THE UNITED STATES WANTED TO HAVE ITS CAKE, EAT IT, AND AVOID ITS CLEANUP COSTS, TOO

By: Olivia Carroll, Volume 106 Staff Member

In 2017, the Territory of Guam brought suit against the United States under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), seeking to recover costs spent on the cleanup of a contaminated site that had been previously used for hazardous waste disposal by the U.S. Navy.[1] The U.S. denied Guam’s claims, arguing a previous consent decree regarding violations of the Clean Water Act (“CWA”) entered into by Guam and the EPA in 2004 satisfied CERCLA’s statutory predicate for contribution claims under § 113(f), thereby barring Guam’s additional claims under the statute’s alternative scheme for cost recovery under § 107(a).[2] Furthermore, while § 107(a) has a six-year statute of limitations, contribution under § 113(f) has a statute of limitations period of only three years,[3] ultimately rendering any claims by Guam untimely.[4] However, in a unanimous decision authored by Justice Thomas, the Supreme Court ruled in favor of Guam and found that the “most natural reading” of § 113(f) allowed parties to seek contribution only after settling a CERCLA-specific liability claim.[5] Thus, where the 2004 consent decree pertained to CWA violations and not CERCLA, Guam was free to pursue its cost recovery action under § 107(a) instead.[6]

I. BACKGROUND

In the 1940s the U.S. Navy constructed a dump site in Guam, which it used for the disposal of hazardous military waste before ceding control back to Guam in 1950.[7] The site, called the Ordot Dump, was then used as a public landfill by Guam until 1983, when the EPA determined the location posed an “ecological hazard” and placed it on the National Priorities List of hazardous waste sites.[8] Subsequent efforts to clean up the site later resulted in a lawsuit by the EPA against Guam under the CWA, asserting Guam allowed the discharge of pollutants into “waters of the United States without obtaining a permit.”[9] This litigation ended in 2004 with the consent decree between Guam and the EPA, compliance with which would make Guam “in full settlement and satisfaction of the civil judicial claims of the United States . . . as alleged in the Complaint.”[10] Importantly, however, those claims were only those specific to the CWA without regard to any claims under CERCLA.[11] Thirteen years later, Guam brought the present action against the United States, this time under CERCLA, seeking recovery of costs from the United States Navy for contributing to the waste site.[12]

II. THE SUPREME COURT’S HOLDING

CERCLA is a comprehensive statutory scheme for responding to and resolving environmental hazards.[13] Relevant to this case, there are two potential “routes” a party can take to seek money from other parties responsible for the contamination to help pay for the cleanup costs. The first is § 107(a), “cost recovery,” which allows recovery of costs of a “removal or remedial action” from “any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of.”[14] This provision has a six-year statute of limitations period. The second is § 113(f)(3)(B), “contribution”, which allows a person “who has resolved its liability to the United States or a State” in a settlement to seek contribution and recover some of the costs incurred.[15] This provision has a three-year statute of limitations period. It has been generally established in previous opinions that parties cannot be eligible under both—ability to make a claim under § 113 bars any action under § 107.[16]

The U.S. argued, and the lower D.C. Circuit court agreed, that the language in § 113(f) describing a party as having “resolved its liability” was broad enough to encompass not only CERCLA-specific liability claims but any environmental liability claims.[17] Thus, the lower court found the remedial measures and conditional release for claims solely related to the CWA in the 2004 consent decree sufficiently “resolved Guam’s liability” for the dump.[18] Guam was then eligible for relief thought § 113(f), and applying the three-year statute of limitations, Guam had no remedy available.[19]

This argument before the Supreme Court failed.[20] In a technical reading of the provisions, the Court found that the CERCLA provisions, when read together as the comprehensive statutory scheme was intended, limited the type of liability that needed to be “resolved” to liability under CERCLA.[21] Justice Thomas noted that the portion of § 113, entitled “contribution” was telling in that “[a] contribution suit does not exist in a vacuum, but rather is a tool for apportioning the burdens of a predicate ‘common liability’ among the responsible parties.”[22] That common liability can only be found within the bounds of CERCLA’s specific regime, especially where there is no general federal right to contribution otherwise.[23]

III. FUTURE OF CERCLA LIABILITY

Since the statute’s enactment in 1980, CERCLA has gained a reputation as a complex and confusing puzzle for courts to apply.[24] The decision in Guam alone overturns the precedent of at least four circuit courts that had previously ruled in favor of the United States’ position that non-CERCLA settlement claims were sufficient to trigger § 113(f) contribution actions.[25] It is thus unsurprising that there remains some apprehension that the Guam decision will render more confusion than clarity for settling parties moving forward under CERCLA liability.[26] For example, parties who had previously relied on past non-CERCLA settlement agreements as a basis for assessing contribution rights and the applicability of § 113(f)’s three-year statute of limitations may reevaluate cases against partially liable parties under the now longer six-year window.

Another major question arises from the Court’s narrow ruling in Guam, which declined to reach the second question posed as to what degree a settlement must incorporate CERCLA in order to qualify as “resolving” liability enough to trigger § 113(f).[27] Yet while not formally addressing the issue, Justice Thomas’ analysis of the word “resolve” in the Court’s opinion suggests a fairly strict application, noting the term “conveys certainty and finality.”[28] He then further opined that, “[i]t would be rather odd to say that a party has ‘resolved its liability’ if that party remains vulnerable to a CERCLA suit.”[29] This reading suggests partial resolution is insufficient, and a settlement must bar all potential future CERCLA claims to trigger the § 113(f) provision.[30]

Finally, parties entering into settlement negotiations for hazardous waste cleanup may change their approach with the understanding that not all claims will trigger CERCLA contribution. While a CERCLA-specific settlement would achieve finality, it will likely restrict parties from a § 107(a) cost recovery action and in doing so limit their window to bring contribution suits to only three years.[31] Alternatively, parties can weigh the benefits of negotiating a more general settlement that avoids explicitly disclaiming CERCLA liability to possibly preserve a § 107(a) claim with its longer 6-year statute of limitations period—keeping in mind that such a settlement will leave the party exposed to potential future CERCLA claims by other private parties or the government.

