Metro Water v. North American Galva ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-3299
METROPOLITAN WATER RECLAMATION
DISTRICT OF GREATER CHICAGO,
Plaintiff-Appellee,
v.
NORTH AMERICAN GALVANIZING &
COATINGS, INCORPORATED,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 03 C 754—James B. Zagel, Judge.
____________
ARGUED JANUARY 20, 2006—DECIDED JANUARY 17, 2007
____________
Before BAUER, FLAUM and RIPPLE, Circuit Judges.
RIPPLE, Circuit Judge. Section 107(a) of the Comprehen-
sive Environmental Response, Compensation, and Lia-
bility Act (“CERCLA”), 42 U.S.C. § 9601 et seq., imposes
liability on certain private parties for the cleanup costs
associated with a hazardous waste contamination. In turn,
CERCLA Section 113(f), added by the Superfund Amend-
ments and Reauthorization Act of 1986 (“SARA”), Pub. L.
No. 99-499, 100 Stat. 1613 (1986), allows those responsible
for cleanup costs to bring actions for contribution against
2 No. 05-3299
one another as a means of apportioning fault. Metropolitan
Water Reclamation District of Chicago (“Metropolitan
Water”) has brought this action under both provisions,
seeking to recover cleanup costs that it voluntarily in-
curred in remedying a parcel of property that it has leased
for the past fifty years to Lake River Corporation (“Lake
River”). Lake River’s parent, North American Galvanizing
& Coatings, Inc. (“North American”), moved to dismiss
Metropolitan Water’s complaint for failure to state a claim,
see Fed. R. Civ. P. 12(b)(6). The district court granted the
motion in part, dismissing Metropolitan Water’s § 113(f)
contribution claim, but allowed the § 107(a) claim to go
forward. We have jurisdiction over North American’s
interlocutory appeal from this order, certified under 28
U.S.C. § 1292(b), and for the reasons set forth in the fol-
lowing opinion affirm the judgment of the district court.
I
BACKGROUND
A. Facts
In this appeal from the denial of a motion to dismiss,
we accept as true all well-pleaded allegations in Metropoli-
tan Water’s complaint and draw all reasonable inferences
in its favor. See Cler v. Illinois Educ. Ass’n, 423 F.3d 726, 729
(7th Cir. 2005). The facts of the present dispute concern a
parcel of contaminated property located on South Harlem
Avenue, about one quarter mile north of the Stevenson
Expressway in Forest View, Illinois. Metropolitan Water
owns this property, consisting of approximately fifty
acres. In the late 1940s, it entered into a long-term lease
with the Lake River Corporation, a wholly owned sub-
sidiary of North American. Lake River developed the
No. 05-3299 3
property, constructing a facility to store, mix and package
industrial chemicals for its own use and for the use of its
customers. Lake River’s operations involved accepting,
by truck, barge and rail, large amounts of chemicals that
it then held in above-ground storage tanks located on the
property.
These tanks, according to the complaint, were prone to
leaks. Over the course of Lake River’s tenancy, the tanks
allegedly spilled close to 12,000 gallons of industrial
chemicals into the soil and groundwater. These toxins, the
complaint further alleged, were “hazardous substances,” as
that phrase is defined in CERCLA, see 42 U.S.C. § 9601(11),
and posed an imminent danger to the environment. The
complaint also stated that Metropolitan Water has “in-
curred substantial expenses” investigating, monitoring
and remedying the contaminated portions of its property.
R.9 at 6.
B. District Court Proceedings
In February 2003, Metropolitan Water filed this action
against Lake River to recoup its costs in remedying the
contamination. The original complaint asserted a claim
under CERCLA § 107(a), see 42 U.S.C. § 9607(a), an alterna-
tive claim for contribution under CERCLA § 113(f), see id.
§ 9613(f), and state law claims for nuisance and breach of
contract. Lake River failed to answer the complaint,
resulting in a default judgment that ordered Lake River to
pay approximately $1.8 million in damages to Metropolitan
Water, in addition to future response costs. Metropolitan
Water then amended the complaint to add Lake River’s
parent, North American, as a defendant; the amended
complaint realleged the CERCLA counts and state law
4 No. 05-3299
claims. North American then moved to dismiss under
Federal Rule of Civil Procedure 12(b)(6).
In ruling on North American’s motion, the district court
began by distinguishing the two CERCLA claims being
asserted. The court first described § 107(a)’s liability
provisions as providing an implied cause of action for
cost recovery in cases “where a party is seeking direct
recovery of costs incurred in cleaning up a hazardous
waste site.” R.23 at 3. Section 113(f) claims for contribution,
by contrast, are asserted by “potentially responsible
parties,” or “PRPs,” seeking to apportion damages among
themselves. The court recognized that Metropolitan Water,
because it owned the property during the period of con-
tamination, must be considered a PRP under CERCLA’s
strict liability framework. Normally, the court noted,
PRPs are limited to claims for contribution under § 113(f)
and cannot recoup the full cost of remediation under the
joint and several recovery of § 107(a). The court then
observed that the Supreme Court had held recently in
Cooper Industries v. Aviall Services, Inc., 543 U.S. 157 (2004),
that parties like Metropolitan Water who have com-
menced cleanup voluntarily, rather than being com-
pelled to do so by a civil suit, have no right to contribu-
tion under the plain wording of § 113(f). See 42 U.S.C.
