Ni Ni g M M h k k Ch Ch

(cont’d) (cont’d)

W.R. G Grace race v.

• v. Zotos
• s,

559 F 559 F.3d 3d 85 85 (2d (2d Cir ir. . 2009) 2009) Ni Niagar ara M Mohaw awk k v.

• v. Ch

Chev evron, 596 F 596 F.3d 3d 11 112 (2d 2 (2d Cir ir. . 20 2010) § 107 claim allowed “even though its expenditures were made in compliance with a consent order”; beca se § 107(a) not limited to § 107 claim rejected because allowing it “would in effect nullify the SARA amendment and abrogate the requirements Congress placed on because § 107(a) not limited to those who act “voluntarily”; “relevant inquiry . . . is whether [plaintiff acted without] the type of requirements Congress placed on contribution claims under § 113” – [N.B.: Court cites only to the CERCLA administrative or judicial action that would give rise to a contribution claim under section 113(f)” statute of limitations to support the reference to “requirements”]

13

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

(cont’d) (cont’d)

 Some legal theories are inherently more favorable  Some legal theories are inherently more favorable to the plaintiff than others  Many worthy claims founder on procedural issues, e.g., a statute of limitations problem that no one anticipated  EPA/DOJ i l t i i t t litig ti  EPA/DOJ involvement in private-party litigation can be a “wild card”

• EPA/DOJ often seeks to block § 107 claims against

EPA/DOJ often seeks to block § 107 claims against settling PRPs

• Yet EPA/DOJ refuses to confer such protection up front

i ttl t gr t in settlement agreements

14

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery

(cont’d) (cont’d)

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery

• Pr

Pros

• s:
• Joint and several liability (subject to counterclaim for

y ( j equitable contribution)

• Easier prima facie case and burden of proof (need not

delineate the equitable shares of each defendant delineate the equitable shares of each defendant

• Defenses typically limited to those set forth in § 107(b)

(act of God, act of war, third-party defense)

• Benefit of highly favorable case law built up by EPA/DOJ
• ver 30 years
• Recovery may even include attorney’s fees as

“enforcement” cost.

15

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery (cont d)

• Pr

Pros

• s (cont’d):
• Longer statute of limitations than for § 113(f)

g § ( ) contribution claims

• Text of CERCLA § 113(g)(2):

“(2) Actions for tions for reco recovery of

• f cos

costs An initial action for recovery “(2) Actions for tions for reco recovery of

• f cos
• costs. — An initial action for recovery
• f the costs referred to in section 107 must be commenced —

(A) for removal action, within 3 years after completion of the removal action ; and removal action, …….; and (B) for a remedial action, within 6 years after initiation of physical on-site construction of the remedial action……”

16

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery (cont d)

• Con

Cons:

• Courts may be reluctant to grant PRPs the powerful

y g p weapon of joint and several liability. Agere Systems v. AETC, 602 F.3d 204 (3d Cir. 2010) (discussed infra); Solutia, Inc. v. McWane, Inc., 726 F. Supp. 2d 1316 (N.D. Ala., 2010).

• Defendants may raise divisibility of harm based on

Burlington Northern, effectively turning claim into one for contribution

17

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery (cont d)

• Con

Cons (cont’d):

• EPA/DOJ may seek to block § 107 claims brought

/ y § g against other PRPs, especially against if those other PRPs have settled with EPA

• EPA/DOJ argues that § 107 claims are available only for

EPA/DOJ argues that § 107 claims are available only for purely “voluntary” cleanups, although the Supreme Court said no such thing in Atlantic Research

• Ashland v Gar 729 F Supp 2d 526 (D R I 2010) (“clearly the

Ashland v. Gar, 729 F. Supp. 2d 526 (D.R.I. 2010) ( clearly the focus of the Supreme Court’s analysis [in Atlantic Research] was

• n the type of recovery sought, not on the voluntariness of the

cleanup or the innocence of that party bringing the action.”).

18

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 107(a) cost reco 7(a) cost recovery (cont d)

• Con

Cons (cont’d):

• EPA/DOJ contend that any PRP incurring costs under

/ y g government agency oversight is limited to a contribution claim under § 113

• EPA/DOJ argues that “worker” PRPs had § 113 claims

EPA/DOJ argues that worker PRPs had § 113 claims based on the AOC they signed, and even if those claims are now time-barred, they still cannot pursue § 107 claims!

