District Court Holds that Prior CERCLA § 107(a) Cost Recovery Action Against a Party Limits the Party to § 113(f)(1) Contribution Claim in Subsequent Action
The District Court for the Central District of California recently held in an unpublished opinion that a party cannot bring a CERCLA § 107(a) cost recovery action for response costs which relate to a common liability shared with an earlier § 107(a) action against that party. Instead, the party can only pursue a § 113(f) contribution claim regardless of whether the specific costs for which it seeks recovery are the same as those sought from the party in the earlier cost recovery action.
In Whittaker Corp. v. United States, Case No. CV 13-1741 FMO, 2014 U.S. Dist. LEXIS 23918 (C.D. Cal. Feb. 10, 2014), plaintiff Whittaker Corporation (“Whittaker”) brought two § 107(a) cost recovery claims alleging owner and arranger liability against the defendant United States of America (the “Federal Government”) for response costs incurred to clean up contamination in the soil and groundwater at a former military munitions manufacturing site (the “Site”). According to Whittaker’s first amended complaint (“FAC”), Whittaker voluntarily performed and incurred costs for interim remedial efforts at the Site under the oversight of the California Department of Toxic Substances Control (“DTSC”). Whittaker alleged that it entered into a voluntary consent order (the “Consent Order”) with DTSC in 1994 related to such efforts. In 2002, DTSC issued an Imminent and Substantial Endangerment Determination and Order and Remedial Action Order (“Endangerment Order”) for Whittaker to remediate the site, which provided, in part, that Whittaker remain subject to the Consent Order. Whittaker alleged that neither Order was entered into subject to CERCLA or a court order.
In 2000, Whittaker itself was subject to § 107(a) cost recovery claims brought by a group of water agencies and companies in the area of the Site (collectively, the “Water Purveyors”) for reimbursement of costs expended by the Water Purveyors to respond to groundwater contamination in certain off-Site production wells (the “Water Purveyor Action”). This action was eventually settled in 2007 (the “Water Purveyor Settlement”). Whittaker alleged that its subsequent FAC against the Federal Government sought response costs outside the scope of the Water Purveyor Action.
The Supreme Court has interpreted CERCLA as providing complementary, but distinct, remedies under §§ 107(a) and 113(f) to parties in different procedural circumstances:
Section 113(f)(1) authorizes a contribution action to PRPs [potentially responsible parties] with common liability stemming from an action instituted under § 106 or § 107(a). And § 107(a) permits cost recovery (as distinct from contribution) by a private party that has itself incurred cleanup costs. Hence, a PRP that pays money to satisfy a settlement agreement or a court judgment may pursue § 113(f) contribution. But by reimbursing response costs paid by other parties, the PRP has not incurred its own costs of response and therefore cannot recover under § 107(a).
United States v. Atlantic Research Corp., 551 U.S. 128, 139 (U.S. 2007).
The Federal Government brought a motion to dismiss Whittaker’s FAC, arguing that Whittaker was limited to contribution actions as a PRP with common liability stemming from the § 107(a) claims in the Water Purveyor Action. Whittaker countered that it still possessed § 107(a) claims because no § 113(f) claim was available for response costs outside the scope of the Water Purveyor Action. According to Whittaker, the Water Purveyors’ complaint related only to the reimbursement of costs the Water Purveyors incurred addressing their contaminated off-Site wells, not on-Site remediation. Whittaker argued that § 113(f)(1) permits a suit “only where the PRP is suing another party in contribution to force that party to share in the exact costs that were the subject of a §§ 106 or 107 settlement or judgment.” Whittaker, at *14. It further argued that some response costs incurred at the Site pre-date the Water Purveyors’ claims, and therefore such costs sought by Whittaker from the Federal Government could not possibly have resulted from the Water Purveyor Settlement.
The District Court disagreed with Whittaker, and held that nothing in the text of § 113(f)(1) limits recovery under a contribution action to the scope of the previous cost recovery action against the plaintiff. Indeed, the Court held “[a] party’s procedural circumstances, not the nature of its alleged costs, will determine whether a party may pursue a contribution action under § 113(f)(1).” Whittaker, at *21-22. The District Court found that the allegations by the Water Purveyors in their complaint “implicated the entire cleanup of the Site,” as the Water Purveyors had alleged that Whittaker’s activities at the Site caused releases of hazardous substances on and off the Site, so that the Water Purveyors incurred response costs for which Whittaker was liable under § 107(a). Relying on the Supreme Court’s decision in Atlantic Research that “§ 113(f)(1) permits suit before or after the establishment of common liability,” the District Court found that a § 113(f)(1) contribution action was available to Whittaker for all response costs to remediate the Site at the time that the Water Purveyor Action was filed, since the Federal Government and Whittaker shared a common liability for the claims in the Water Purveyor Action. “Here, [Whittaker] meets the procedural circumstances of § 113(f)(1), and its remedy for the costs it seeks ‘during or following’ the [Water Purveyor Action] is a contribution claim under § 113(f)(1).” Whittaker, at *22. Accordingly, the District Court held that Whittaker’s § 107(a) cost recovery claims could not survive a Motion to Dismiss and dismissed its FAC, which did not seek relief under § 113(f)(1), with prejudice.