§ 9613(f)(1) (allowing contribution only “during or fol-
lowing any civil action”). The district court held that,
for this subset of PRPs who voluntarily undertake clean-
up, an implied right to contribution under § 107(a) remains
available, notwithstanding their status as strictly liable
parties under the statute. A contrary outcome, the court
reasoned, “would seem to lie contrary to the general
purposes of CERCLA to promote prompt and proper
cleanup of contaminated properties.” R.23 at 7.
No. 05-3299 5
After hearing oral argument from the parties, we invited
the Environmental Protection Agency (“EPA”) to submit
its views as amicus curiae. The EPA accepted our invita-
tion,1 and, with the permission of the court, Lockheed
Martin Corporation also has submitted an amicus curiae
brief. Both Metropolitan Water and North American now
have filed supplemental briefs in response.
II
DISCUSSION
A.
1. CERCLA
In the 1970s and 80s, a number of high-profile environ-
mental disasters, including the “Love Canal” dumping at
Niagara Falls, New York, drew the public’s attention to
the environmental risks and health hazards posed by
improper hazardous waste disposal.2 In response to rising
public concern and the view that “existing law [was]
clearly inadequate to deal with this massive problem,” H.R.
Rep. No. 96-1016, pt. 1, at 22 (1980), as reprinted in 1980
U.S.C.C.A.N 6119, 6120, Congress enacted the CERCLA.
The law’s purpose was twofold. It was intended, for one,
to “establish a comprehensive response and financing
mechanism to abate and control the vast problems associ-
1
The court expresses its thanks to the EPA for its valuable
assistance.
2
For details on the Love Canal site, see A. Theodore Steegmann,
Jr., History of Love Canal and SUNY at Buffalo’s Response: History,
The University Role, and Health Research, 8 Buff Envtl. L.J 173
(2001).
6 No. 05-3299
ated with abandoned and inactive hazardous waste
disposal sites.” H.R. Rep. No. 96-1016, at 1. Second,
CERCLA was meant to shift the costs of cleanup to the
parties responsible for the contamination. See Meghrig v.
KFC Western, Inc., 516 U.S. 479, 483 (1996).
Enforcement of CERCLA rests primarily with the EPA,
and the statute gives the agency a broad range of enforce-
ment options. To implement the statute’s goals at a na-
tional level, the EPA is directed by CERCLA to formulate
a National Contingency Plan outlining specific steps
that parties must take in choosing a remedial action plan
and in cleaning up hazardous waste. See 40 C.F.R. pt. 300.
In addition, for specific sites that the EPA deems an
imminent threat, the agency is authorized to issue an
administrative compliance order or obtain a court injunc-
tion, directing any responsible party to respond to the
contamination. See 42 U.S.C. § 9606(a). Additionally, if
it chooses, the EPA may commence cleanup on its own
using monies from the Hazardous Substances Superfund,
see id. § 9604, a fund established by CERLCA and financed
through a combination of appropriations, EPA fees and
industry taxes. 42 U.S.C. § 9605; United States v. Hercules,
Inc., 247 F.3d 706, 715 (8th Cir. 2001).
After Superfund money has been spent by the EPA,
CERCLA allows the agency to recover its costs from the
responsible parties, who are divided by CERLCA § 107(a)
into the following four statutory categories:
(1) the owner and operator of a vessel or a facility,
(2) any person who at the time of disposal of any
hazardous substance owned or operated any facility
at which such hazardous substances were disposed of,
(3) any person who by contract, agreement, or other-
wise arranged for disposal or treatment, or arranged
No. 05-3299 7
with a transporter for transport for disposal or treat-
ment, of hazardous substances owned or possessed by
such person, by any other party or entity, at any facility
or incineration vessel owned or operated by another
party or entity and containing such hazardous sub-
stances, and
(4) any person who accepts or accepted any hazardous
substances for transport to disposal or treatment
facilities, incineration vessels or sites selected by
such person, from which there is a release, or a threat-
ened release which causes the incurrence of response
costs, of a hazardous substance . . . .
42 U.S.C. § 9607. For these statutorily defined parties, or
PRPs, liability under § 107(a) is strict, joint and several. In
other words, by invoking § 107(a), the EPA may recover
its costs in full from any responsible party, regardless of
that party’s relative fault.3
2. SARA
In the wake of CERCLA’s passage, an important question
emerged: Whether a responsible party, who had been
sued to commence cleanup or repay response costs, may
obtain contribution from other responsible parties. As
originally enacted in 1980, CERCLA did not provide
expressly for a right of contribution. See generally Cooper
Indus., 543 U.S. at 162. Courts filled this vacuum by recog-
nizing an implied right of contribution for PRPs who had
been sued under Section 107(a) and, because of that
3
The only exception to joint liability is when the harm is
divisible, but this is a rare scenario.
8 No. 05-3299
provision’s joint-liability scheme, had been ordered to pay
more than their pro rata share of the cleanup costs. See id.
(citing cases).
In 1986, Congress amended CERCLA by way of SARA to
authorize expressly a contribution action. See SARA, Pub.
L. No. 99-499, 100 Stat. 1613. The provision allowing
for contribution states in relevant part: “Any person may
seek contribution from any other person who is liable or
potentially liable under section 9607(a) of this title, dur-
ing or following any civil action under section 9606 of this
title or under section 9607(a) of this title.” 42 U.S.C.
§ 9613(f)(1). In actions under this provision, the court
allocates costs using equitable principles. Liability is
several, as opposed to Section 107(a)’s joint and several
scheme. In addition, SARA encourages parties to settle
with the government by insulating any party that
settles from being sued in a contribution action. See id.
§ 9613(f)(2).
SARA, in turn, produced its own set of new questions.
