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Presenting a live 90-minute webinar with interactive Q&A
CERCLA Actions and Statute of Limitations:
Navigating the Circuit Split, Lessons
From Recent Decisions Practical Implications for Whether Judicially Approved Settlement
Requires Resolution of CERCLA Liability
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
THURSDAY, FEBRUARY 2, 2017
Leah J. Knowlton, Partner, Taylor English Duma, Atlanta
Summer Nastich, Founder, Nastich Law, Berkeley, Calif.
Christopher (Smitty) Smith, Esq., Steptoe & Johnson, Los Angeles
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Update on CERCLA §107 and §113 Statutes of Limitations Decisions
Presented by
Leah J. Knowlton
Taylor English Duma LLP
1600 Parkwood Circle, Suite 400
Atlanta, Georgia 30339
(678) 426-4642
Overview
I. CERCLA §107 and §113 statutes of limitations A. CERCLA response cost basics
B. History of CERCLA limitations periods
C. Statutes of limitations for §107 cost recovery claims
D. Statutes of limitations for §113 contribution claims
• Does the agreement resolve liability?
• What type of liability must be resolved?
E. Is the claim for §107 cost recovery or §113 contribution?
F. Recent cases on each
II. Difficult or unresolved issues
6
CERCLA Basics
• CERCLA § 107(a) cost recovery claim: – Elements of a prima facie case = 1) release, 2) from a facility, 3)
caused response costs, 4) consistent with NCP, and 5) defendants are responsible parties under §107 (e.g. owner, operator, arranger)
• CERCLA §113(f)(1) contribution claim: – Contribution from PRP potentially liable under §107
– During or after litigation under §106 or §107
• CERCLA §113(f)(3)(B) – Contribution right for a person who resolves some or all of its
liability
– In a judicially or administratively approved settlement with EPA or a State
7
History of CERCLA Limitations Periods
• Original Superfund Act had only a 3-year limit for making claims against the Fund. § 112(d) – In early cases courts applied this 3-year limit to damages claims, or
held that there was no limit for such claims . . . and everything in between.
• The 1986 Superfund Amendments and Reauthorization Act (“SARA”) added § 113(g) and § 309 for different types of actions. – SARA limitations periods and discovery rule were applied
prospectively only from October 17, 1986.
Practice tip: Pre-SARA CERCLA SoL cases are unreliable.
8
§ 107 Cost Recovery SoL
• An initial action for cost recovery under § 107 must be brought: – 3 years after completion of removal action. § 9613 (g)(2)(A)
– 6 years after initiation of physical on-site construction of remedial action. § 9613 (g)(2)(B)
– If remedial action is initiated within 3 years of removal, then costs of removal can be recovered in suit for costs of remedial action. § 9613 (g)(2)(B)
– If a declaratory judgment for future costs is entered in initial action, a subsequent suit for additional costs must be commenced within 3 years of completion of original response action. Id.
• Focus on the type of cleanup
9
§ 113 Contribution SoL
• Under § 113 (g)(3) a contribution suit must be filed no more than 3 years after the date of:
1. Judgment for response costs
2. An administrative order for de minimus settlement under § 9622(g)
3. An administrative order for cost recovery settlement under § 9622(h)
4. A judicially approved settlement under § 9622(h)
• Focus on what was settled and how
• CERCLA is silent on SoL for actions other than these four – Does any SoL apply to § 113 cases
in the silent void?
10
§ 113 Contribution Claim
• CERCLA §113(f)(1) - provides a right to contribution
– from a person who is liable or potentially liable under §107
– during or after litigation under §106 or §107
• CERCLA §113(f)(3)(B) - provides a right to contribution
– for a person who resolved its liability to U.S. or a State
– for some or all of a response action
– in a judicially or administratively approved settlement
– from a person not party to a settlement
11
§ 107 Cost Recovery or § 113 Contribution?
• § 107(a) and § 113(f) remedies are distinct, and a PRP cannot recover the same costs under both. Cooper Indus,. Inc. v. Aviall Servs., Inc., 543 U.S. 157, 163 n.3 (2004)
• A party can bring a § 107 claim to recover costs voluntarily incurred to clean up a site. U.S. v. Atlantic Research Corp., 551 U.S. 128 (2007)
– § 113 is not the exclusive cause of action
– Footnote 6: What about costs a party was compelled to incur under a consent decree, after suit under § 106 or § 107? Id. at 139, n.6
12
§ 107 Cost Recovery or § 113 Contribution?
