February 28, 2021

Volume XI, Number 59

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February 26, 2021

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Supreme Court grants Certiorari in Guam CERCLA Case

Earlier this month, the Supreme Court granted a petition for certiorari in Guam v. United States (No. 20-382), a case involving liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The case gives the Court an opportunity to better delineate the boundary between “cost recovery” claims under section 107, and “contribution” claims under section 113. See 42 U.S.C. §§ 9607, 9613(f). The Court will specifically address what kinds of settlement agreements trigger a section 113 contribution claim and its corresponding three-year statute of limitations.

Background

For nearly half a century, the U.S. Navy operated a landfill on the Island of Guam, into which it deposited spent munitions, chemicals, and everyday garbage with minimal environmental safeguards. The United States relinquished sovereignty over the island in 1950, but the Navy continued to use the “Ordot Dump” throughout the Korean and Vietnam Wars. In 2002, the U.S. Environmental Protection Agency (EPA) sued Guam under the Clean Water Act (CWA), alleging that the Dump leached pollutants into waters of the United States. Two years later, Guam and EPA entered into a consent decree that, among other things, required Guam to pay a civil penalty, close the Dump, and install a dump cover system. The agreement expressly bound both parties and was “based on the pleadings . . . without any finding or admission of liability against or by [Guam].” Guam closed the Dump in 2011, but the cleanup continues.

The lawsuit

In 2017 Guam sued the Navy, seeking to recoup nearly $160 million in closure and remediation costs. It brought both a cost recovery claim under CERCLA section 107(a), and a contribution claim under section 113(f). The United States moved to dismiss the suit, arguing that the 2004 EPA consent decree resolved Guam’s liability for the response action, and that a section 113 contribution action therefore constituted Guam’s exclusive CERCLA remedy. And because section 113 imposes a three-year statute of limitations, the United States argued, Guam was barred from pursuing that claim. The District Court disagreed. It concluded that the 2004 EPA consent decree failed to resolve Guam’s liability for the clean-up, and allowed the territory to proceed under section 107, which carries a longer, six-year statute of limitations.

On interlocutory appeal the D.C. Circuit reversed. Joining several other circuits, it first determined that a potentially responsible party (PRP) who may bring a section 113 contribution action must bring such an action rather than a section 107 claim for cost recovery. Then, acknowledging a circuit split, the court held that a settlement need not be CERCLA-specific to trigger a section 113 contribution action. Finally, turning to the terms of the 2004 consent decree, the D.C. Circuit concluded that the agreement indeed triggered a contribution action, and that the statute of limitations for such an action had expired.

Cert petition

Guam asked the Supreme Court to grant certiorari on two questions: (1) whether a non-CERCLA settlement can trigger a contribution claim under CERCLA Section 113(f)(3)(B), and (2) whether a settlement that expressly disclaims any liability determination and leaves the settling party exposed to future liability can trigger a contribution claim under CERCLA Section 113(f)(3)(B). Guam argued that the circuit courts are split on both questions, and because the 2004 EPA consent decree failed to trigger section 113 contribution, it can proceed with its section 107 claim. The United States conceded a “lopsided” circuit split on the first question, but contested the presence of a split on the second question, which it characterized as a “case-specific dispute about the interpretation of a particular consent decree.” The Court granted the petition.

Potential implications

The case will give the Court a chance to address the line between CERCLA section 107 cost recovery claims and section 113 contribution claims, which has consistently confused litigants and the lower courts. The Court’s decision to grant certiorari suggests that it intends to provide some clarification in this area, although the extent of that clarification may vary.

  • At the very least, the Court will decide whether a non-CERCLA settlement can trigger a section 113 contribution claim. This question could impact companies who face site-specific claims under various statutes in addition to CERCLA, like the CWA and the Resource Conservation and Recovery Act (RCRA). The case will determine the effect of settlement under these other statutes on CERCLA liability—and the applicable CERCLA statute of limitations.

  • The Court also will address the impact of liability disclaimers and performance conditions in settlement agreements. As Guam pointed out in its petition, both the Sixth and Seventh Circuits have held that consent decrees containing such provisions fail to “resolve liability” and thus do not trigger section 113 contribution. The Court’s decision could provide firmer guidance on what settlement agreements must include to “resolve liability” at a Superfund site. Such guidance also could inform the implications of other common forms of government action in the CERCLA realm, like Administrative Orders by Consent and Unilateral Administrative Orders.

  • The Court could further distinguish section 107 and section 113 actions. The Court last addressed this issue in United States v. Atlantic Research Corp., where it clarified that “the remedies available in §§ 107(a) and 113(f) complement each other by providing causes of action ‘to persons in different procedural circumstances.’” 551 U.S. 128, 140 (2007) (citation omitted). While a section-113 contribution action “is contingent upon an inequitable distribution of common liability among liable parties,” a section-107 cost-recovery action, in contrast, “permits recovery of cleanup costs but does not create a right to contribution.” Id. at 139. But the Court left some questions unanswered, and expressly acknowledged that the two actions overlap in some circumstances. See id. at 139 n.6. For example, when a PRP “sustain[s] expenses pursuant to a consent decree following a suit under § 106 or § 107(a),” “the PRP does not incur costs voluntarily but does not reimburse the costs of another party.” Id. While Guam did not present a question on the “mutual exclusivity” of sections 107 and 113, the D.C. Circuit addressed this issue and the Court could weigh in too.

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Copyright © 2020, Hunton Andrews Kurth LLP. All Rights Reserved.National Law Review, Volume XI, Number 19
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George Sibley Environmental Attorney Hunton Andrews Kurth Law Firm
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Trey’s practice focuses on environmental litigation and trial work.

Trey has been trial counsel in a diverse array of trials and appeals, including major CERCLA cost-recovery actions, defense of environmental citizen suits and civil enforcement cases, consumer class actions and federal civil rights. Trey combines courtroom experience in complex trials with the substantive knowledge specific to environmental disputes arising under the federal Clean Air Act, Clean Water Act, National Environmental Policy Act and Endangered Species Act.

Trey was law clerk to the Hon. Karen J....

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J. Pierce Lamberson Litigation Attorney Hunton Andrews Kurth Richmond. VA
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Pierce focuses his practice on appellate matters in state and federal courts, including representing individuals and corporations in all stages of litigation.

A former law clerk, Pierce has experience working through all stages of a matter, with a focus on issues and appeals litigation. He also maintains an active pro bono practice.

Prior to joining Hunton Andrews Kurth, Pierce served as a law clerk for Judge Deborah L. Cook of the United States Court of Appeals for the Sixth Circuit. In that role, Pierce worked on several complex appeals, gained insight into federal court...

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