Third Circuit Holds That Settlement With a State Agency Is Sufficient to Give Rise to CERCLA 113(f)(3)(B) Contribution Claim

Since the Supreme Court’s decisions in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004) and United States v. Atlantic Research Corp., 551 U.S. 128 (2007), there has been continuing uncertainty about whether a CERCLA potentially responsible party (“PRP”) can bring a cause of action for contribution against other PRPs under CERCLA §113(f) where the PRP has settled with a state agency under state law, but has not resolved its liability with the U.S. EPA or a state agency via an “administrative or judicially approved settlement” under CERCLA. 

This issue, which Cooper Industries and Atlantic Research left undecided, is of importance to any PRP that has resolved its liability under state environmental laws without settling CERCLA claims and then seeks contribution for response costs.

In Trinity Industries, Inc. v. Chicago Bridge & Iron Co., 2013 WL 4418534 (3d Cir. Aug. 20, 2013), the Third Circuit  allowed such a contribution action to proceed, holding that CERCLA Section 113(f)(3)(B) “requires only the existence of a settlement resolving liability to the United States or a state ‘for some or all of a response action’” to support a PRP’s contribution claim.  Id. at *3-5.  The Third Circuit’s decision provides further insight into this important issue, but signals a circuit split that may require further clarification from the Supreme Court.

Trinity Industries, Inc. and Trinity Industries Railcar Corporation (“Trinity”) entered into a consent order with the Commonwealth of Pennsylvania naming Trinity as a “responsible person” for the release of hazardous substances at a site that it owned and had for some period used for manufacturing railcars.  The consent order required Trinity to undertake remediation of the site under the supervision of the Pennsylvania Department of Environmental Protection.  The consent order was entered under state environmental laws and did not explicitly resolve Trinity’s liability under CERCLA.  Trinity subsequently filed a contribution claim under CERCLA § 113(f)(3)(B) against a former owner of the site for a share of the remediation costs.

Persuaded by arguments of both Trinity and the United States, which filed an amicus brief in support of Trinity’s position, the court of appeals agreed that the statutory language of CERCLA § 113(f)(3)(B) does not require resolution of CERCLA liability in order to pursue a Section 113(f)(3)(B) contribution claim.  Rather, it only requires the existence of a settlement resolving liability to the United States or a state “for some or all of a response action.”  “Section 113(f)(3)(B) does not state that the ‘response action’ in question must have been initiated pursuant to CERCLA – a requirement that might easily have been written into the provision.”  Trinity Industries, 2013 WL 4418534 at *4.  The court also noted that because remediation standards established under state law were considered “applicable, relevant and appropriate” to satisfy requirements under CERCLA and that compliance with those state remediation standards relieved a party from CERCLA liability, the consent order at issue had eliminated the risk of future CERCLA enforcement actions by the government.  Id. at *5.

The Third Circuit’s decision in Trinity Industries conflicts with the Second Circuit’s holding that CERCLA § 113(f)(3)(B) only allows for contribution claims where a PRP’s liability under CERCLA has been resolved.  See, e.g., Consol. Edison Co. of N.Y., Inc. v. UGI Utils., Inc., 423 F.3d 90, 95 (2d Cir. 2005); W.R. Grace & Co. v. Zotos Int’l, Inc., 559 F.3d 85, 91 (2d Cir. 2009).  In declining to follow the Second Circuit, the Trinity Industries court notes that the Second Circuit’s Consolidated Edison decision relied on the legislative history of CERCLA § 113(f)(1) rather than Section 113(f)(3)(B).  The Third Circuit’s decision instead relied on the plain language of Section 113(f)(3)(B), and relevant legislative history, as well as Third Circuit precedent that declined to impose a requirement that a government agency specifically invoke CERCLA in its oversight activities as a condition precedent to bringing a CERCLA cost recovery action.  Trinity Indus., 2013 WL 4418534 at *4-5 (citing United States v. Rohm & Haas Co., 2 F.3d 1265 (3d Cir. 1993)). 

-- Tom Boer and Nicole Martin

For more information, please contact Tom Boer at (415) 228-5413, jtb@bcltlaw.com, or Nicole Martin at (415) 228-5435, nmm@bcltlaw.com.