• Appellate Courts have unanimously held that a PRP compelled to incur costs under a consent decree or administrative settlement is limited to a § 113 claim. – Has a PRP resolved its liability for some or all of a response action?
– Arising from common liability stemming from a §107 action?
– If so, a claim for cost recovery under §107 is not available.
Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 124-28 (2d Cir. 2010)
Agere Sys. Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 227-29 (3d Cir. 2010)
Hobart Corp. v. Waste Mgmt. of Ohio, Inc., 758 F.3d 757, 767 (6th Cir. 2014)
Bernstein v. Bankert, 733 F.3d 190, 206 (7th Cir. 2012)
Morrison Enters., LLC v. Dravo Corp., 638 F.3d 594, 603 (8th Cir. 2011)
Kotrous v. Goss-Jewett Co. of N. Cal., 523 F.3d 924, 932 (9th Cir. 2008)
Solutia, Inc. v. McWane, Inc., 672 F.3d 1230, 1236-37 (11th Cir. 2012
• But, these cases did not involve 2 distinct sets of costs. What if you have §107 [apple] costs + § 113 [orange] costs from the same site?
13
Mixed 107(a) and 113(f) costs
Whittaker Corp. v. United States, 825 F.3d 1002 (9th Circuit, 2016). • Whittaker owned a munitions manufacturing facility that became the
Bermite Superfund Site.
• In 2003, Whittaker was found liable on a 107(a) claims for damages to water companies for contaminating off-site water wells.
• In 2013, Whittaker sued the U.S. for 107 response costs for Bermite Site.
• District court dismissed, finding that Whittaker triggered 113(f)(1): it was subject to a 107 action and now sought to recover costs.
• 9th Circuit reversed. Whittaker could seek cost recovery from the U.S. and was not limited to a 113 contribution action – now barred by the statute of limitation- because it seeks on-site remediation costs [apples] that are distinct from costs of off-site water contamination [oranges] for which it was found liable in 2003.
14
§ 107 or § 113 Scenarios
• What action is available and which
SoL applies when: – A PRP voluntarily reimburses another party for response costs?
– Costs are incurred after a UAO by EPA required the work?
– A settlement contains a disclaimer of liability, or a settlement is conditioned upon future actions not yet completed?
– A settlement with a State does not specify that it resolves CERCLA liability?
– The “response action” arises under State law?
• Some of these scenarios were recently reviewed by courts
Practice tip: carefully review the language of a settlement agreement.
15
§ 113 Scenarios – Recent Cases
Does the language of the agreement “resolve” liability?
1. Did Pre-2005 “Old Form” AOC resolve liability? = NO
• Bernstein v. Bankert, 733 F.3d 190 (7th Cir. 2013) – a 2002 AOC with disclaimer of liability and covenant-not-to-sue (“CNS”) conditioned upon work not completed did not “resolve” liability for a §113(f)(3)(B) claim.
• Northern States Power Co. v. City of Ashland, Wis., 93 F. Supp. 3d 958, 970 (W.D. Wis. 2015) – a 2003 AOC was for future costs only and did not recover or settle past costs, so did not “resolve” liability.
• Florida Power Corp. v. FirstEnergy Corp., 810 F.3d 996, 1004 (6th Cir. 2015) – a 1998 AOC and a 2003 AOC for RI/FS “explicitly condition the resolution of liability on performance,” and EPA broadly reserved its right to take further enforcement actions.
16
§ 113 Scenarios – Recent Cases
Did Pre-2005 “Old Form” AOC resolve liability? = YES
• NCR Corp. , et al. v. George A. Whiting Paper Co., et al., 768 F.3d 682, 692 (7th Cir. 2014) – CNS in 2004 AOC took effect immediately upon signing, and it was irrelevant that CNS was conditioned upon performance, so AOC did resolve liability.
17
§ 113 Scenarios – Recent Cases
Does the language of the agreement “resolve” liability?
