SteveK April 26th, 2010
In the recent decision in Agere Systems, Inc, et. al. v. Advances Environmental Technologies, LLC, et. al., the 3rd Circuit Court of Appeals continued the discussion of the complex interaction between sections 107(a) and 113(f) of CERCLA. Agere involved a case from the Eastern District of Pennsylvania related to the Boarhead Superfund Site. The EPA commenced a 107(a) action against Cytec, Ford and SPS on June 2, 2000 by filing a complaint along with a consent decree for OU-1. Cytec, Ford and SPS subsequently entered into a separate settlement agreement with Agere, TI and two other companies to collectively fund and perform work for OU-1. The EPA subsequently commenced another 107(a) suit against Cytec, Ford and TI by filing a complaint and a second consent decree related to OU-2. A private settlement agreement was entered into by the three companies with Agere, which assigned its rights for cost recovery to the group. The parties that had settled subsequently brought an action against Carpenter Technology Corporation to recover costs. After trial, the District Court held Carpenter liable, and allocated a significant share to Carpenter, including an enhanced share based upon the court finding that Carpenter had significant culpability in creating the Superfund site and because of its lack of cooperation in cleaning up the site.
The 3rd Circuit identified six essential challenges present by Carpenter: 1) the 113(f) claim was time-barred because Carpenter did not share a common liability with the plaintiffs since the EPA claim was filed after the expiration of the time for the filing of such actions, 2) Agere and TI cannot bring a 107(a) action for sums paid in a private settlement with other plaintiffs, as opposed to sums paid by the other parties to the EPA, based upon the provisions of 107(a), 3) the plaintiffs that signed the OU-1 and OU-2 Consent Decrees do not have rights to sue under 107(a); only section 113(f) claims may be pursued, 4) Cytec, Ford, SPS and TI failed to present competent evidence of the total waste they disposed of at the site, and therefore the allocation of liability by the District Court was flawed, 5) the allocation was flawed by a miscalculation of volumetric shares in that the court did not consider the culpability and lack of cooperation of the plaintiffs, and improperly relied upon volumetric shares rather than the dollar amounts collected from the settling defendants, and 6) the limitations of the plaintiffs claims under section 107(a) of CERCLA should apply to the similar provision in related Pennsylvania law.
The 3rd Circuit carefully explored each issue and remanded the case to the District Court for further findings. The district court was directed to make further findings on facts related to whether certain claims were time-barred. In addition, the district court was required to make determinations as to the waste volumes based upon appropriate evidence.
The most significant aspect of the decision is the Circuit Court’s exploration of the interaction between Section 107(a) and 113(f) as developed in United States v. Atlantic Research Corp. 551 U.S. 128 (2007). The Court noted that in Atlantic Research the Supreme Court held that 107(a) “permits a PRP to recover only the costs is has ‘incurred’ in cleaning up a site,” and that payment to settle a claim does not constitute the incurring of response costs. Since the money paid by TI and Agere to settle the case was placed in a trust to fund the actual work at OU-1 and OU-2, the requirement that the claim be for recovery of response costs was satisfied. The 3rd Circuit concluded that the Supreme Court did not intend to exclude all settlement payments, particularly where the funds were not reimbursement of costs incurred by others, but were actually used to fund the remedial work. The Court went on to distinguish the Supreme Court’s statement that the parties that could not make 107(a) claims could still maintain a claim under Section 113(f), noting that it was not intended to provide the opposite; that is, that a party that was precluded from a 113(f) claim would not have a 107(a) claim. In this case neither Agere nor TI were able to maintain 113(f) claims for contribution because neither were sued by the EPA or the other PRPs. The Court concluded that Congress could not have intended to “penalize cooperative cleanup efforts by excluding from CERCLA’s broad recovery provisions all PRPs who, like Agere and TI, have come forward and assist[ed] in a cleanup even though they have not been subjected to cost recovery suit.” The Court found that such a result would be contrary to the goal of CERCLA “to encourage private parties to assume the financial responsibility of cleanup by allowing them to seek recovery from others.”
The 3rd Circuit then went on to consider the 113(f)/107(a) issues regarding the defendants sued by the EPA: Cytec, Ford and SPS. Carpenter argued that those parties had only 113(f) claims since once a party settles the 107(a) claims, it is only entitled to assert 113(f) claims. The Court noted that the issue of whether a party in the position of Cytec, Ford and SPS may bring a 107(a) claim in addition to a 113(f) claim was left open in Atlantic Research. The 3rd Circuit noted that if the parties had rights under 107(a) as well as 113(f), the trial court, on remand, could impose 100% of the liability on Carpenter. Further, Carpenter would not be able to resolve this by a Section 113(f) counterclaim since the parties that had settled with the EPA would be shielded from liability under section 113(f)(2). The Court agreed that this would be a perverse result since the primary goal of CERCLA is to have polluters pay.
The remand to the trial court, therefore, required the court to explore significant issues regarding whether certain aspects of the claim were time barred, and to conduct a fact intensive analysis to support an allocation among all parties.
DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC ( www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contact Steven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.