19

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution

(cont’d) (cont’d)

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution

• Pr

Pros

• s:
• Usually no objection/challenge by EPA/DOJ
• Con

Cons:

• Must be tied to a statutory “trigger” event
• EPA (or State) § 107 cost recovery action
• EPA (or State) § 107 cost recovery action
• EPA § 106 civil action to compel performance of work
• RD/RA consent decree
• Oth r d

i i tr ti r j di i ll r d “ ttl t”

• Other administrative or judicially approved “settlement”

with EPA or the State

• Query whether § 113 plaintiff may also seek other

response costs that were not incurred pursuant to the same “trigger” event.

20

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont d)

• Con

Cons (cont’d):

• Must be tied to a statutory “trigger” event

y gg

• EPA Issuance of § 106 Unilateral Administrative Order?
• NO

NO -- Emhart Industries, Inc. v. New England Container Co Inc 478 F Supp 2d 199 (D R I Container Co., Inc., 478 F. Supp. 2d 199 (D.R.I. 2007); Raytheon Aircraft Co. v. United States, 435 F.

• Supp. 2d 1136 (D. Kan. 2006); Pharmacia Corp. v.

Clayton Chemical Acquisition LLC, 382 F. Supp. 2d 1079 (S.D. Ill. 2005).

21

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont d)

• Con

Cons (cont’d):

• AOC for RI/FS?

/

• NO

NO -- ITT Indus.. Inc. v. BorgWarner. Inc., 506 F.3d 452 (6th Cir. 2007); Pharmacia Corp. v. Clayton Chemical Acquisition LLC, 382

• F. Supp. 2d 1079 (S.D. Ill. 2005).
• Pract

Practice Tip ce Tip: Ask to perform RI/FS under a CERCLA consent decree instead, triggering the right to seek contribution

22

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont d)

• Con

Cons (cont’d):

• Even if plaintiff is entitled to seek contribution, that’s

p not the end of the story

• Prima facie case includes several common-law elements

that may be difficult to prove in the CERCLA context: that may be difficult to prove in the CERCLA context:

• common liability to a third party
• complete discharge of that party’s claim,
• costs were incurred under compulsion of law

23

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont d)

• Con

Cons (cont’d):

• See, e.g., Du Pont v. United States, 297 F. Supp. 2d 740,

g pp 751-55 (D.N.J. 2003), aff’d on other grounds, 460 F.3d 515 (3d Cir. 2006), vacated on other grounds, 127 S.

• Ct. 2971 (2007). See also BASF Catalysts LLC v. United

States, 479 F. Supp. 2d 214 (D.Mass. 2007).

24

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont d)

• Con

Cons (cont’d):

• Recovery limited to the equitable share of each

defendant defendant

• Courts have broad discretion to consider any equitable

factors (not just the Gore factors), reviewable on appeal

• nly for abuse of discretion
• nly for abuse of discretion
• Court may find that defendants are liable, but equity

dictates that no contribution should be allowed . . .

• Appleton Papers Inc v George A Whitting Paper Co 2009 WL

Appleton Papers Inc. v. George A. Whitting Paper Co., 2009 WL 5064049 (E.D.Wis. Dec. 16, 2009)

• r that defendants should be assigned a “zero share”
• Kalamazoo River Study Group v. Eaton Corp., 258. F. Supp. 2d

y p p , pp 736 (W.D. Mich. 2002)

25

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont d)

• Con

Cons (cont’d):

• Statute of limitations is shorter, less predictable (§

p (§ 113(g)(3))

• Many contribution claims have no limitation period at

all! all!

• Text of CERCLA § 113(g)(3):

“(3) Contr Contributi

• tion. — No action for contribution for any response costs or damages may

be commenced more than 3 years after— be commenced more than 3 years after (A) the date of judgment in any action under this Act for recovery of such costs or damages, or (B) the date of an administrative order under section 122(g) (relating to de i i i ttl t ) 122(h) ( l ti t t ttl t ) t minimis settlements) or 122(h) (relating to cost recovery settlements) or entry

• f a judicially approved settlement with respect to such costs or damages.”