 

[1] Amended Complaint at 1, Gov’t of Guam v. United States, No. 17-cv-02487 (D. Conn. May 19, 2017).

[2] Brief for the United States in Opposition at 2–3, Territory of Guam v. United States, 593 U.S. __ (2021) (No. 20-382) [hereinafter Brief for United States].

[3] The § 113(f) statute of limitations clock would have begun after the signing of the consent decree in 2004. Territory of Guam v. United States, No. 20-382, slip op. at 3 (U.S. May 24, 2021).

[4] Brief for United States, supra note 2, at 2.

[5] Territory of Guam v. United States, No. 20-382, slip op. at 9 (U.S. May 24, 2021).

[6] Id. at 9.

[7] Id. at 2.

[8] Id.; Steve Limtiaco, Decades in Court: The History of the Ordot Dump, Pacific Daily News (May 25, 2021), https://www.guampdn.com/news/local/decades-in-court-the-history-of-the-ordot-dump/article_cf3b9868-c1e0-519f-9bef-c8731e941151.html [https://perma.cc/WCW6-8XKS].

[9] Territory of Guam v. United States, No. 20-382, slip op. at 2 (U.S. May 24, 2021).

[10] Id.

[11] Id. (“But Guam was not completely free. As the agreement explained, ‘the United States d[id] not waive any rights or remedies available to it for any violation by the Government of Guam of federal and territorial laws and regulations,’ ‘[e]xcept as specifically provided [i]n [the decree].’”).

[12] Id.

[13] Superfund: CERCLA Overview, Env’t Prot. Agency, https://www.epa.gov/superfund/superfund-cercla-overview[https://perma.cc/SF65-7QDE].

[14] 42 U.S.C § 9607(a).

[15] 42 U.S.C § 9613(f).

[16] See Brief for Petitioner at 6, Territory of Guam v. United States, 593 U.S. __ (2021) (No. 20-382) (conceding that with § 113(f)’s stricter procedural requirements, including the shorter statute of limitation period, lower courts have consistently concluded that § 107 and § 113 are “mutually exclusive.”).

[17] Territory of Guam v. United States, No. 20-382, slip op. at 3 (U.S. May 24, 2021).

[18] Id.

[19] Id.

[20] Id. at 4.

[21] Id.

[22] Id.

[23] Id. at 5.

[24] See, e.g., Paul M. Hauge, No, That Doesn’t Settle It: U.S. Supreme Court Clarifies Which Types of Settlements Trigger CERCLA Contribution Rights, Gibbons Law Alert (June 1, 2021), https://www.gibbonslawalert.com/2021/06/01/no-that-doesnt-settle-it-u-s-supreme-court-clarifies-which-types-of-settlements-trigger-cercla-contribution-rights [https://perma.cc/3ZTP-DZ9P] (“The complex and overlapping nature of the three different routes to recovering cleanup costs under [CERCLA] has bedeviled courts for decades.”).

[25] See Trinity Industries, Inc. v. Chicago Bridge & Iron Co., 735 F.3d 131, 136 (3d Cir. 2013); Asarco LLC v. Atl. Richfield Co., 866 F.3d 1108, 1120–21 (9th Cir. 2017); Refined Metals Corp. v. NL Industries Inc., 937 F.3d 928, 932 (7th Cir. 2019); Gov’t of Guam v. United States, 950 F.3d 104, 114 (D.C. Cir. 2020), rev’d and remanded sub nom., Guam, 593 U.S. __ (2021). Only the Second Circuit had previously found § 113(f)(3)(B) creates a “contribution right only when liability for CERCLA claims . . . is resolved.” Consolidated Edison Co. of New York, Inc. v. UGI Utilities, Inc., 423 F.3d 90, 95 (2d Cir. 2005).

[26] See, e.g., David G. Mandelbaum, Only CERCLA Settlements Trigger CERCLA Contribution: Guam v. US, Nat. L. Rev. (May 24, 2021), https://www.natlawreview.com/article/only-cercla-settlements-trigger-cercla-contribution-guam-v-us [https://perma.cc/8932-KLYK] (noting that some state settlement agreements bar a later CERCLA claim by action of state law, rather than express terms of a settlement agreement).

[27] Territory of Guam v. United States, No. 20-382, slip op. at 3–4 (U.S. May 24, 2021); see also Joseph Romero, Resolved, yet Unclear: Supreme Court Tightens CERCLA Contribution Claim Requirements, Vandeventer Black (June 15, 2021), https://vanblacklaw.com/appellate/resolved-yet-unclear-supreme-court-tightens-cercla-contribution-claim-requirements [https://perma.cc/72HY-KCVB] (noting it is similarly unclear whether § 113 is triggered by resolving partial liability at a specific site after preliminary assessment, without addressing future potential remedial actions at the site).

[28] Territory of Guam v. United States, No. 20-382, slip op. at 7 (U.S. May 24, 2021).

[29] Id.

[30] Such a hardline rule, however, might prove difficult to apply in actual cases as remediation under CERCLA can take decades to fully complete and parties often enter settlements at different stages of the process as they happen. Romero, supra note 27.

[31] 42 U.S.C § 9613(g)(1).