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Responsible Party May Recover All of Its Response Costs For a Voluntary Cleanup Under CERCLA

By: Byron P. Gee
04/24/08

The Ninth Circuit rules that parties that voluntarily clean up sites, have a right to seek payment for all of their response costs from other potentially responsible parties.

In an important decision for persons in California that engage in voluntary cleanup activities – including owners and developers of contaminated property – the United States Court of Appeals for the Ninth Circuit held that a potentially responsible party (PRP) that conducts a voluntary cleanup of a contaminated site may recover all of its response costs from other PRPs under the Comprehensive Environmental Response, Compensation and Recovery Act (CERCLA), 42 U.S.C. §§ 9601-9675. Kotrous v. Bayer Cropscience, Inc., Ninth Circuit Case No. 06-15162 (April 17, 2008) and Adobe Lumber, Inc. v. Hellman, Ninth Circuit Case No. 06-16019 (April 17, 2008). The Court’s decision overturns a 1997 Ninth Circuit decision that held that "a PRP is not entitled to recover all of its response costs from other PRPs, but instead is limited to asserting a claim for contribution (for a portion of its response costs)." Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1301-1302 (9th Cir. 1997).

James Kotrous (Kotrous) sought contribution under CERCLA section 113 and response costs pursuant to section 107 for expenses he incurred cleaning soil and groundwater contamination at his Sacramento mattress store. Kotrous was required to cleanup the site under a California Regional Water Quality Control Board (Regional Board) cleanup and abatement order, but had not been sued under CERCLA. Adobe Lumber Inc. (Adobe) also sued prior landowners of his Woodland Hills shopping center for all or some of its response costs under section 107. Adobe had been voluntarily working with the Regional Board to clean up its property, but was not under an order from the Regional Board at the time it filed its complaint. The district court, relying on Pinal Creek’s holding that an action under section 107 was necessarily for contribution, held plaintiffs could recover their cleanup costs under section 113. It denied both defendants' motions to dismiss plaintiffs’ section 113 claims. The appellate court consolidated their interlocutory appeals.

In Kotrous and Adobe, the Court was required to consider the continued viability of Pinal Creek Group in light of the Supreme Court’s most recent precedent addressing CERCLA. sections 107 and 113(f) of CERCLA, "allow private parties to recover expenses associated with cleaning up contaminated sites." United States v. Atlantic Research Corp., 127 S. Ct. 2331, 2333 (2007). In Atlantic Research, the Supreme Court held that § 107(a) provides "so-called potentially responsible parties (PRPs)...with a cause of action to recover costs from other PRPs," id. at 2334, whereas § 113 provides an action for contribution. In so holding, the Supreme Court undermined Pinal Creek’s holding that section 107 entitles PRPs to seek only contribution, not cost recovery, from other PRPs. Because Kotrous and Adobe were not subject to actions under section 106 or 107, they were not PRPs entitled to seek contribution under section 113. The Court held that Kotrous and Adobe must instead proceed under section 107 for cost recovery. The defendants named in Kotrous’ and Adobe’s section 107 claims could then seek contribution from other PRPs under section 113. The Court vacated and remanded the District Court’s order and granted Kotrous and Adobe leave to amend their complaints as needed on remand.

The Court, however, declined to specifically overturn the portion of the Pinal Creek holding that "a PRP cannot assert a claim against other PRPs for joint and several liability." Pinal Creek at 1306.[1] The issue of whether a PRP can seek joint and several liability from other PRPs is very significant because it would allow a PRP that engages in a voluntary cleanup to recover its entire response costs from one or a few of the other PRPs, thus placing the burden on the defendant PRPs to seek contribution from the other remaining PRPs. The Court noted, however, that the U.S. Supreme Court in Atlantic Research concluded (without analysis) that a PRP that engages in a voluntary CERCLA cleanup could seek to hold other PRPs jointly and severally liable for its response costs.

Byron Gee is a partner that specializes in environmental and water law. He assists clients to resolve site contamination issues and is an experienced CERCLA litigator. He can be reached at (213) 612-7843 or bgee@nossaman.com.



[1] Kotrous and Adobe requested the Court overturn the Pinal Creek holding that prohibits a PRP from seeking joint and several liability at oral arguments, but the Court declined to consider the request because the issue was not before the Court.

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