On June 11, 2007, the Supreme Court of the United States issued an opinion in United States v. Atlantic Research Corp., which addresses a critical question left open in the Court’s 2004 Cooper Industries, Inc. v. Aviall Services, Inc. decision: whether Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA,” or “Superfund”) provides a potentially responsible party (“PRP”) such as an owner or operator of a contaminated site with a claim to recover response costs from other PRPs. Delivering the unanimous opinion of the Court, Justice Thomas held that CERCLA does provide PRPs that voluntarily remediate a site with a cost recovery claim for relief against other PRPs.

Section 107(a)(4) makes PRPs liable for, among other things:
“(A) all costs of removal or remedial action incurred by the United States Government or 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.” (emphasis added).

The federal government argued that the term “any other person” refers only to non-PRPs. The Court rejected that argument, basing its rationale on the text of the statute. Relying on the maxim that statutes must “be read as a whole,” the Court interpreted the term “any other person” in relation to the parties listed in the immediately preceding subparagraph, namely, the United States, States and tribes. It concluded that the term refers to “any person other than those three.” Therefore, the Court held that “the plain language of subparagraph (B) authorizes cost-recovery actions by any private party, including PRPs.” Put differently, responsibility for contamination does not bar private PRPs from bringing cost-recovery actions against other PRPs. Indeed, the opinion discusses the breadth of the PRP definition and declines to distinguish among classes of PRPs.

The Government also argued that interpreting Section 107(a) to allow for cost recovery by PRPs would create conflict between that section and CERCLA Section 113(f), which grants PRPs a right to contribution. The Court rejected the potential for such conflict, characterizing Section 107(a) cost recovery actions and Section 113(f) contribution actions as providing “clearly distinct” remedies. It dismissed the Government’s argument that allowing PRPs to recover costs would allow for circumvention of Section 113(f)’s statute of limitations.

The Court further distinguished between cost recovery and contribution actions by limiting when costs will be deemed “incurred” in cleaning up a site. According to the Court, payments made in satisfaction of a settlement agreement would not give rise to a claim for cost recovery. Reimbursement of such payments from other PRPs would be available under the contribution provisions of Section 113(f). A claim for cost recovery would be available under Section 107(a) when a PRP voluntarily expends funds to remediate a site. The Court declined to decide whether costs incurred pursuant to a consent decree, after litigation, would be recoverable under either or both of these sections, although it seems likely that recovery would be recognized under at least one of CERCLA’s provisions.

Finally, the Court noted that its ruling would not eviscerate the “settlement bar” set forth in Section 113(f)(2), which provides protection against contribution claims for parties that settle Superfund cases. The Court noted that “a district court applying traditional rules of equity would undoubtedly consider any prior settlement as part of the liability calculus.”

While the Court’s opinion does not directly rely on the strong public policy arguments supporting voluntary cleanups by PRPs, its decision will help to encourage voluntary remediation.