Foremost was whether the new, codified right of con-
tribution was now the only cause of action available to a
PRP seeking to recover its cleanup costs. PRPs who had
expended costs in remedying a site or settling liability
understandably wished to seek joint and several cost
recovery under § 107(a). Litigation ensued. Every circuit
to decide the issue held that, after SARA, PRPs were
precluded generally from seeking joint and several cost
recovery under § 107(a), and that any claim seeking to
shift costs from one responsible party to another must be
No. 05-3299 9
brought as a § 113(f) claim for contribution.4 These courts
reasoned that a PRP, by definition, shares in some of the
responsibility for the contamination. Therefore, any ac-
tion by one PRP against another to equitably apportion
liability is a “quintessential claim for contribution” and it
would be unfair to allow a PRP to recover “100 percent of
the response costs from others similarly situated.” Bedford
Affiliates v. Sills, 156 F.3d 416, 424 (2d Cir. 1998). Moreover,
these courts reasoned that permitting a PRP to elect
recovery under § 107(a) would render § 113(f) meaning-
less, as a PRP “would readily abandon a § 113(f)(1) suit
in favor of the substantially more generous provisions of
§ 107(a).” Id. We were among the courts to adopt this
reasoning and held in Akzo Coatings, Inc. v. Aigner Corp., 30
F.3d 761, 764 (7th Cir. 1994), that a claim “by and between
jointly and severally liable parties for an appropriate
division of the payment one of them has been compelled
to make” sounds in contribution, and must be brought
under § 113(f)(1).
3. The Innocent Landowner Exception
CERCLA’s strict liability regime yields a great number
of potentially liable individuals, in large part due to the
4
See Morrison Enters. v. McShares, Inc., 302 F.3d 1127, 1133 (10th
Cir. 2002); Axel Johnson, Inc. v. Carroll Carolina Oil Co., 191 F.3d
409, 415 (4th Cir. 1999); Bedford Affiliates v. Sills, 156 F.3d 416, 424
(2d Cir. 1998); Centerior Serv. Co. v. Acme Scrap Iron & Metal Corp.,
153 F.3d 344, 351 (6th Cir. 1998); Pinal Creek Group v. Newmont
Mining Corp., 118 F.3d 1298, 1301 (9th Cir. 1997); United Techs.
Corp. v. Browning-Ferris Indus. Inc., 33 F.3d 96, 101 (1st Cir. 1994);
New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1122
(3d Cir. 1997).
10 No. 05-3299
practical reality that those truly responsible may not have
the necessary money for the cleanup. For example, an
absentee landowner may be liable under § 107(a) for the
full cost of remedying a hazardous site caused by its
tenant, even if the landowner had no reason to know
that hazardous waste was being stored on its land.5 To
blunt the force of a rule that limits the rights of these
“innocent” parties to contribution under § 113(f), our case
law has developed what is known as the “innocent land-
owner” exception. Under the exception, which originated
in Akzo and was reaffirmed in Rumpke of Indiana, Inc. v.
Cummins Engine Co., Inc., 107 F.3d 1235, 1241 (7th Cir.
1997), a joint and several cost recovery action under Sec-
tion 107(a) remains available to “landowners who allege
that they did not pollute the site in any way.”
In Rumpke, the owner of a dump discovered, some
six years after purchasing the site, that a “cocktail of
hazardous wastes” had been deposited there regularly by
a nearby recycling company. Id. at 1236. Recognizing
that it now owned a veritable environmental disaster,
the dump owner commenced voluntary cleanup and
brought an action for both cost recovery under § 107(a)
and for contribution under § 113(f)(1) against the com-
pany that had arranged the delivery of the toxins. Revers-
ing an entry of summary judgment for the defendants,
we decided that the dump owner, who was strictly liable
5
Section 107(b) provides a limited set of affirmative defenses
for parties who would otherwise be strictly liable. The defenses
require showing that the damage was caused by (1) “an act of
God;” (2) “an act of war;” or (3) an act of a third party who has
no contractual privity to the defendant. Metropolitan Water
has not pleaded any of these affirmative defenses.
No. 05-3299 11
but who had not actually contributed to the hazardous
conditions, could maintain a direct cost recovery claim
under § 107(a). In doing so, we emphasized that the
dump owner had not been the subject of either govern-
mental or private compulsion to initiate cleanup. It under-
took cleanup on its own and, maintaining that it shared
no actual responsibility for the site, was not trying to
divide up its own liability or apportion costs. Therefore,
we held that the claim was not one for contribution that
had to be brought under § 113(f); a full cost recovery
action remained available to the dump owner under
§ 107(a).6
4. Cooper Industries, Inc. v. Aviall Services, Inc.
Recently, the Supreme Court had occasion to discuss the
interplay between sections 107(a) and 113(f), and decided
a key issue concerning the timing of a § 113(f) claim for
contribution. In Cooper Industries, 543 U.S. 157, an owner
and one time operator of several airplane maintenance
sites had sold the properties to another company in the
early 1980s. After operating the sites for a number of
years, the buyer, Aviall Services, discovered that both it
and the seller, Cooper Industries, had contaminated the
6
We imagined in Rumpke that “one of two outcomes would
follow from a landowner suit under § 107(a): either the facts
would establish that the landowner was truly blameless, in
which case the other PRPs would be entitled to bring a suit
under § 113(f) . . ., or the facts would show that the landowner
was also partially responsible, in which case it would not be
entitled to recover under its § 107(a) theory and only the § 113(f)
claim would go forward.” Rumpke of Indiana, Inc. v. Cummins
Engine Co., Inc., 107 F.3d 1235, 1240 (7th Cir. 1997).