2. Did Post-2005 “New Form” ASAOC resolve liability? = YES
• Hobart Corp. et al. v. Waste Management of Ohio, Inc., et al., 758 F.3d 757 (6th Cir. 2014) -- 2006 ASAOC constituted an “administrative settlement” that triggered §113(f)(3)(B) for 3 reasons:
– It stated that the parties agreed it was an administrative settlement for purposes of §113(f)(3)(B).
– The title ASAOC exactly matched the statutory language.
– EPA’s CNS was given in consideration of the actions to be taken and payments to be made
18
§ 113 (f)(3)(B) Triggers
What type of liability must be resolved?
• Consolidated Edison of New York, Inc. v. UGI Utilities, Inc., 423 F.3d 90 (2d Cir. 2005) – Con Ed entered into a voluntary cleanup agreement with NY State
– Court reasoned that Con Ed’s agreement with State did not resolve a “response action” because that term is a CERCLA-specific term
– Agreement’s “reservation of rights” section cited State’s right to take action under CERCLA if conditions were not met
– Court held that §113(f)(3)(B) “create[s] a contribution right only when liability for CERCLA claims, rather than some broader category of legal claims, is resolved.”
Type of liability = CERCLA only (2nd Circuit)
19
§ 113 Recent Cases
What type of liability must be resolved? • Trinity Industries, Inc. v. Chicago Bridge & Iron Co., 735 F.3d
131 (3d Cir. 2013) – Trinity entered into a consent order with PA DEP to perform response
actions pursuant to State law.
– Court noted that PA statute “bears a strong resemblance to CERCLA” and cost recovery/contribution provisions are virtually identical.
– A CERCLA-specific requirement is absent in the text of §107.
– Remediation under the PA statute is essentially CERCLA remediation.
– Court held that “§113(f)(3)(B) does not require that a party have settled its liability under CERCLA in particular to be eligible for contribution.”
Type of liability = CERCLA or State analog (3rd Circuit)
20
§ 113 Recent Cases
What type of liability must be resolved?
• ASARCO LLC v. Atlantic Richfield, 73 F. Supp. 3d 1285 (D. Mont. 2014). – Superfund Site added to NPL in 1984
– 1998 consent decree with EPA under RCRA & Clean Water Act, that made no explicit reference to CERCLA
– Court noted that the term “response action” is not CERCLA-exclusive
– Court held that §113(f)(3)(B) gives rise to contribution claims for any “response action” that falls under the “wide umbrella” of CERCLA definitions of remove/ removal, remedy/ remedial action, respond/ response. §§ 101(23) – (25)
Type of liability = CERCLA or State analog (D. Mont.)
21
§ 113 Recent Cases
Which SoL is triggered for a removal?
Does a contribution action for a removal ASAOC trigger the removal SoL (3 years from completion) or the contribution SoL (3 years from executing settlement)?
• Hobart Corp. et al. v. Waste Management of Ohio, Inc., et al., 758 F.3d 757 (6th Cir. 2014).
– ASAOC for removal. The SoL began running on the effective date of ASAOC, not completion of removal.
• LWD PRP Group v. Alcan Corp., et al., 600 Fed. Appx. 357 (6th Cir. 2015).
– Same analysis as Hobart, and tolling agreements were not effective. “the limitations period is statutory, not contractual. The EPA and [PRP Group] did not have the power to lengthen the time” even though the settlement agreement expressed an intent to do so.
22
§ 113 Recent Cases
ASARCO, LLC v. Celanese Chemical Co., 792 F.3d 1203 (9th Cir. 2015).
• Settlement between ASARCO and other PRPs, entered by court as a consent judgment in 1989.
• 16 years later ASARCO filed for bankruptcy, with EPA and California filing proof of claims.
• ASARCO filed new §113 contribution claims.
Q = This scenario doesn’t fit in the 4 categories of §113(f) because no resolution of liability to U.S. or a State. Which SoL? Held: Any judicially-approved settlement is subject to the SoL of 113(g)(3)(B), and does not need to involve the government.
Also, a bankruptcy settlement does not revive the claim.
23
Removal Costs for §107 Claim
“Removal” defined in § 9601(23)
• Short term, temporary
• Can be a series of actions, including: – Monitoring, assessing, evaluating
– Securing the site with fencing
– Providing alternative water supplies.
