Environmental Edge
May 24, 2021

Guam v. US: US Supreme Court Upends Prevailing Trend in CERCLA Contribution Suits

Environmental Edge: Climate Change & Regulatory Insights

Pursuant to CERCLA Section 113(f )(3)(B), “[a] person who has resolved its liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement may seek contribution from any person who is not party to a settlement referred to in paragraph (2).” On May 24, 2021, the US Supreme Court resolved a circuit split regarding interpretation of this provision and held that, in order to trigger a claim for contribution under §113(f )(3)(B) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §9613(f)(3)(B), “[a] settlement must resolve a CERCLA liability.” Guam v. United States, 593 U.S. (2021).

Whether a settlement agreement with the United States or a state that resolved non-CERCLA environmental response costs (for example, under state law or other federal environmental laws) gave rise to a CERCLA contribution claim was a question that had previously split the federal circuit courts 4 to 1. The majority of circuits that had addressed the issue had held that, “Congress did not intend to limit § 113(f)(3)(B) to response actions and costs incurred under CERCLA settlements,” and “a non-[CERCLA] settlement agreement may form the necessary predicate for a § 113(f)(3)(B) contribution action.” Asarco LLC v. Atl. Richfield Co., 866 F.3d 1108, 1120–21 (9th Cir. 2017); see also Trinity Industries, Inc. v. Chicago Bridge & Iron Co., 735 F.3d 131, 136 (3d Cir. 2013); Refined Metals Corp. v. NL Industries Inc., 937 F.3d 928, 932 (7th Cir. 2019); Gov't of Guam v. United States, 950 F.3d 104, 114 (D.C. Cir. 2020), rev'd and remanded sub nom. Guam, 593 U.S. ___ (2021). Only the Second Circuit had held that Section 113(f)(3)(B) creates a “contribution right only when liability for CERCLA claims . . . is resolved.” Consolidated Edison Co. of New York, Inc. v. UGI Utilities, Inc., 423 F.3d 90, 95 (2d Cir. 2005). But even the Second Circuit more recently stated in dicta that the United States “understandably takes issue” with this holding, and “there is a great deal of force to [the United States’] argument.” Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 126 (2d Cir. 2010).

In a unanimous opinion delivered by Justice Thomas on May 24, 2021, the Supreme Court upended the prevailing trend amongst the circuits, rejected the United States’ position, and explained that “[t]he most natural reading of §113(f )(3)(B) is that a party may seek contribution under CERCLA only after settling a CERCLA-specific liability.” Guam, 593 U.S. at 9 (2021). The holding relies heavily on the concept that the subsections of 113(f) of CERCLA have “strong textual links among them” and that this “family of contribution provisions anticipates a predicate CERCLA liability.” Id. at 6. Also persuasive was that “[r]emaining within the bounds of CERCLA is … consistent with the familiar principle that a federal contribution action is virtually always a creature of a specific statutory regime.” Id at 5.  In the Court’s view, “[i]f a broad, textually undefined set of environmental settlements could start the clock on a §113(f)(3)(B) contribution action, a party who did not realize that his non-CERCLA settlement overlaps with a hypothetical CERCLA response action might fail to sue in time.” Id. at FN 4.

The specific underlying agreement at issue in the Guam case was a 2004 settlement between the United States and Guam related to Clean Water Act (CWA) claims arising at a dump site operated by the government of Guam which had historically received wastes from US Naval operations on the island. More than a decade after settling the CWA liabilities, Guam sued the United States to recover cleanup costs incurred in further remediating contamination at the dump site; it brought both a CERCLA Section 107 cost recovery claim and a mutually exclusive CERCLA Section 113(f)(3)(B) claim. The DC Circuit below held that, as a result of the 2004 CWA settlement, Guam’s claim could arise only under Section 113(f)(3)(B) (not Section 107) of CERCLA but that the Section 113(f)(3)(B) claim was time-barred under the relevant statute of limitations. The Supreme Court’s reversal in the case revives Guam’s claim against the United States under CERCLA Section 107.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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