26

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont’d)

(cont’d) (cont’d)

 CER CERCLA LA § 11 113(f) contribution 3(f) contribution (cont d)

• Con

Cons (cont’d):

• Defendants may argue no “common liability” if an EPA

y g y claim against them would have been time-barred based

• n SOL
• Agere Systems v. AETC, 602 F.3d 204 (3d Cir. 2010) (discussed

g y , ( ) ( infra)

• Attorney’s fees generally not recoverable
• Litigation fees versus PRP search fees
• Litigation fees versus PRP search fees

27

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 Stat State la e law w claims claims

(cont’d) (cont’d)

 Stat State la e law w claims claims

• Pr

Pros

• s:
• May cover petroleum or other substances not covered by

y p y CERCLA

• May impose liability on broader universe of “arrangers”
• r generators (e.g., New Jersey Spill Act: “any person
• r generators (e.g., New Jersey Spill Act: any person

responsible for” a discharge)

• May authorize recovery of plaintiff’s attorney’s fees

28

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 Stat State la e law w claims claims (cont’d)

(cont’d) (cont’d)

 Stat State la e law w claims claims (cont d)

• Con

Cons:

• May be preempted by CERCLA (e.g., if recovery would be

y p p y ( g y allowed where CERCLA would bar such recovery)

• Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc.,

596 F.3d 112, 138 (2d Cir. 2010) (“state law 596 F.3d 112, 138 (2d Cir. 2010) ( state law contribution claims for CERCLA response costs conflict with CERCLA contribution claims and therefore are preempted” )

29

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 Stat State la e law w claims claims (cont’d)

(cont’d) (cont’d)

 Stat State la e law w claims claims (cont d)

• Con

Cons (cont’d):

• Some courts distinguish between statutory claims and

g y common-law claims:

• In re Reading Corp., 115 F.3d 1111, 1117 (3d Cir.

1997) (“Permitting independent common law remedies 1997) ( Permitting independent common law remedies would create a path around the statutory settlement scheme, raising an obstacle to the intent of Congress.”)

• Manor Care Inc v Yaskin 950 F 2d 122 126 (3d Cir
• Manor Care, Inc. v. Yaskin, 950 F.2d 122, 126 (3d Cir.

1991) (upholding New Jersey DEP’s authority to issue Spill Act directives: “Congress did not intend for CERCLA remedies to preempt complementary state remedies.” p p p y

30

Wh Why does it y does it matt matter ho er how w the claim the claim is styled? is styled?

 Stat State la e law w claims claims (cont’d)

(cont’d) (cont’d)

 Stat State la e law w claims claims (cont d)

• Con

Cons (cont’d):

• Courts tend to finding that state-law contribution

g remedies are preempted, but:

• Preemption cases are difficult to reconcile with CERCLA’s savings

clauses in § 114(a) and § 310(h) § §

• Preemption cases are not carefully reasoned, and so the law in

this area should not be viewed as stable or settled

• State law claims may also be subject to state-specific

State law claims may also be subject to state specific anomalies

• E.g., the Minnesota Environmental Response and Liability Act

(MERLA) allows PRPs to recover their “removal” costs but not (MERLA) allows PRPs to recover their removal costs but not their “remedial” costs

31

OVER ERVIEW VIEW

Slide Slide No. No. I I Contribution Contribution Claims Claims I. Contribution Contribution Claims Claims *Their *Their Varieties, rieties, Availability ailability, Pr Pros

• s and

and Cons

• ns

3 II. II. Recent Case La cent Case Law w De Developments lopments *Cour *Courts “Directing s “Directing Traf affic” t c” to Either § Either § 107 or

• r § 113

33 33 III. III. Discussion Discussion of

• f Current

Current Issues Issues 76 76 IV IV Question Question and and Answ Answer er Session Session 77 77 IV IV. Question Question-and and-Answ Answer er Session Session 77 77

32

C I C I d t i I I A i A i ll S i S i I I Cooper

• oper I

Indus ustries, es, I Inc.

• nc. v.
• v. Aviall

ll Ser ervices, ces, I Inc.

• nc. ,

543 U.S. 157 (2004).

33

Coo Cooper Indus er Industries, ries, Inc. v

• Inc. v. A

Aviall Ser iall Services, Inc. ices, Inc.

