Recent High Court Ruling May Impact Private Cost Recovery Litigation

January 16, 2008
Client Alert Newsletter Forecast 2008

In its June 2007 decision in United States v. Atlantic Research Corp., the U.S. Supreme Court held that a party that has engaged in a voluntary cleanup of a contaminated site may recover costs from other potentially responsible parties ("PRPs") under Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), providing a separate remedy from Section 113(f), which grants a PRP the right to seek contribution from other parties only where it has been compelled to pay (by court judgment or government settlement) more than its fair share of a joint liability. The decision restores incentives for PRPs to clean up polluted sites even when the government has not yet required them to do so, and may prompt an increase in the filing of private cost recovery actions. Parties that have performed cleanups should now consider evaluating whether they might have worthwhile claims against other PRPs, including the United States; parties that have been sued for cleanup should consider possible contribution counterclaims; and parties entering into settlements should document that the settlement is voluntary.

Although Atlantic Research resolved the substantial uncertainty on the viability of claims for recovery of voluntary cleanup costs, the decision left open other issues. These include whether cleanup costs incurred by a PRP pursuant to a consent decree following an EPA administrative enforcement action are recoverable under Section 107(a), Section 113(f), or both; whether a PRP who has agreed to perform a response action under a federal or state agency consent order can bring an action under Section 107(a); and whether parties that have settled their cleanup liability with the government in exchange for "contribution protection" can be exposed to cost recovery actions brought by other PRPs under Section 107(a). These issues will surely prompt further litigation in 2008 and beyond.