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Cost Recovery for Environmental Clean-ups

A release of hazardous waste is often a traumatic event, such as a spill from an overturned tanker truck or a cloud of toxic gas rising from a railroad car. Sometimes, the release is quiet and it is not noticed for a period of time.  For example, an unaware purchaser of real estate might unluckily come across hazardous waste on their newly purchased property or, a leaking drum might be discovered in a state park.

In any situation, it is incumbent on someone to stabilize the situation to prevent spread of the contamination and then to start a clean-up.  The “person” doing the clean-up, under federal law can be the federal, state or tribal government, an individual, a company, a business, a city or a county, to name a few.  Once the remediation begins, then the costs begin accumulating.  At that point, the entity doing the clean up starts looking for someone to help cover the expenses.

The federal law that governs this topic is the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), also known as the Superfund Act.  Under CERCLA, there are two methods of cost recovery.

CERCLA Section 107(a)(4)(B) authorizes any person to recover the costs incurred from the cleanup from a potentially responsible party (PRP) that released or spilled the hazardous waste.  Section 107(a) of CERCLA defines four categories of PRPs, 94 Stat. 2781, 42 U. S. C. §§9607(a)(1)-(4), and makes them liable for, among other things:

“(A) all costs of removal or remedial action incurred by the United States Government, a State, or an Indian tribe not inconsistent with the national contingency plan; [and]

(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan.”  §9607(a)(4)(A)-(B).”

The courts have interpreted “any other person” to mean any person who is not authorized under Subsection (A), namely, the United States, a State, or a Tribal government.  So cities, individuals, businesses and companies are authorized under (B) to recover their costs incurred in a cleanup.  United States v. Atlantic Research Corp., 551 U.S. 128 (2007).

The other means of recovery is authorized by Section 113(f) of CERCLA, that allows a PRP to recover contribution from another PRP, but only after the claimant-PRP has itself been sued under Section 106 or 107 of CERCLA.   See Cooper Industries, Inc. v. Aviall Services, Inc., 543 U. S. 157 (2004).

There is some confusion among practitioners about whether or not a party must be sued before being authorized to recover costs.  That view is based on an incomplete understanding of the interaction between Section 107(a) and Section 113(f) of CERCLA.  While a PRP is only entitled to recover contribution from another PRP under Section 113(f) after the claiming PRP has itself been sued, that precursor condition does not exist under Section 107(a). Both authorities for cost recovery exist independently of each other, though they are related.  See Atlantic Research, supra.

There are other differences between the two statutes, such as the statute of limitations and the scope of liability.  Practitioners should use care in distinguishing the two provisions and utilize the section that best meets the facts and serves the client’s needs.

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