12 No. 05-3299
facilities with hazardous substances that had leaked into
the ground from storage containers. Aviall notified Texas
authorities of the contamination, who in turn directed
Aviall to clean up the site. Aviall then commenced cleanup
and, after it had incurred some $5 million in response
costs, brought an action for contribution against Cooper
Industries under CERCLA § 113(f).
The Supreme Court held that § 113(f) did not authorize
Aviall’s suit for contribution. The Court began by noting
that the cost recovery remedy of § 107(a) and the con-
tribution remedy of § 113(f)(1) are “clearly distinct.” Id. at
163 & n.3. The Court then examined the text of § 113(f)(1),
which provides that a claim for contribution may be
brought “during or following any civil action under section
9606 of this title or under section 9607(a) of this title.” 42
U.S.C. § 9613(f)(1). As the Court emphasized, Aviall had
not been the subject of any civil enforcement action, and
its claim based on Section 113(f) therefore was not “during
or following any civil action.” Id. On this basis, the Court
deemed Aviall’s contribution action premature.
Notably, the Court did not rule out the availability of a
§ 107(a) action, observing in dictum that § 113(f)(1) is
not the “exclusive cause of action for contribution avail-
able to a PRP.” Cooper Indus., 543 U.S. at 167. The Court
refused to speculate, however, on the precise nature of
the alternative remedy and decided only the question of
Aviall’s right to a § 113(f) cause of action.7 The limited
7
Justice Ginsburg in dissent, joined by Justice Stevens, argued
that Aviall, despite being a PRP, retained a cause of action
under § 107(a) to recover a proportionate share of its cleanup
costs. In the dissent’s view, the Court should have reached this
(continued...)
No. 05-3299 13
holding of Cooper Industries is that a party first must have
settled its liability with a government entity or been
sued, either for costs under § 107(a) or for compliance
under § 106, before it may look to other responsible
parties for contribution under § 113(f)(1).
B.
We now must decide, in the wake of Cooper Industries,
what rights of action, if any, are available to Metropolitan
Water under CERCLA. It is clear, at the very least, that
Metropolitan Water cannot bring suit under § 113(f)
because it has not been the subject of an action for damages
or compliance under CERCLA.8 This conclusion, as the
district court held, follows from a straightforward applica-
tion of Cooper Industries.9
7
(...continued)
issue, even though Aviall brought its action ostensibly under
§ 113(f). According to the dissent, Aviall’s reliance on § 113(f)
instead of 107(a) was simply an effort to “conform[] its plead-
ing to then-governing Fifth Circuit precedent, which held that
a CERCLA contribution action arises through the joint opera-
tion of § 107(a) and § 113(f)(1).” Cooper Indus., Inc. v. Aviall Servs.,
Inc., 543 U.S. 157, 173 (2004) (Ginsburg, J., dissenting). Acknowl-
edging these arguments, the majority nevertheless declined to
address the issue because it had neither been briefed nor
addressed in the decisions below.
8
Indeed, as far as the limited record indicates, Metropolitan
Water has not come under any governmental scrutiny what-
soever.
9
Remarkably, Metropolitan Water refuses to concede that its
§ 113(f) contribution claim is barred by Cooper Industries. We
must reject this contention because the Supreme Court could
(continued...)
14 No. 05-3299
Metropolitan Water and Lockheed urge us to hold, as the
district court did, that a right of action exists under § 107(a)
for private parties that, although potentially strictly liable
for the costs of cleanup, have voluntary undertaken
remediation and have no right to contribution under
§ 113(f)(1). They invite our attention first to the statutory
text of § 107(a), which they believe authorizes such a
cause of action. The language in focus provides that four
statutorily defined categories of parties “shall be liable
for” the government’s remedial and removal costs, see 42
U.S.C. § 9607(a)(4)(A), and for
(B) any other necessary costs of response incurred by
any other person consistent with the national contin-
gency plan; . . . .
Id. § 9607(a)(4)(B). Metropolitan Water maintains that,
under this provision’s plain wording, the only question is
whether it is a “person” and whether it has incurred
“necessary costs of response.” Id. Undoubtedly, as it
points out, Metropolitan Water is a “person” within the
meaning of CERCLA, which defines that term, inter alia, as
a “firm” or “corporation.” Id. § 9601(21). Moreover, Metro-
politan Water, as its complaint alleges, has incurred costs
of response by taking “remedial action,” to “prevent or
minimize the release of hazardous substances so that they
do not migrate to cause substantial danger to present or
future public health or welfare or the environment.” Id.
9
(...continued)
not have been clearer when it said: “The issue we must decide
is whether a private party who has not been sued under § 106 or
§ 107(a) may nevertheless obtain contribution under § 113(f)(1)
from other liable parties. We hold that it may not.” Cooper Indus.,
543 U.S. at 160-61.
No. 05-3299 15
§ 9601(24). Thus, Metropolitan Water contends, § 107(a)
makes its cost recovery remedy available, in very straight-
forward language, to any person that has incurred neces-
sary costs of response, including PRPs.
North American responds that § 107(a)(4)(B) does
nothing more than spell out the potential liability of
responsible parties and does not create an authorization to
sue. Although § 107(a)(4)(B) includes liability for the
response costs of “any other person,” North American
maintains that this language does not create a cause of action
for “any other person,” particularly for PRPs such as
Metropolitan Water. The EPA agrees that Metropolitan
Water has no cause of action under § 107(a), but inter-
prets § 107(a)(4)(B) in a slightly different manner. Unlike
North American, the EPA acknowledges that the sub-
section creates a cause of action for some private parties.
