On June 11, 2007, the United States Supreme Court resolved an important dispute about the rights of private companies to sue in federal court for recovery of their costs of cleaning up contaminated sites.  In United States v. Atlantic Research Corp., the Court decided that "potentially responsible parties," or "PRPs" – i.e., companies and individuals who are liable for environmental cleanup costs -- may sue other liable parties in federal court to recover their costs.  Until Atlantic Research, the prevailing view in the federal courts was that the sole remedy available to these parties under the Superfund law (also known as the Comprehensive Environmental Response, Compensation and Liability Act, or "CERCLA") was a claim for “contribution” that they could bring only if they had been sued by the government or by a non-liable party.  This prerequisite to contribution claims raised a significant barrier to voluntary cleanups and to cost-sharing litigation in federal courts.  Atlantic Research lowers this barrier.

In Atlantic Research, a PRP sued the United States under two theories for a portion of the costs it had incurred in the cleanup of a military installation operated by the U.S. Department of Defense.  One theory was “cost recovery,” the other, contribution.  The trial court dismissed both claims, ruling that Atlantic Research, as a PRP, was ineligible under prevailing decisions in the federal courts to sue for cost recovery, and as a party that had not been sued by the government (in its enforcement capacity) or a non-liable party, it was ineligible, under the Supreme Court’s 2004 decision in Aviall Services, Inc. v. Cooper Industries, to seek contribution.  It was, in other words, without a CERCLA remedy of any kind.

On appeal, the Eighth Circuit Court of Appeals agreed that Atlantic Research was ineligible to sue for contribution, but reversed the trial court, holding that Section 107(a) of CERCLA (42 U.S.C. Section 9607(a)) provides PRPs with a claim for recovery of costs. 

In affirming the Eighth Circuit's decision, the Supreme Court rejected a reading by the government of some key language in Section 107(a), a reading that would, in the Court's words, "reduce the number of potential plaintiffs to almost zero, rendering [the provision] a dead letter." The Supreme Court also emphasized the difference between cost recovery and contribution.  In a contribution case, a plaintiff who is liable under CERCLA and has paid more than its equitable share of cleanup costs may recover equitable shares of cleanup costs from other PRPs.  By contrast, in a cost recovery case, a party that has incurred cleanup costs may seek to recover those costs from parties that are liable under CERCLA, regardless of whether the plaintiff is also a liable party.  In Atlantic Research, the Court observed that if a PRP – as opposed to a non-liable party – brings a cost recovery case, the defendants would then be free to counter-claim against the PRP plaintiff for contribution, thereby ensuring that the trial court would make an equitable allocation of cleanup costs amongst all the liable parties. 

By holding that a PRP can itself sue for cost recovery, the Supreme Court effectively overruled previous decisions in lower courts relegating PRPs to what had become very limited rights to sue for contribution.  As a result, Atlantic Research may help to encourage liable parties to clean up contaminated sites voluntarily, and it will likely open the door to renewed cost sharing litigation.

At the same time, however, the decision also raises some interesting problems that PRPs, the federal courts, and perhaps Congress as well, will have to grapple with over the coming months and years.  One of them is the problem faced by PRPs who settle their CERCLA liability at a site in good faith and who rely on other provisions of CERCLA that protect them from contribution claims by non-settling parties.  If the “contribution bar” does not insulate them from claims for cost recovery, the finality they hope to achieve by their settlements may be lost, though they may have the right to file a counterclaim and argue that their settlements should be taken into account in an equitable allocation of cleanup costs.  These and other questions will be the subject of continued litigation as the courts sort out the implications of Atlantic Research.