• Can include the RI/FS process, with triggering event being EPA’s issuance of the ROD. See U.S. v. Davis, 882 F. Supp. 1217 (D.RI
1995); Pneumo Abex Corp. v Bessemer & Lake Erie R.R., 936 F. Supp. 1250 (E.D. VA 1996).
• Claim must be filed within 3 years of completion of removal.
24
Remedial Costs for §107 Claim
“Remedial” defined in § 9601(24) • Long-term, permanent solutions
• Claim must be filed within 6 years of
start of construction
• Actions at the location of the release, including: – Perimeter protection using dikes, trenches
– Dredging or excavations
– Repair or replacement of leaking containers
– Collection of leachate and runoff
– Provision of alternative water supplies
– Offsite transport and onsite storage of contaminated materials
25
Process -Removal or Remedial?
• RI/FS is part of the removal process. Kelley v. E.I. DuPont de Nemours and Co., 17 F.3d 836 (6th Cir. 1994).
• Approval of final RA plan triggered SoL for remedial action. California v. Neville Chemical Co., 358 F.3d 661 (9th Cir. 2004).
• Adoption of removal measures in RA plan triggers 3 year SoL. New York v. Next Millenium Realty, 732 F.3d 117 (2d Cir. 2013).
• Activities before adoption of RA plan are “removal.” Asarco v. Atlantic Richfield, 73 F. Supp. 1285 (D. Mont. 2014)
Source:http://www.rabnewpo
rtri.org/IRP.htm
26
Activity - Removal or Remedial?
• Determined as a matter of law, and can be basis for summary judgment. American Premier Underwriters Inc. v. General Elec. Co., 866 F. Supp. 2d 883 (S.D. Ohio 2012).
• Installing fences to limit access, prior to RA Plan is removal, but installing
electrical pole and water lines for night lighting, dust control and steam cleaning triggered remedial 6-yr. SoL. California v. Hyampom Lumber Co. 903 F. Supp. 1389 (ED Cal, 1995).
• Installing a steel fence to limit access prior to laying clay cap was remedial
because it was first item listed in subsequent closure plan. Union Carbide Corp. v. Thiokol Corp., 890 F. Supp. 1035(SD Ga, 1994).
• Installing plugs in under ground openings is removal. Colorado v. Sunoco,
Inc., 337 F.3d 1233 (10th Cir. 2003).
27
Activity - Removal or Remedial?
Northern States Power Co. v. City of Ashland, Wis., 93 F. Supp. 3d 958 (W.D. Wis. 2015)
• Plaintiff brought §107 cost recovery claim for investigations and “soil extraction” and groundwater cleanup activities for period of time before it entered into a consent decree.
• Court considered 1) whether response addressed the endpoint or source of the problem, 2) duration, and 3) completeness of the solution.
Held: Comprehensiveness of response, large volume of contaminants removed, over 13 years, at cost of $2.8 MM means it was a remedial action, not removal.
Distinguished Next Millenium Realty.
28
Activity - Removal or Remedial?
New York v. Next Millennium Realty, LLC, 732 F.3d 117 (2nd Cir. 2013).
• Plaintiff brought §107 cost recovery claim for investigations and GAC/air stripper systems to treat VOCs in groundwater.
• GAC/air stripper ran more than 20 years, at a cost of $2.45 MM.
• Dist. Ct. held it was a remedial system.
Held: The GAC/air stripper systems were responses to imminent public health hazard, and did not permanently remediate the problem, and were therefore part of a removal action.
Therefore, SoL to file cost recovery is 3 years after completion of the removal action.
29
Difficult Questions
• What happens if a remedy is disturbed, e.g. a capped site dug up, and another removal or remedial action occurs?
• Can there be more than one cost recovery suit for removal costs at the same site?
• What if a previously remediated site is reopened to address a new remedial standard, after prior cost recovery actions?
• If initiation of construction of a remedy triggers the SoL, what if a new area of contamination is found after the SoL expires?
• Can each OU be the basis for different suits for response costs if work described in the ACOs overlaps?
• Can there be more than one “facility” at a site, and thus more than one action for response costs?
• Can you seek § 113 contribution for costs that were not connected with the same trigger of that § 113 action?
30
Contact Me If You Have Questions!
Leah J. Knowlton
Taylor English Duma LLP
1600 Parkwood Circle, Suite 400
Atlanta, Georgia 30339
(678) 426-4642
31
What is the circuit split?