The agency, however, disagrees with Metropolitan Water
about who specifically is authorized to sue under the
subsection. According to the EPA, the word “other” in the
phrase “any other person” distinguishes those who may
sue for cleanup costs from the four classes of potentially
responsible parties listed earlier in subsections (1) through
(4) of Section 107(a).10 Thus, as the EPA reasons, the phrase
“any other person” refers to a class of individuals who
by definition are not potentially responsible for cleanup
costs. For parties like Metropolitan Water who are poten-
10
As discussed earlier, § 107(a) enumerates four classes of
potentially responsible parties: (1) owners of facilities with
hazardous substances; (2) former owners of facilities with
hazardous substances; (3) generators of hazardous substances;
and (4) transporters of hazardous substances. 42 U.S.C.
§ 9607(a)(1)-(4).
16 No. 05-3299
tially liable for cleanup costs, the EPA submits, their only
cause of action lies in the contribution provisions of
§ 113(f), when available.
Relevant Supreme Court precedent compels us to reject,
at the very least, the view taken by North American that
§ 107(a) does not create a cause of action at all. In Key
Tronic Corp. v. United States, 511 U.S. 809, 818 (1994), the
Supreme Court stated that Ҥ 107 unquestionably pro-
vides a cause of action for private parties to seek recovery
of cleanup costs.” In that case, Key Tronic Corporation,
one of several parties responsible for contaminating a
landfill, settled a lawsuit with the EPA and then brought
an action against the Air Force and several other parties
responsible for the contamination. Key Tronic’s com-
plaint asserted a contribution claim under § 113(f) for
recovery of part of its multi-million dollar commitment
to the EPA. Additionally, Key Tronic advanced a claim
under § 107(a)(4)(B) for the costs that it had incurred
voluntarily before settling with the EPA.
The Supreme Court accepted certiorari only to decide
whether § 107(a) authorized Key Tronic to recover its
attorneys fees. Although the Court held ultimately that
attorneys fees were unavailable, it also undertook a
comprehensive discussion of the rights of action available
under CERCLA. The Court began with the premise that
Ҥ 107 unquestionably provides a cause of action for
private parties to seek recovery of cleanup costs.” Id. at 818.
According to the Court, this right of action was implied
rather than express. As the Court explained, by imposing
liability on responsible parties for costs “incurred by any
other person,” 42 U.S.C. § 9607(a)(4)(B), § 107(a) “im-
plies—but does not expressly command—that [PRPs] may
have a claim for contribution against those treated as
No. 05-3299 17
joint tortfeasors.” Key Tronic Corp., 511 U.S. at 818 n.11.
The Court noted additional support for this reading in
the statute’s multiple references to an “ ‘action . . . under
section [9607(a)(4)(D)].’ ” Id. at 816 (quoting 42 U.S.C.
§ 9613(f)(1) and citing id. § 9607(a)(4)(D)). As for the
interplay between sections 107(a) and 113(f), the Court
observed that, after SARA, “the statute now expressly
authorizes a cause of action for contribution in § 113
and impliedly authorizes a similar and somewhat over-
lapping remedy in § 107.” Key Tronic Corp., 511 U.S. at 816.
The Court’s discussion in Key Tronic therefore dismisses
any notion that § 107(a) does not authorize at least some
parties to sue. Moreover, in Cooper Industries, the Court
reaffirmed Key Tronic’s recognition of a “cost recovery
remedy of § 107(a)(4)(B)” that is “clearly distinct” from
the contribution remedy in Section 113(f)(1). Cooper Indus.,
543 U.S. at 163 n.3.
C.
Despite recognizing an implied cause of action under
§ 107(a), however, these cases appear to leave open the
question we now face of whether § 107(a) authorizes a
cause of action by potentially liable parties in Metropolitan
Water’s situation.11 This precise question has been ad-
11
We recognize that the plaintiff in Key Tronic was, just like
Metropolitan Water, a potentially responsible party who
brought suit under Section 107(a). However, the issue before
the Court in Key Tronic was attorneys’ fees, not the availability
of a right of action under Section 107(a). We therefore cannot
read Key Tronic’s discussion as anything more than the tacit
approval of a PRP’s right of action in these circumstances.
18 No. 05-3299
dressed by three federal courts of appeals in the aftermath
of Cooper Industries.12 In Consolidated Edison Co. of New York,
Inc. v. UGI Utilities, Inc., 423 F.3d 90 (2d Cir. 2005), our
colleagues on the Second Circuit held that parties such as
Metropolitan Water may bring an action under § 107(a) for
response costs incurred voluntarily. Shortly thereafter,
the Court of Appeals for the Eighth Circuit adopted the
reasoning set forth in Consolidated Edison. See Atl. Research
12
Since Cooper Industries, a number of district courts have held
that a PRP, who cannot seek recovery under section 113(f), may
nonetheless bring a cause of action under section 107(a). See
Raytheon Aircraft Co. v. United States, 435 F. Supp. 2d 1136, 1145-
49 (D. Kan. 2006); Seneca Meadows, Inc. v. ECI Liquidating, Inc.,
427 F. Supp. 2d 279, 288-91 (W.D.N.Y. 2006); Sunnyside Dev.
Corp., LLC v. Opsys U.S. Corp., No. 3:05-CV-01447-MHP, 2006
WL 1128039, at *2 (N.D. Cal. April 27, 2006); Ferguson v. Arcata
Redwood Co. LLC, No. 3:03-CV-056352-SI, 2005 WL 1869445 at *6
(N.D. Cal. Aug. 2, 2005); Viacom, Inc. v. United States, 404
F. Supp. 2d 3, 6-9 (D.D.C. 2005); Vine Street LLC v. Keeling, 362
F. Supp. 2d 754, 760-64 (E.D. Tex. 2005). Several district courts
have reached the opposite conclusion, but most did so because
they found themselves bound by pre-Cooper Industries case law
in their circuit. See, e.g., R.E. Goodson Constr. Co. Inc. v. Int’l Paper
Co., No. 4:02-4184-RBH, 2005 WL 2614927, at *5-6, 8 (D. S.C. Oct.
