The United States Court of Appeals for the Sixth Circuit became the latest federal court of appeals to weigh in on the dichotomous nature of Superfund claims made under Sections 107 and 113 in the wake of the United States Supreme Court’s decision in United States v. Atlantic Research Corp., 551 U.S. 128 (2007). In Hobart Corp. v. Waste Management of Ohio, Inc., the Sixth Circuit held that Sections 107(a)(4)(B) and 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601-9675, “provide mutually exclusive remedies,” an issue left open in Atlantic Research.
Generally speaking, whereas Section 107 allows a potentially responsible party (“PRP”) who has funded remediation of a contaminated site to file a cost recovery action against other PRPs within six years, Section 113 allows a PRP who has at least partially resolved its liability to the United States only three years to file a contribution action against non-settling PRPs. The court in Hobart found that a PRP must proceed under Section 113 if it meets one of that section’s statutory triggers, e.g., entering into an administrative settlement that at least partially resolves that PRP’s CERCLA liability to the United States.
In Hobart, Plaintiff PRPs entered into an Administrative Settlement Agreement and Order on Consent (“ASAOC”) with the United States Environmental Protection Agency (“EPA”) with respect to their roles in the contamination of an Ohio landfill. The ASAOC — which was patterned on the EPA’s 2005 model administrative consent order — included provisions for contribution protection afforded to settling PRPs under Section 113(f)(3)(B). Four years after entering into the ASAOC, Plaintiffs brought the first of two actions in which they asserted both Section 107 cost recovery and Section 113 contribution claims against other PRPs who also used the landfill.
In a series of decisions, the district court ultimately ruled that Sections 107(a)(4)(B) and 113(f)(3)(B) were mutually exclusive and that Plaintiffs, having entered into the ASAOC, were required to proceed under Section 113 only. The district court initially found that Plaintiffs’ Section 113 contribution claims in both actions were time barred. Then, as a result of the mutual exclusivity of Sections 107 and 113, the district court dismissed Plaintiffs’ Section 107 cost recovery claims. On appeal, the Sixth Circuit affirmed the reasoning of, and ultimate decisions made by the district court, notwithstanding Plaintiffs’ assertion on appeal that the ASAOC was not a Section 113-triggering administrative settlement.
In so doing, the Sixth Circuit followed an emerging line of appellate cases which have unequivocally found that PRPs that have settled their CERCLA claims with the government are barred from seeking cost recovery from other PRPs under CERCLA Section 107. See, e.g., Morrison Enterprises, LLC v. Dravo Corp., 638 F.3d 594, 603 (8th Cir. 2011); Solutia, Inc. v. McWane, Inc., 672 F.3d 1230, 1237 (11th Cir. 2012). And because no federal court of appeals has issued a ruling contrary to these recent decisions, PRPs are now uniformly advised to pay close attention to the three-year statute of limitations period under Section 113, particularly in cases where PRPs have reached any kind of administrative settlement with the government.