Skip to main content
Nossaman LLP

E-Alerts

Supreme Court To Hear Important CERCLA Cost Recovery Case

By: Alfred E. Smith
04/13/07

On April 23, 2007, the United States Supreme Court will hear arguments in U.S. v. Atlantic Research Corporation, Supreme Court Case No. 06-562 ("Atlantic Research"). The case raises important issues for parties seeking to recover environmental remediation costs under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). If the Supreme Court does not affirm the decision of the Eighth Circuit in U.S. v. Atlantic Research Corp., 459 F.3d 827 (8th Cir. 2006), many public agencies, water purveyors and other parties will be significantly limited in their ability to utilize CERCLA’s powerful enforcement tools to recover costs from responsible parties that are incurred cleaning up hazardous contamination.

Specifically, Atlantic Research raises the question of whether a so-called responsible party that voluntarily takes action to clean up the environment may bring an action under section 107(a) of CERCLA. Under the holding in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004), a party that is not subject to a lawsuit under section 106 or 107(a) of CERCLA is barred from seeking contribution under section 113(f)(1) of CERCLA.

In the case before the Court, plaintiff Atlantic Research filed suit against the United States after it voluntarily investigated and cleaned up hazardous contamination of soil and groundwater. Because Atlantic Research was not subject to a lawsuit under section 106 or 107(a) of CERCLA, it was barred from seeking section 113(f)(1) contribution by Aviall. Accordingly, Atlantic Research filed an action under section 107(a) of CERCLA; however, the district court held that Atlantic Research is a liable party that cannot bring an action under section 107(a). The Court of Appeals reversed, holding that a liable party that is barred from seeking contribution under section 113(f)(1) of CERCLA may bring an action under section 107(a) of CERCLA.

There is currently a split among the federal appellate courts on this issue. Consistent with Atlantic Research, the Second Circuit in Consolidated Edison Co. of N.Y. v. UGI Utilities, Inc., 423 F.3d 90 (2nd Cir. 2005), ruled that a liable party that voluntarily undertakes an environmental clean up may pursue a cause of action under CERCLA section 107(a) to recover its costs from other liable parties. However, just three weeks later, the Third Circuit broke with the Second and Eighth Circuits when it issued its opinion in E.I. DuPont De Nemours and Co. v. United States, 460 F.3d 515 (3rd Cir. 2006).

The question of whether a liable party possesses a right of action under CERCLA is of particular importance to public and private water purveyors. When water supplies are adversely impacted by contamination, water purveyors are often mandated to incur cleanup costs to ensure a continuing safe and reliable water supply to their service area, deferring issues of cost allocation until a later time. Water purveyors may ultimately be adjudged innocent parties when they seek to recover those response costs; however, polluters have argued that water purveyors are liable, even if only for a de minimis amount. For example, some polluters have argued that by pumping groundwater production wells, water purveyors spread the contaminant plume. If affirmed, the ruling of the Eighth Circuit will preserve an important right of action under CERCLA that will enable water purveyors to focus on their mission of providing clean and reliable water supplies, without fearing that cleanup costs cannot be recouped from polluters.

The Nossaman firm filed an amicus curiae brief supporting the Eighth Circuit’s ruling on behalf of the Association of California Water Agencies, the National Association of Water Companies, the California Water Association, the California State Association of Counties, the Castaic Lake Water Agency, the San Gabriel Basin Water Quality Authority, and the Main San Gabriel Basin Watermaster.

A decision from the Supreme Court is likely to be forthcoming in June 2007.

To view a copy of Nossaman’s amicus curiae brief, click here.

Alfred E. Smith, II is a Partner in Nossaman's Los Angeles office who specializes in environmental, water and complex commercial litigation. He represents public and private water purveyors, major water users, corporations and public agencies on matters including environmental compliance, water rights disputes, conjunctive use, public utility regulation, groundwater management and litigation over allegedly contaminated water and soil. Alfred is a graduate of the Harvard Law School, and he is an appointed member of the Association of California Water Agencies’ (ACWA) Legal Affairs Committee. He can be reached at (213) 612-7800 or asmith@nossaman.com.

  • Professionals
  • Practices
  • Success Stories
  • News
  • Events
  • Resources
  • Firm Pages