(Dude, no. That’s a banana split.)
Two flavors of CERCLA contribution actions
CERCLA section 113(f)(1): “Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title…”
33
Two flavors of CERCLA contribution actions
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…” (Emphasis added)
(Dude, stop.)
34
The split is about this one
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…” (Emphasis added)
35
Cases on the split
Consolidated Edison Company of New York v. UGI Utilities, Inc. (2nd Cir. 2005) 423 F.3d 90. W.R. Grace & Co.-Conn v. Zotos International, Inc. (2nd Cir. 2009) 559 F.3d 85. Niagara Mohawk Power Corp. v. Chevron (2nd Cir. 2010) 596 F.3d 112.
Trinity Industries, Inc. v. Chicago Bridge & Iron Co. (3rd Cir. 2013) 735 F.3d 131. Asarco LLC v. Atlantic Richfield Co. (D. Mt. 2014) 73 F.Supp.3d 1285 (signed August 26, 2014) on appeal to the Ninth Circuit
36
Consolidated Edison Company of New York v. UGI Utilities, Inc. (2nd Cir. 2005) 423 F.3d 90
37
Consolidated Edison Company of New York v. UGI Utilities, Inc. (2nd Cir. 2005) 423 F.3d 90.
38
Consolidated Edison Company of New York v. UGI Utilities, Inc. (2nd Cir. 2005) 423 F.3d 90.
“Response action” in section 113(f)(3)(B) is “a CERCLA-specific term describing an action to clean up a site or minimize the release of contaminants in the future.” So, “section 113(f)(3)(B) does not allow contribution actions based on resolution of liability for state law claims, but not CERCLA claims.”
39
Ladies and gentlemen, here again is 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 UNDER CERCLA or for some or all of the costs of such action UNDER CERCLA in an administrative or judicially approved settlement may seek contribution from any person who is not party to a settlement…” (Emphasis added)
40
W.R. Grace & Co.-Conn v. Zotos International, Inc. (2nd Cir. 2009) 559 F.3d 85.
41
W.R. Grace & Co.-Conn v. Zotos International, Inc. (2nd Cir. 2009) 559 F.3d 85.
(For real, dude…)
42
W.R. Grace & Co.-Conn v. Zotos International, Inc. (2nd Cir. 2009) 559 F.3d 85.
Held that the 1988 consent order did not resolve CERCLA claims that could be brought by the federal government, and was not an administrative settlement cognizable under CERCLA section 113(f)(3)(B). Thus, Grace did not have a CERCLA contribution action. (But Grace did have a section 107 cost recovery claim against Zotos.)
43
Niagara Mohawk Power Corp. v. Chevron (2nd Cir. 2010) 596 F.3d 112.
(!!!)
44
Niagara Mohawk Power Corp. v. Chevron (2nd Cir. 2010) 596 F.3d 112.
Unlike the consent orders in Con Ed and Grace, the order in NiMo specifically released NiMo from CERCLA liability. Thus, the order was an administrative settlement for purposes of CERCLA section 113(f)(3)(B) and NiMo could bring a contribution claim under that section.
45
Trinity Industries, Inc. v. Chicago Bridge & Iron Co. (3rd Cir. 2013) 735 F.3d 131.
(Dude. Sigh.)
46
Trinity Industries, Inc. v. Chicago Bridge & Iron Co. (3rd Cir. 2013) 735 F.3d 131.
Rejected the Second Circuit’s reading of section 113(f)(3)(B). Section 113(f)(3)(B) doesn’t say the “response action” in section 113(f)(3)(B) had to be a CERCLA-specific response action and it would have if that’s what Congress meant. So, specifically resolving CERCLA liability is not prerequisite to a CERCLA contribution claim. Noted that a section 113(f)(1) claim does require a CERLCA action, i.e., an action under CERCLA section 106 or 107, but there is no such requirement under section 113(f)(3)(B).