 Plaintiff Aviall Services Inc bought property from

p

 Plaintiff, Aviall Services Inc., bought property from defendant, Cooper Industries, Inc.  Aviall later discovered environmental contamination

• n the property and voluntarily remediated

 Aviall brought a civil action against Cooper, seeking f C ’ it bl h f recovery of Cooper’s equitable share of environmental response costs

• One of Aviall’s several claims was ultimately brought

One of Aviall s several claims was ultimately brought under CERCLA section 113(f)(1)

34

Coo Cooper’s Mo er’s Motion tion for r Summar Summary Jud Judgment ment

 Cooper argued that Aviall could not state a claim

p y p y g

 Cooper argued that Aviall could not state a claim under section 113(f)(1) because Aviall had not been sued under section 106 or 107

• District Court agreed, and dismissed the claim
• 5th Circuit Court of Appeals affirmed, then reversed

the dismissal by a divided en banc panel vote the dismissal by a divided en banc panel vote

 The Supreme Court affirmed dismissal of the claim by the lower courts

35

Su Supreme Cour reme Court’s Holdin t’s Holding

 Private party who has not first been sued under

p g p g

 Private party who has not first been sued under section 106 or 107 cannot seek contribution under section 113(f)(1) from other potentially responsible ti (“PRP ”) f di ti t it i d parties (“PRPs”) for remediation costs it incurred  Supreme Court based its decision on the plain language of section 113(f)(1): language of section 113(f)(1):

• “Any person may seek contribution from any other

person who is liable or potentially liable under section 960 f f 9607(a) of this title, during or during or follo

• llowing

wing any civil action under section 9606 … or under section 9607(a).” (emphasis added)

36

37

Unit United Stat ed States v es v. A Atlantic R lantic Research Cor search Corp.

 Plaintiff Atlantic Research Corp leased property

p

 Plaintiff, Atlantic Research Corp., leased property from US Department of Defense  In the course of work done for the U.S., Atlantic contaminated the site, then voluntarily cleaned it  Atlantic brought a civil action against the US under CER CERCLA LA ti 10 107 t h f t CER CERCLA LA section 10 107 to recover share of costs incurred in voluntarily cleaning up contaminated site

38

U.S. Mo U.S. Moves t s to Dismiss Dismiss

 U S argued that section 107(a) does not allow PRPs  U.S. argued that section 107(a) does not allow PRPs (such as Atlantic) to recover costs

• District Court granted dismissal
• 8th Circuit Court of Appeals reversed, stating that

section 113(f) does not provide the exclusive route by which PRPs may recover cleanup costs which PRPs may recover cleanup costs

 Supreme Court affirmed judgment of the Court of Appeals

39

Su Supreme Cour reme Court’s Holdin t’s Holding

 PRPs who have voluntarily incurred remediation

p g p g

 PRPs who have voluntarily incurred remediation costs may bring cost recovery action against other PRPs under section 107(a)(4)(B)  The decision harmonized section 107(a) cost recovery and 113(f) contribution:

• “§ 107(a) permits cost recovery (as distinct from
• “§ 107(a) permits cost recovery (as distinct from

contribution) by a private party that has itself incu itself incurred clean-up costs. . . . [C]osts of reimbur imbursement t ement to th th t t l g l j dg t ano anoth ther er per person pursuant to a legal judgment or settlement are recoverable only under § 113(f).” (emphasis added)

40

Su Supreme Cour reme Court’s Holdin t’s Holding (cont’d)

(cont’d)

 While recognizing possible scenario Court declined

p g p g

 While recognizing possible scenario, Court declined to decide whether costs of work done pursuant to consent decree under section 106 or 107 ( ll d t ) bl d ti (compelled costs) are recoverable under section 113(f), 107(a), or both

41

Fo Footnote S Six

 We do not suggest that §§ 107(a)(4)(B) and 113(f) have no §§

• verlap at all. Key Tronic Corp. v. United States, 511 U.S.

809, 816, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994) (stating the statutes provide “similar and somewhat overlapping remed[ies]”). For instance, we recognize that a PRP may sustain expenses pursuant to a consent decree following a suit under § 106 or § 107(a). See, e.g., United Technologies

• Corp. v. Browning-Ferris Industries, Inc.