13, 2005); Montville Township v. Woodmont Builders, LLC, No.
03-2680DRD, 2005 WL 2000204, at *3 (D. N.J. Aug. 17, 2005);
Boarhead Farm Agreement Group v. Advanced Envtl. Tech. Corp., 381
F. Supp. 2d 427, 435 (E.D. Pa. 2005); City of Waukesha v. Viacom
Int’l, Inc., 362 F. Supp. 2d 1025 (E.D. Wis. 2005); Mercury Mall
Assocs., Inc., v. Nick’s Mkt., Inc., 368 F. Supp. 2d 513, 519-20 (E.D.
Va. 2005) (following 1998 Fourth Circuit precedent but charac-
terizing the result as “quixotic”). It is unclear what result these
district courts would have reached had they been uncon-
strained by older circuit precedents.
No. 05-3299 19
Corp. v. United States, 459 F.3d 827 (8th Cir. 2006). However,
most recently, a divided panel of the Court of Appeals
for the Third Circuit held that the Supreme Court’s deci-
sion in Cooper Industries did not require it to revisit its prior
holdings that “a PRP seeking to offset its cleanup costs
must invoke contribution under § 113.” E.I. DuPont De
Nemours & Co. v. United States, 460 F.3d 515, 528 (3d Cir.
2006).13 We review these decisions below.
Turning first to the decision of the Second Circuit,
Consolidated Edison sought reimbursement from the
operator of one of its power plants for cleanup costs
that Consolidated Edison had incurred in remedying
hazardous waste contamination. Consolidated Edison’s
complaint asserted claims under both § 107(a) and § 113(f).
The court held first that a § 113(f) claim for contribution
was unavailable under these circumstances because Con-
solidated Edison had not been sued under CERCLA or
resolved CERCLA liability through settlement.
Instead, the court held, Consolidated Edison was entitled
to pursue its action under § 107(a). After reviewing the
statutory scheme and the effect of the Supreme Court’s
decision in Cooper Industries, the Second Circuit concluded
that sections 107(a) and 113(f) each “embod[y] a mecha-
nism for cost recovery available to persons in different
procedural circumstances.” Consol. Edison, 423 F.3d at 99.
For parties that have not been sued or made to participate
in an administrative proceeding, but that “if sued, would
be held liable under section 107(a),” the court held that
§ 107(a) authorizes a suit to recover voluntary response
costs. Id. at 100. In this particular procedural circum-
13
Judge Sloviter filed a dissenting opinion.
20 No. 05-3299
stance, the court noted, a § 113(f) claim for contribution
is unavailable because, as Cooper Industries held, that
claim would not arise “ ’during or following any civil
action,’ ” Cooper Indus., 543 U.S. at 160 (quoting 42 U.S.C.
§ 9613(f)(1)). To preclude these parties also from recover-
ing necessary response costs under § 107(a), the Second
Circuit reasoned, would discourage voluntary cleanup
and thereby undermine a key feature of CERLCA.
Like the Second Circuit, the Eighth Circuit in Atlantic
Research was faced with the following question: “Can one
liable party recover costs advanced, beyond its equitable
share, from another liable party in direct recovery, or by
§ 107 contribution, or as a matter of federal common law?”
459 F.3d at 834. The court answered in the affirmative
and, following the Second Circuit, held “that it no longer
makes sense to view § 113 as a liable party’s exclusive
remedy.” Id. The Eighth Circuit further explained that
“[t]he Supreme Court [had] emphasized that §§ 107 and
113 are ‘distinct.’ ” Id. at 835. “Accordingly,” the court
continued, “it [wa]s no longer appropriate to view § 107’s
remedies exclusively through a § 113 prism,” and it
“reject[ed] an approach which categorically deprive[d] a
liable party of a § 107 remedy.” Id. Like the Second Circuit,
it found “no such limitation in Congress’s words.” Id.14
The Court of Appeals for the Third Circuit, however,
reached a conclusion different from that of the Second and
Eighth Circuits. In E.I. Dupont, the company-plain-
tiff owned property which “was owned or operated by
14
The Eighth Circuit went on to conclude that “the broad
language of § 107 supports not only a right of cost recovery
but also an implied right to contribution.” Atl. Research Corp.
v. United States, 459 F.3d 827, 836 (8th Cir. 2006).