47
Asarco LLC v. Atlantic Richfield Co. (D. Mt. 2014) 73 F.Supp.3d 1285 (signed August 26, 2014)
[eye roll]
48
Asarco LLC v. Atlantic Richfield Co. (D. Mt. 2014) 73 F.Supp.3d 1285 (signed August 26, 2014)
“response action” in 113(f)(3)(B) really just means “response.” So includes the terms “remove, removal, remedy, and remedial action…including enforcement activities related thereto.” And because these terms are so broadly defined under CERCLA, a party has a 113(f)(3)(B) claim after resolving any of its liability to the US or a state. Thus, section 113(f)(3)(B) does not require resolution of CERCLA liability in particular.
49
In sum…Second Circuit
A state can settle CERCLA claims—without express approval from EPA—but the agreement must specifically address CERCLA liability in order to give rise to a section 113(f)(3)(B) claim. If the agreement doesn’t mention CERCLA, you may have a section 107 claim, but not a section 113(f)(3)(B) claim.
50
In sum…Third Circuit
You don’t have to resolve your CERCLA-specific liability to bring a section 113(f)(3)(B) claim, but you do have to be subject to suit under section 106 or 107 to bring a section 113(f)(1) claim.
51
In sum…Ninth Circuit
Section 113(f)(3)(B) does not require resolution of CERCLA liability in particular. Instead, that provision gives rise to a contribution claim based upon a judicially approved settlement that resolves a party’s liability for some or all of a “response action,” as that term is defined by CERCLA sections 101(23) to 101(25) .
52
In sum…Ninth Circuit
53
The end (go eat some ice cream!)
Summer L. Nastich [email protected] (415) 794-4210 NastichLaw.com
(Dude…)
54
Tools and Triggers &
Asarco Case Study
Christopher ‘Smitty’ Smith
www.steptoe.com
February 2, 2017
Tools and Triggers & Asarco Case Study
Tools and Triggers –
– Court-tested tools and triggers
both plaintiffs and defendants
have utilized to address SOL
issues for CERCLA claims.
Asarco Case Study –
– Mining operations company
provides excellent case study for
exploring SOL issues for
CERCLA claims.
– Issues addressed by variety of
courts around the country.
56 www.steptoe.com
Tools: Summary
Tools: explores a handful of court-tested tools
available to address SOL issues in the context of
CERCLA.
Toolbox Includes:
– Tolling Agreements
– Equitable Tolling
– Waiver
– Relation Back
– Statutes of Repose
– Separate Facilities/Costs
57 www.steptoe.com
Triggers: Summary
Triggers: explores triggers for SOL in the context of
NRD, Cost Recovery, and Contribution claims.
– Natural Resource Damages (NRD) – 42 U.S.C. § 9613(g)(1)
– Cost Recovery – 42 U.S.C. § 9613(g)(2)
– Contribution – 42 U.S.C. § 9613(g)(3)
– Additional triggers exist, but are not discussed in this
presentation.
• Subrogation – 42 U.S.C. § 9613(g)(4)
• Indemnification Payments – 42 U.S.C. § 9613(g)(5)
• Minors and Incompetents – 42 U.S.C. § 9613(g)(6)
58 www.steptoe.com
Asarco Case Study: Summary
Background –
– Asarco is mining, smelting, and refining company with historical
operations around the country.
– Environmental liabilities for Asarco were estimated at $6.5B.
– Company filed for bankruptcy in August 2005.
– Emerging from bankruptcy, Asarco began a national effort to pursue
other PRPs it identified as contributors to the sites it settled in
bankruptcy.
Case Study –
– SOL issues raised in the numerous CERCLA cases brought by
Asarco around the country provide an excellent case study as
well as valuable lessons for practitioners.
59 www.steptoe.com
Tools: Tolling Agreements
The Basics –
– Can take many forms.
– Typically express agreement with
covenants tolling all SOL.
– Significant detail is not necessary.
– Discretionary to call out CERCLA
liability in tolling agreement, but can
provide added level of comfort.
– Courts recognize use of tolling
agreements to toll SOL for CERCLA
claims
– Only useful to toll SOL against parties
to the tolling agreement.
60 www.steptoe.com
Tools: Tolling Agreements
Court-approved tool to toll SOL in CERCLA cases
– “An analysis of CERCLA’s structure, underlying policy
goals, and legislative history, as well as the reasoning of
relevant precedent, leads to the conclusion that
Congress intended…to provide a typical statute of
limitations subject to extension by tolling agreement.”