., 33 F.3d 96, 97 (C.A.1 1994). In such a case, the PRP does not incur costs voluntarily but does not reimburse the costs of another

• party. We do not decide whether these compelled costs of

response are recoverable under § 113(f), § 107(a), or both. For our purposes, it suffices to demonstrate that costs § incurred voluntarily are recoverable only by way of § 107(a)(4)(B), and costs of reimbursement to another person pursuant to a legal judgment or settlement are recoverable

• nly under § 113(f). Thus, at a minimum, neither remedy

swallows the other, contrary to the Government's argument.

42

Section 1 Section 107 Lan 7 Langua uage

 Section 107(a) – Liability

g g g g

 Section 107(a) Liability

• The statute sets out who is liable in § 107(a)(1)-(4) and

then states in §107(a)(4) to whom those parties are liable and what they are liable for:

• To the government for all costs

costs of a removal or remedial action not inconsistent with the NCP and,

• To any other person for an

any o y other costs of response her costs of response incurred which costs are consistent with the NCP.

43

Section 11 Section 113(f) Lan Langua uage ( ) ( ) g g

 Section 113(f) “Contribution”  Section 113(f) Contribution

• Con

Contributi

• bution. — Any person may seek contribution from

any other person who is liable or potentially liable under §107(a) during or f during or follo llowing an ing any civil action under y civil action under § 106 or under 06 or under § 10 107(a).

• Se

Settl

• ttlement. — A person who has resolved its liability to

Se Settl ttlement. A person who has resolved its liability to the United States or a State in an administra an administrativ tive or

• r

judicially appr judicially approved settlemen ed settlement shall not be liable for claims for contribution regarding matters addressed in claims for contribution regarding matters addressed in the settlement.

44

Section 11 Section 113(f) Lan Langua uage e (cont’d)

(cont’d)

 Persons not party to settlement

( ) ( ) g g

 Persons not party to settlement.

• ……………
• A person who has resolved its liability to the United

p y States or a State for some or all of a response action

• r for some or all of the costs of such action in an

ad administrativ ministrative or

• r j

judicially ap dicially appr proved s ed settlement ttlement ma may ad administrativ ministrative or

• r j

judicially ap dicially appr proved s ed settlement ttlement ma may seek contribution eek contribution from any person who is not party to a settlement referred to in paragraph (2).

45

Costs Clearly R Costs Clearly Reco coverable Under Either rable Under Either §10 107 o

• r §11

113

 Claims that must be brought under §10 107:

§10 107 o

• r §11

113

 Claims that must be brought under §10 107:

• Costs incurred in cleanup undertaken without EPA
• versight or involvement.

 Claims that must be brought under §113 113:

• Claims against 3rd parties for government incurred

t h th g t h d t d l costs where the government has conducted a cleanup and sued your client for cost recovery.

46

Ag Agere Sys Systems, ems, Inc., e Inc., et al. v

• al. v. Advanced

Advanced Ag Agere Sys Systems, ems, Inc., e Inc., et al. v

• al. v. Advanced

Advanced En Environmental T vironmental Technology Corp., e chnology Corp., et al. al. 602 F 602 F.3d 3d 204 (3d 204 (3d Cir

• ir. 20

. 2010)

47

Agere Sys ere Systems, ems, Inc., e Inc., et al. v

• al. v. Advanced

Advanced En Environmental T vironmental Technology Corp chnology Corp e et al al

 Three of five plaintiffs agreed in US Consent Decree

En Environmental T vironmental Technology Corp chnology Corp., ., et et a al.

 Three of five plaintiffs agreed in US Consent Decree to perform OU-1 Work  Those three plus another plaintiff, TI, agreed in a second US Consent Decree to reimburse US past costs and to perform OU-2 Work  TI j i d OU 1 G d Ag j i d OU 1 d OU  TI joined OU-1 Group and Agere joined OU-1 and OU- 2 Groups  Claims asserted under Section 107(a) and Section Claims asserted under Section 107(a) and Section 113(f)

48

Agere Sys ere Systems, ems, Inc., e Inc., et al. v

• al. v. Advanced

Advanced En Environmental T vironmental Technology Corp chnology Corp e et al al

 Held --

En Environmental T vironmental Technology Corp chnology Corp., ., et et a

• al. (cont’d)