No. 05-3299 21
the United States at various times during World War I,
World War II, and/or the Korean War, during which
time the United States was responsible for some contami-
nation.” E.I DuPont De Nemours, 460 F.3d at 525. The
company had undertaken a voluntary cleanup of one of
the sites, in the absence of a preexisting § 106 or § 107
action, and also in the absence of a § 113(f)(3) settlement,
and later instituted a contribution action against the
United States. The district court rejected the company’s
claim, and the judgment was affirmed by the Third
Circuit. In doing so, the Third Circuit believed that it
was bound by its precedent, which held that “a PRP
seeking to offset its cleanup costs must invoke contribu-
tion under § 113.” Id. at 528. It declined to follow the lead of
the Second Circuit and limit its prior case law “factually to
those circumstances where a PRP has already satisfied the
prerequisites for § 113 contribution set forth in Cooper
Industries.” Id. at 530. The Third Circuit also determined
that nothing in Cooper Industries required it to reevaluate
that precedent: “Cooper Industries did not explicitly or
implicitly overrule our precedents; indeed, the Supreme
Court expressly declined to consider the very questions at
issue here.” Id. at 532. Finally, the court rejected DuPont’s
argument that “in the wake of Cooper Industries, our [prior]
decisions . . . are in direct opposition to CERCLA’s broad
remedial purpose as expressed in its legislative history.” Id.
at 533. The court held that “a thorough review of CERCLA,
as amended by SARA, does not support the conclusion”
that, “because CERCLA’s general goal was to assure
prompt and effective cleanups, and sua sponte cleanups by
PRPs may be prompt and effective, those PRPs must be
able to seek contribution.” Id. at 541. Instead, “Congress in-
tended to allow contribution for settling or sued PRPs as
a way to encourage them to admit their liability, settle
22 No. 05-3299
with the Government, and begin expeditious cleanup
operations pursuant to a consent decree or other agree-
ment.” Id.15
After reviewing the rationales of our sister circuits, we
find ourselves in agreement with the conclusion reached
by the Second and Eighth Circuits, and by Judge Sloviter
in her dissenting opinion in E.I. DuPont. The Supreme
Court’s continued recognition of an implied cause of
action in § 107(a), coupled with that subsection’s plain
language, convince us that Metropolitan Water may sue
under § 107(a) to recover necessary response costs.
Section 107(a) states in relevant part that a responsible
party
(4) . . . shall be liable for—
(A) all costs of removal or remedial action incurred by
the United States Government or a State or an Indian
tribe not inconsistent with the national contingency
plan;
(B) any other necessary costs of response incurred by
any other person consistent with the national contin-
gency plan; . . . .
42 U.S.C. § 9607(a)(4). Nothing in subsection (B) indicates
that a potentially liable party, such as Metropolitan Water,
15
In her dissenting opinion, Judge Sloviter disagreed with the
majority’s conclusion that Cooper Industries did not “weaken[]
the conceptual underpinnings” of the court’s prior case law. E.I.
DuPont de Nemours & Co. v. United States, 460 F.3d 515, 545 (3d
Cir. 2006). She also believed that, in light of Cooper Industries,
the court’s precedent could no longer “be reconciled with
the policies Congress sought to encourage when it enacted
CERCLA.” Id.
No. 05-3299 23
should not be considered “any other person” for purposes
of a right of action.
Certainly, as the EPA points out, the word “other” in that
phrase should be given meaning as a distinguishing term.
Yet, we disagree that the word “other” distinguishes “any
other person” from the four categories of potentially
responsible parties listed earlier in subsections (1) through
(4) of § 107(a). Rather, we read “other” as distinguishing
“any other person” from the “United States Government,”
a “State” or an “Indian tribe,” the parties listed in the
immediately preceding subsection. Id. These parties, as
subsection (A) states, may recover costs “not inconsistent
with the national contingency plan.” Id. § 9607(a)(4)(A)
(emphasis added). By contrast, “any other person” is
limited to recovery of those costs “consistent with the
national contingency plan.” Id. § 9607(a)(4)(B) (emphasis
added). Thus, we read the two subsections, and the
reference to “any other person,” simply as the statute’s
way of relaxing the burden of proof for governmental
entities as opposed to private parties.16
16
Indeed, other circuits have understood this portion of the
statute as distinguishing between the Government’s burden of
proof and that of private citizens. In United States v. E.I. DuPont
de Nemours & Co., 432 F.3d 161, 178 (3d Cir. 2005) (en banc), the
Third Circuit held that, in a suit by a governmental entity
under § 107(a)(4)(A), cleanup costs are presumed consistent
with the national contingency plan, and the burden rests on the
defendant to prove that they are inconsistent. Correspondingly,
in a suit by “any other person” under § 107(a)(4)(B), the burden
rests on the plaintiff to establish that its response costs are
consistent with the national contingency plan. See Carson Harbor
Vill., Ltd. v. County of Los Angeles, 433 F.3d 1260, 1265 (9th Cir.
2006).
24 No. 05-3299
The only remaining questions, then, under § 107(a) are
whether Metropolitan Water is a “person” and whether
it has incurred “necessary costs of response.” Id.
§ 9607(a)(4)(B). Without question, Metropolitan is a
“person” under CERCLA because it is a “firm” or a
“corporation” within the meaning of the act. Id. § 9601(21).
Moreover, the complaint in the present case alleges that
Metropolitan Water incurred “ ‘response’ costs within the
meaning of § 101(25) of CERCLA (42 U.S.C. § 9601(25))
including investigation, monitoring and clean-up costs.”
R.17 at 14. Finally, the allegations in the complaint make
clear that Metropolitan Water neither has settled any
liability with a government entity nor has been the subject
of a CERCLA suit for damages. These allegations ade-
quately plead a cause of action under § 107(a).
