On June 11th, the U.S. Supreme Court decided a closely watched environmental case that may have significant financial implications for both the federal government and private industry. The case, United States v. Atl. Research Corp., is the second of two cases that have considered whether private parties can recover costs incurred to cleanup contaminated sites under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) when the cleanup effort was voluntarily carried out, rather than compelled by a lawsuit or government order. These two cases are extremely important for parties who pay more than their fair share to cleanup contaminated sites, as they set forth how parties can recover from others who are also liable, but have not taken action to address environmental contamination of the relevant site. The ability of parties to recover costs from other potentially responsible parties or “PRPs" is a critical public policy issue in terms of encouraging parties to take action to remediate contaminated sites.
In the first of the two cases, Cooper Indus., Inc. v. Aviall Serv., Inc., the Court held that private parties who voluntarily clean up sites could seek contribution under § 113 of CERCLA only after having been sued under CERCLA or entering into a settlement agreement with the government resolving CERCLA liability. The upshot of the Aviall case is that a party thatconducts a purely voluntary cleanup will typically not be able to recover under § 113 against other PRPs.
In Atlantic Research, however, the Supreme Court reviewed the general cost recovery provision in § 107 of CERCLA. Prior to Aviall, § 107 was typically used only by a governmental body or a private party to sue for cleanup costs when the plaintiff was not otherwise liable for the cleanup, i.e. when the plaintiff was “innocent.” Before Aviall, the weight of authority held that no private cost recovery or contribution action was available under § 107 for parties who themselves were PRPs. After Aviall, the lower courts were divided on the issue.
The Supreme Court’s decision in Atlantic Research allows parties that engage in voluntary cleanup actions to recover their costs from other liable parties under CERCLA § 107 even if they have not been sued by other parties and even if they themselves are liable for cleanup costs. This outcome is a welcome one because private parties will no longer be deterred from cleaning up contaminated sites.
A more in depth analysis of the Atlantic Research case will be forthcoming.