(cont’d)

 Held

1) Plaintiffs who if permitted to bring a Section 107(a) claim would be shielded from contribution counterclaims under Section 113(f)(2) do not have any 107(a) claims for costs incurred 2) TI and Agere have 107(a) claims for “Work” costs, as 2) TI and Agere have 107(a) claims for Work costs, as they were never sued

 Statutory language ignored, sole focus was perceived inequity of permitting joint and several liability without perceived possibility of equitable allocation counterclaims

49

Niagar Niagara Moha a Mohawk Po wk Power Corp. v r Corp. v. Che Chevron ron Niagar Niagara Moha a Mohawk Po wk Power Corp. v r Corp. v. Che Chevron ron U.S.A S.A., ., Inc., e Inc., et al. al. 596 F 596 F.3d 3d 11 112 (2nd Cir 2 (2nd Cir. 20 2010)

50

Niagar Niagara a Moha Mohawk Po wk Power Corp. v r Corp. v. Che Chevron ron U S U S A I Inc e et a al

 Plaintiff entered into State Consent Order to

U.S.A., ., Inc Inc., ., et et a al.

Plaintiff entered into State Consent Order to perform remediation  Consent Order expressly resolved State’s CERCLA claims claims  Claims asserted under Section 107(a) and Section 113(f)  Held – Plaintiffs limited to Section 113(f)  Statutory language ignored, allowing Section 107(a) l i ld “ llif th SARA d t d claims would “nullify the SARA amendment and abrogate the requirements Congress placed on contribution claims under Section 113” – noting diff t t t t f li it ti different statutes of limitations

51

M i E E t i LL LLC t t l D C Morr

• rrison

son E Enterpr erprises, ses, LL LLC, et t al. v.

• v. Dra

ravo Corp.

• rp.

638 F 638 F.3d 3d 594 (8th Cir 594 (8th Cir. 20 2011) 11)

52

Morrison Ent Morrison Enterprises, rises, LL LLC, e C, et al. v

• al. v. Dr

Dravo Cor

• Corp.

 Plaintiffs entered into US AOCs and Consent Decree

p p p p

 Plaintiffs entered into US AOCs and Consent Decree to do work  Claims asserted under Section 107(a) and Section 113(f)  Held – Section 107(a) claim dismissed

• Entitled to Section 113(f) claim, but claim dismissed

as time barred

 Statutory language ignored no Section 107(a)  Statutory language ignored, no Section 107(a) claim because work costs were not incurred “voluntarily”

53

B t i t t l B k t t t l Berns ernstein, n, et t al. v.

• v. B

Ban anker ert, et t al. 20 2010 WL 3893 WL 3893121 (S.D. Ind. 20 1 (S.D. Ind. 2010)

54

Berns Bernstein, e ein, et al. v

• al. v. Bank

Banker ert, e t, et al. al.

 Held -- No Section 107(a) -- Statutory language  Held No Section 107(a) Statutory language ignored, no Section 107(a) because work pursuant to Consent Decree, so not “voluntary” –– Follows Ag b C t D g t ib ti Agere, because Consent Decree gave contribution protection would prohibit Section 113(f) counterclaim, prevent injustice

55

S l ti ti I I t t l M W M W I I Soluti tia, a, I Inc.

• nc. et

t al. v.

• v. McWane,

ane, I Inc. nc. 726 F 726 F. Supp. 2d

• Supp. 2d 1316 (N.D. Ala.

(N.D. Ala. 20 2010)

56

Solutia

• lutia, Inc. et al. v
• Inc. et al. v. McW

McWane ne, Inc. Inc.

 Held – Section 113(f) only because State Consent

, , , ,

 Held Section 113(f) only because State Consent Decree released CERCLA claims – If settlement gives rise to contribution rights, then Section 113(f) l if t th S ti 107( ) l N

• nly; if not, then Section 107(a) only – No

“voluntary” requirement, acknowledges statutory language in Section 107(a), but Congress could not have “intended that a plaintiff could avoid the less favorable aspects of Section 113(f) claims … just by seeking those very same costs via Section 107(a)” seeking those very same costs via Section 107(a)

• - relies on “some or all of a response action or for

some or all of the costs of such action”

57

U i U it d S St t Ph i C i C t l Unit ited St d States es v.