• U.S. v. Halliburton Energy Services, Inc., No. 07-3795, 2009
WL 3260540, at *8 (S.D. Tex. Oct. 9, 2009)
• See also Universal Paragon Corp. v. Ingersoll-Rand Co., No.
05-3100, 2007 WL 518828, at *10-11 (N.D. Cal. Feb. 13,
2007)
61 www.steptoe.com
Tools: Tolling Agreements Do Not Re-Open SOL
Beware: tolling agreements do not
serve to revive an already expired
SOL. That door is closed.
– Tolling agreement signed after SOL
had run did not serve to re-open SOL.
• LWD PRP Group v. Alcan Corp., 600
Fed.Appx. 357, 365-66 (6th Cir. 2015).
– Equitable tolling could have saved
SOL, but argument was forfeited
because it was not raised.
62 www.steptoe.com
Tools: Equitable Tolling
An equitable tool that could serve to toll SOL when no agreement
otherwise in place.
– Recognized as available in the context of CERCLA.
• Atlantic Richfield Co. v. U.S., 181 F.Supp.3d 898, 922-23 (D. N.M. 2016) (recognizing
equitable tolling as means to toll SOL in context of CERCLA).
It’s your burden, prove it.
– “[A] litigant seeking equitable tolling bears the burden of establishing two
elements: (1) that he has been pursuing his rights diligently, and (2) that some
extraordinary circumstance stood in his way.”
• Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005).
Good Luck (you will need it).
– As an equitable tool, is is recognized as an “extraordinary measure” that, if
available, is only sparingly applied.
• Irwin v. Dept. of Vet. Affairs, 498 U.S. 89, 96 (1990).
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Tools: Waiver
Be careful what you include in your tolling
agreement.
– In order to find waiver, an agreement must
“evince a clear and unmistakable intent of the
parties…”
• Keywell Corp. v. Weinstein, 33 F.3d 159, 165 (2d Cir. 1994).
• Lion Oil Co. v. Tosco Corp., 90 F.3d 268, 270 (8th Cir. 1996).
– Finding purchaser’s agreement to indemnify seller of oil
refinery for all CERCLA liability was valid based on clear,
unequivocal and unambiguous allocation of liability in the
sales contract.
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Tools: Waiver (continued)
Practical Implications –
– Contribution protections afforded to a settling party to a
judicially approved settlement can be waived through an
express agreement, including a tolling agreement, if the
intent is provided for in the agreement.
• Asarco LLC v. Union Pacific R. Co., No. 12-416, 2013 WL
3989181 (D. Neb. Aug. 2, 2013).
– Railroad had separate judicially approved settlement with USEPA
providing contribution protection and entered into subsequent
tolling agreement with Asarco.
– Asarco argued subsequent tolling agreement undid contribution
protection, but Court found railroad did not waive SOL.
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Tools: Relation Back
Procedural device provided for in FRCP 15(c)
– Assumes a timely CERCLA claim has been filed, but that the proper defendant
has not been named before the SOL has run.
– Likely to occur in circumstances where uncertainty surrounds corporate lineage
of a PRP such that the proper entity cannot be identified until some written
discovery has been undertaken.
Elements –
– The proposed amendment changes the party or name of the party against whom a
claim is asserted;
– The amendment asserts a claim or defense that arose out of the conduct,
transaction, or occurrence set out—or attempted to be set out—in the original
pleading;
– Within the period provided by FRCP 4(m) for serving the summons and complaint
(120 days from the date of filing), the party to be brought in by amendment received
notice of the action and will not be prejudiced defending on the merits; and
– The party knew or should have known that the action would have been brought
against it, but for the mistake concerning the proper party’s identity.
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Tools: Relation Back (continued)
You will be charged with what you know or should have known.
Relation back can save you.
– Asarco LLC v. Xstrata PLC, No. 12-527, 2013 WL 2949046, at *5-7 (D.
Utah June 14, 2013).
• Corporate similarities meant that plaintiff could not have known of the proper
entity to be identified as a PRP until after the SOL had run, but was allowed
to utilize relation back to save its claim.
It can also prove to be less helpful.
– Asarco LLC v. NL Industries, Inc., 106 F.Supp.3d 1015, 1034-38 (E.D.
Mo. 2015).
• Historical ownership records were in Asarco’s possession and should have
been studied sufficient to identify the proper PRP within the time allowed
under the SOL.
