US Supreme Court Agrees to Address Circuit Split Over CERCLA Liability

The U.S. Supreme Court has agreed to consider a closely-watched case involving liability under CERCLA

US Supreme Court Agrees to Address Circuit Split Over CERCLA Liability

US Supreme Court Agrees to Address Circuit Split Over CERCLA Liability

<strong>The U.S. Supreme Court has agreed to consider a closely-watched case involving liability under CERCLA</strong>

Author: Daniel T. McKillop|January 28, 2021

The U.S. Supreme Court has agreed to consider a closely-watched case involving liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The questions in Guam v. United States involve the interaction between cost recovery claims under CERCLA section 107 and contribution claims under section 113.

Comprehensive Environmental Response, Compensation, and Liability Act

Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), both the State and the Federal Governments may recover their clean-up costs directly from Potentially Responsible Parties (PRPs). CERCLA also authorizes entities who have taken actions to clean up hazardous waste sites to recoup their cleanup costs from other parties who are also responsible for the contamination. Section 107(a) allows a responsible party to recover cleanup costs from other responsible parties. In addition, Section 113(f)(3)(B) provides that a person that has “resolved its liability” for “some or all of a response action or for some or all of the costs of such action” pursuant to a settlement agreement with the government “may seek contribution from any person who is not party to a settlement.”

Because Section 113(f)(3)(B) has a shorter limitations period of three years rather than six, lower courts have held that it is exclusive, meaning that once a settlement triggers Section 113(f)(3)(B), it bars an otherwise available claim under Section 107(a). The courts do not agree, however, when a settlement triggers Section 113(f)(3)(B).

CERCLA Liability for Remediation of Superfund Site

The dispute in Guam v. United States centers on whether Guam or the U.S. Navy is financially responsible for the environmental hazards arising from the Ordot Dump on the island of Guam. For nearly half a century, the Navy operated the landfill, which contains discarded munitions, chemicals, and everyday garbage. Despite its extensive use, the Ordot Dump lacked basic environmental safeguards. According to court documents, because the landfill was unlined on its bottom and uncapped at its top, it absorbed rain and surface water, which percolated through the landfill and mixed with contaminants. These contaminants released into the nearby Lonfit River and made their way into the Pacific Ocean at Pago Bay. 

After Guam failed to devise plans for containing and disposing of waste at the landfill, the U.S. Environmental Protection Agency (EPA) sued under the Clean Water Act (CWA), asserting that Guam violated the CWA by discharging pollutants into waters of the United States without obtaining a permit. Guam and the EPA entered into a consent decree in 2004, which required Guam, among other things, to pay a civil penalty, close the Ordot Dump, and design and install a "dump cover system."  The Decree expressly states that it "shall apply and be binding upon the Government of Guam ... and on the United States on behalf of U.S. EPA," and was "based on the pleadings, before taking testimony or adjudicating any issue of fact or law, and without any finding or admission of liability against or by the Government of Guam." 

In 2017, Guam filed a lawsuit against the United States, arguing that the Navy was responsible for the Ordot Dump’s contamination and seeking to recoup its landfill closure and remediation costs. Guam brought two causes of action: a CERCLA section 107(a) claim seeking "removal and remediation costs" related to the landfill, and, "[i]n the alternative," a section 113(f) contribution action. The United States moved to dismiss the suit, arguing that Guam could not avail itself of CERCLA section 107(a) because section 113(f)(3)(B) is "the exclusive CERCLA remedy for the costs a liable party is compelled to incur pursuant to a judicially-approved settlement with the United States." Citing the 2004 Consent Decree, the United States argued that Guam had resolved its liability for a response action, and so had to proceed under section 113 rather than 107. Because section 113 "imposes a three-year statute of limitations on contribution claims" that runs from a consent decree’s entry, the United States argued that Guam was time-barred from pursuing that claim.

According to the district court, “whether or not an agreement for the removal or remediation of hazardous waste ‘resolves’ liability for section 113(f)(3)(B) purposes turns on the terms of the agreement.” It went on to conclude that "the 2004 Consent Decree did not resolve Guam’s liability for the Ordot Landfill cleanup." Because the 2004 Decree failed to meet the "statutorily prescribed conditions for bringing a contribution claim under section 113(f)(3)(B)," the court ruled that Guam could maintain its section 107(a) claim against the United States and denied the United States’ motion to dismiss.

The D.C. Circuit Court of Appeals reversed, concluding that the 2004 Consent Decree triggered Guam’s right to pursue a contribution claim under section 113, precluding it from pursuing a claim under section 107. In so ruling, the D.C. Circuit agreed with the Third, Seventh, and Ninth Circuits that section 113(f)(3)(B) does not require a CERCLA-specific settlement. Given that Guam filed suit more than three years after the consent decree was entered, the court held that Guam’s action is barred.

Issues Before the Supreme Court

The Supreme Court granted certiorari on January 8, 2021. The justices have agreed to consider the following questions:

(1) Whether a settlement that is not under the Comprehensive Environmental Response, Compensation, and Liability Act 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).

Oral arguments have not yet been scheduled. However, a decision is expected before the term ends in June. The Supreme Court’s decision will hopefully resolve the circuit splits and  bring much-needed clarity regarding what types of settlements will trigger contribution claims under § 113(f)(3)(B). Please stay tuned for updates.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

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About Author Daniel T. McKillop

Daniel T. McKillop

Dan McKillop has more than fifteen years of experience representing corporate and individual clients in complex environmental litigation and regulatory proceedings before state and federal courts and environmental agencies arising under numerous state and federal statutes.

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