Recognizing in § 107(a) a right of action for Metropolitan
Water also appears in line with the explicit savings clause
found in § 113(f)(1). The last sentence of § 113(f)(1) pro-
vides: “Nothing in this subsection shall diminish the right
of any person to bring an action for contribution in the
absence of a civil action under [§ 106] of this title or [§ 107]
of this title.” 42 U.S.C. § 9613(f)(1). As the Supreme Court
stated in Cooper Industries, “the sentence rebuts any pre-
sumption that the express right of contribution provided by
the enabling clause [of § 113(f)] is the exclusive cause of
action for contribution available to a PRP.” Cooper Indus.,
543 U.S. at 166-67.
Our holding today does not require us to revisit our pre-
Cooper Industries decision in Akzo Coatings, in which we
held that a claim “by and between jointly and severally
liable parties for an appropriate division of the payment
one of them has been compelled to make” must be brought
under § 113(f)(1). Akzo Coatings, 30 F.3d at 764. In Akzo, the
No. 05-3299 25
plaintiff, before bringing suit against another PRP, had
been the subject of an EPA administrative order under
§ 106 requiring Akzo Coatings and several other “liable
persons” to conduct certain emergency removal activities.
Id. at 762. Here, by contrast, there has been no EPA order
and no proceeding apportioning necessary costs of re-
sponse to Metropolitan Water. Thus, unlike in Akzo,
Metropolitan Water has not been compelled to initiate
cleanup or repay the EPA, and Metropolitan Water’s
action against North American is not an action “for an
appropriate division of the payment one of them has been
compelled to make.” Id. at 764.17
In addition, we are concerned that prohibiting suit by
a voluntary plaintiff like Metropolitan Water may under-
mine CERCLA’s twin aims of encouraging expeditious,
voluntary environmental cleanups while holding responsi-
ble parties accountable for the response costs that their
past activities induced. As Consolidated Edison, Atlantic
17
For this reason, we hesitate to label Metropolitan Water’s right
of action under § 107 an “implied right to contribution,” as the
district court did. Under the technical definition of contribu-
tion at common law, a volunteer who is not itself liable may
not pursue contribution. See 18 Am. Jur. 2d Contribution § 15;
Restatement (Second) of Torts § 886A(1) & cmts. b & e. Section
107(a) only imposes liability on private parties to the extent
there have been “necessary costs of response” already incurred.
42 U.S.C. § 9607(a)(4). If no costs qualifying under this language
have been incurred or awarded against the volunteer, then
that party has no right to contribution. When Metropolitan
Water commenced cleanup, no other party had taken remedial
action and there was no common liability. Therefore, Metropoli-
tan Water’s action under § 107 is characterized more appropri-
ately as a cost-recovery action than as a claim for contribution.
26 No. 05-3299
Research and several post-Cooper Industries district court
decisions have recognized, in order to further CERCLA’s
policies, potentially responsible parties must be allowed
to recover response costs even before they have been
sued themselves under CERCLA or have settled their
CERCLA liability with a government entity. Were a cost
recovery action unavailable in these circumstances, the
Second Circuit reasoned, “such parties would likely
wait until they are sued to commence cleaning up any
site for which they are not exclusively responsible because
of their inability to be reimbursed for cleanup expendi-
tures in the absence of a suit.” Consol. Edison, 423 F.3d at
100. As the court concluded, this result “would undercut
one of CERCLA’s main goals, ‘encourag[ing] private
parties to assume the financial responsibility of cleanup
costs by allowing them to seek recovery from others.’ ” Id.
(quoting Key Tronic, 511 U.S. at 819 n.13 (internal quota-
tion marks omitted)).
North American and the EPA respond to this policy
argument with one of their own. They contend that the
United States may lose valuable settlement leverage if
parties such as Metropolitan Water are allowed to bring
an action under § 107(a) in these circumstances. They
point out that PRPs who choose to settle with the United
States enjoy protection from contribution suits by other
parties and retain the ability to seek contribution them-
selves. See 42 U.S.C. § 9613(f)(2). By contrast, PRPs who
choose not to settle are barred from seeking contribu-
tion under § 113(f) from the settling parties and thus
face potentially disproportionate liability. If the statute
were to allow non-settling parties to sue under § 107(a),
even when unable to do so under § 113(f), North American
and the EPA contend that PRPs would be discouraged
from settling with the United States.
No. 05-3299 27
We are sensitive to the EPA’s concerns regarding dimin-
ished settlement leverage. Certainly, the contribution
protection provision in § 113(f)(2) appears to reflect a
congressional desire that PRPs ought to be encouraged to
settle their liability with the United States. However, these
concerns simply do not exist in the circumstances pre-
sented here. In this case, the allegations of the com-
plaint make clear that neither the EPA nor any other
government entity has involved itself in the cleanup
undertaken by Metropolitan Water. As far as the complaint
indicates, Metropolitan Water’s undertaking was com-
pletely voluntary and financed by Metropolitan Water
alone. In the present case, the EPA simply is not in the
picture and has no reason to purse a settlement.
We hold that Metropolitan Water has a right of action
under CERCLA § 107(a).18
Conclusion
For the foregoing reasons, the judgment of the district
court is affirmed.
AFFIRMED
18
In reaching this holding, we find it unnecessary to decide
whether Metropolitan Water falls within the “innocent land-
owner” exception recognized by some of our pre-Cooper Indus-
tries decisions. See, e.g., Rumpke, 107 F.3d at 1240. Rumpke was
decided in a statutory regime in which landowners who
undertook voluntary cleanup efforts had the option of recover-
ing costs via an action for contribution under § 113(f). Given that
Cooper Industries has foreclosed that option, we find the “inno-
cent landowner” exception of little value in deciding the pres-
ent dispute.
28 No. 05-3299
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—1-17-07