• v. Ph

Pharmac armacia C Corp.,

• rp., et

t al. 713 F 3 F. Supp. 2d 785 (S.D. Ill. 20

• Supp. 2d 785 (S.D. Ill. 2010)

58

Unit United Stat ed States v es v. Pharmacia Cor Pharmacia Corp., e ., et al. al.

 Held – Section 107(a) cross-claim permitted for

p

 Held Section 107(a) cross claim permitted for costs incurred “voluntarily outside the scope of” Pharmacia’s partial US Consent Decree and not i b bl t th US S ti 113(f) l i reimbursable to the US – Section 113(f) claim previously dismissed because US lost liability trial against remaining defendant

59

Opinions allo Opinions allowing a wing a Section 1 Section 107(a) claim where 7(a) claim where there there is no right t is no right to a Section a Section 11 113(f) 3(f) claim claim

60

W.R. Gr

• R. Grace & Co.

ace & Co. –CONN v CONN v. Zot Zotos Int’l, Inc. nt’l, Inc. 559 F 559 F.3d 3d 85 (2d 85 (2d Cir

• ir. 2009)

. 2009)

61

W.R. Gr

• R. Grace & Co. –CONN

ace & Co. –CONN v. Zot Zotos Int’l, Inc. s Int’l, Inc.

 Plaintiff entered into State Consent Order to do  Plaintiff entered into State Consent Order to do work and reimburse State response costs  CO did not mention CERCLA  Held – Section 107(a) claim permitted, no Section 113(f) claim  No Section 113(f) claim because not a CERCLA settlement  No statutory requirement that costs be “voluntary”  No statutory requirement that costs be “voluntary”, and Grace did the work itself

62

W.R. Gr

• R. Grace & Co. –CONN

ace & Co. –CONN v. Zot Zotos Int’l, Inc., s Int’l, Inc.,

(cont’d) (cont’d)

 “The relevant inquiry is whether the party  The relevant inquiry … is whether the party undertook the remedial actions without the need for the type of administrative or judicial action that ld gi i t t ib ti l i d would give rise to a contribution claim under section 113(f)”  Encourage cleanups Encourage cleanups

63

ITT Indus ITT Industries ries Inc Inc v v Bor BorgWarner rner Inc Inc ITT Indus ITT Industries ries, Inc

• Inc. v
• v. BorgW

BorgWarner rner, Inc Inc. 506 F 506 F.3d 3d 452 (6th Cir 452 (6th Cir. 2009) 2009)

64

ITT Indus ITT Industries, Inc. ries, Inc. v. Bor BorgWarner rner, Inc. , Inc. g

 Plaintiff entered into ACO that was not a Section  Plaintiff entered into ACO that was not a Section 113(f) settlement  Held –Section 107(a) permitted  ACO gave no contribution rights, so Section 107(a) permitted

65

A h A hl d I I GAR E El t f i g t l Ashl hlan and I d Inc.

• nc. v.
• v. GAR El

GAR Elec ectro roform

• rming, et

t al. 729 F 729 F. Supp. 2d

• Supp. 2d 526 (D.R.I.

526 (D.R.I. 2010) 0)

66

Ashland Inc. Ashland Inc. v. GAR Electroformin GAR Electroforming, e , et al. al. g

 Plaintiff responded to EPA letter and accompanying  Plaintiff responded to EPA letter and accompanying AOC with a letter agreeing to be a Performing Party (others had settled with EPA) and thereafter f d t i k d i b d EPA performed certain work and reimbursed EPA

• versight costs

 Held – Section 107(a) claim permitted against Held Section 107(a) claim permitted against parties to EPA Consent Decree; no Section 113(f) claim because Plaintiff was never sued, never j di i l d i i t ti l f ttl t judicial or administrative approval of settlement

67

Ashland Ashland Inc. v

• Inc. v. GAR Electroforming, e

GAR Electroforming, et al., al.,

(cont’d) (cont’d)

 No statutory requirement that costs be “voluntary”;  No statutory requirement that costs be voluntary ; follows Grace  Contribution protection given to CD parties did not bar Section 107(a) claim

68

Ford Mot rd Motor Co. v r Co. v. Michigan Consolidat Michigan Consolidated ed Ford Mot rd Motor Co. v r Co. v. Michigan Consolidat Michigan Consolidated ed Gas Co. Gas Co. 2009 WL 3 2009 WL 31904 190418 (E.D. 8 (E.D. Mich. 2009)

• ich. 2009)

69

Ford rd Mot Motor r Co. v

• Co. v. Michigan Consolidat

Michigan Consolidated ed Gas Co. Gas Co. Ford rd Mot Motor r Co. v

• Co. v. Michigan Consolidat

Michigan Consolidated ed Gas Co. Gas Co.

 Plaintiff entered into State voluntary CERCLA CACO y to do remediation  Brought Section 107(a) and Section 113(f) claims  Held Section 107(a) claim permitted; Section  Held – Section 107(a) claim permitted; Section 113(f) claim dismissed  No Section 113(f) claim because wasn’t 122(g) or (h) (statute of limitations) (h) (statute of limitations)  No statutory requirement that costs be “voluntary” and it was voluntary  Encourage cleanups

70

US v US v. Pharmacia Corp., e Pharmacia Corp., et al. al. US v US v. Pharmacia Corp., e Pharmacia Corp., et al. al. v.

• v. R

Rogers C Cartage 713 F 3 F. Supp. 2d 785 (S.D. Ill. 20

• Supp. 2d 785 (S.D. Ill. 2010)

71

US v US v. Pharmacia Cor Pharmacia Corp., e ., et al. v

• al. v. R

Roger ers Car s Cartage p g p g g

 Cross-claim Plaintiffs sued by US, entered into y , partial settlement  Cross-claim Defendants found not liable to US at trial t a  Cross-claims asserted under Section 107(a) and Section 113(f) for costs outside scope of settlement (that claim dismissed when cross-claim Defendant (that claim dismissed when cross claim Defendant found not liable)  Held – Section 107(a) claim permitted, but only for costs outside the scope of any ACO or Consent costs outside the scope of any ACO or Consent Decree and not reimbursement  Being sued by the US under Section 107(a) does not bar a Section 107(a) claim bar a Section 107(a) claim

72

Queens W Queens West De Development Corp. v lopment Corp. v. Queens W Queens West De Development Corp. v lopment Corp. v. Hone Honeyw ywell Int ell International Inc. rnational Inc.

• No. 3:1
• No. 3:10-cv
• cv-048

04876 (D.N (D.N.J. .J. Aug. 1

• ug. 17, 20

, 2011) 11)

73

Queens W Queens West v

• v. Hone

Honeywell Int ll International rnational

 Queens West remediated a former chemical works

y

Queens West remediated a former chemical works

• perated by Honeywell’s predecessor in Long Island

City.  Remediation performed under New York DEC’s  Remediation performed under New York DEC’s voluntary cleanup program  Contribution claim asserted under § 113(f) §  Held – No § 113 claim permitted for costs incurred voluntarily, which (citing Atlantic Research) are recoverable only under § 107(a) recoverable only under § 107(a).  Queens West did not allege (1) that it is a PRP, or (2) that it entered into an administrative or j di i ll d ttl t judicially approved settlement

74

OVER ERVIEW VIEW

Slide Slide No. No. I I Contribution Contribution Claims Claims I. Contribution Contribution Claims Claims *Their *Their Varieties, rieties, Availability ailability, Pr Pros

• s and

and Cons

• ns

7 II. II. Recent Case La cent Case Law w De Developments lopments *Cour *Courts “Directing s “Directing Traf affic” t c” to Either § Either § 107 or

• r § 113

33 33 III. III. Discussion Discussion of

• f Current

Current Issues Issues 76 76 IV IV Question Question and and Answ Answer er Session Session 77 77 IV IV. Question Question-and and-Answ Answer er Session Session 77 77

75

Discussion of Current Issues Discussion of Current Issues

76

Question-and- Question-and-Answ Answer Session er Session

77

Glenn A. Harris, Esq. Michael W. Steinberg, Esq. B l B ll d S h S h M L M L i Ball llar ard d Spa pahr Morgan

• rgan L

Lew ewis

harrisg@ballardspahr.com msteinberg@morganlewis.com 856-761-3440 (202) 739-5141