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Tools: Statutes of Repose
What are they?
– Repose is a hard deadline imposed by state legislature’s to term-out claims.
– More draconian than SOL.
– Not subject to the same equitable principles that can serve to toll SOL.
Be Aware!!!
– Statutes of repose vary from state to state
• Look to your state to determine if such statutes are implicated for your case.
Statutes of repose have been found to trump CERCLA’s SOL.
– CTS Corp. v. Waldburger, 134 S.Ct. 2175 (2014)
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Tools: Separate Facilities/Costs
Types of facilities and costs drive the SOL in CERCLA cases.
– Result: the SOL is tied (and limited) to those types of facilities and costs.
Court considerations for what are separate facilities and costs.
– Fact-intensive determination.
• “In determining whether a claim is made regarding matters not addressed in
the settlement, a court must consider various factors, including the particular
hazardous substance at issue in the settlement, the location or site in
question, the time frame covered by the settlement, and the cost of cleanup.”
– Asarco LLC v. Atlantic Richfield Company, 73 F.Supp.2d 1285, 1294 (D. Mont. 2014).
• Look to the judgment/settlement for details about what facilities/costs are
covered in order to evaluate SOL limitations.
– RSR Corp. v. Commercial Metals Co., 496 F.3d 552, 557 (6th Cir. 2007).
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Tools: Separate Facilities/Costs (cases)
3-year SOL from settlement only cuts off contribution recovery for those
facilities/costs addressed in settlement that triggers SOL.
– American Cyanamid Co. v. Capuano, 381 F.3d 6, 15 (1st Cir. 2004).
Right to contribution for some expenses at a site does not necessarily
mean that the party pursuing the right loses its right to bring a cost
recovery action for other expenses.
– Bernstein v. Bankert, 733 F.3d 190, 202-03 (7th Cir. 2012).
– NCR Corp. v. George A. Whiting Paper Co., 768 F.3d 682, 690-92 (7th Cir.
2014).
– Agere Systems, Inc. v. Advanced Environmental Technology Corp., 602 F.3d
204, 225 (3d Cir. 2010).
Settlement agreement with USEPA did not preclude CERCLA
contribution claims for costs incurred by sites expressly excluded from
agreement.
– Asarco, LLC v. Noranda Mining, Inc., --- F.3d ---, No. 16-4045, 2017 WL 24609
at *5-6 (10th Cir. Jan. 3, 2017)
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Triggers: Covered Types
Natural Resource Damages—3 Triggers
– Section 113(g)(1) provides 3 triggers for the SOL in NRD cases:
• Date of discovery of loss
• Date of regulations promulgated under Section 151(c)
• Completion of remedial action (excluding O&M)
Cost Recovery—2 Triggers
– Section 113(g)(2) provides 2 triggers for the SOL in cost recovery cases:
• Completion of a removal action
• Initiation of physical on-site construction for a remedial action
Contribution—4 Triggers
– Section 113(g)(3) provides 4 triggers for the SOL in contribution cases:
• Entry of a judgment
• Section 122(g) de minimis settlement
• Section 122(h) cost recovery settlement
• Judicially approved settlement
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Triggers: NRD (Section 113(g)(1))
3 triggers, but 3rd trigger (with longer SOL) most commonly used.
Generally considered an “open-ended” SOL b/c NRD damages tend to
be addressed as the last form of damages in a CERCLA case.
– U.S. v. Asarco Inc., 28 F.Supp.2d 1170, 1179-80 (D. Idaho 1998), vacated on
other grounds, 214 F.3d 1104 (9th Cir. 2000).
For any facility listed on the NPL, a NRD claim is timely so long as it is
commenced within 3 years after completion of the remedial action.
– This is notwithstanding that such a claim would have been untimely under the
first two types of triggers for an NRD claim at the time the facility was listed on
the NPL.
• New York v. Next Millennium Realty, LLC, 160 F.Supp.3d 485, 520 (E.D. N.Y. 2016)
– Essentially, the first two triggers for an NRD claim are irrelevant to USEPA
because they can be nullified by the third trigger, which inevitably provides for
an extended time to trigger.
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Triggers: Cost Recovery (Section 113(g)(2))
2 triggers –
– Completion of a “removal
action” = 3 year SOL.
– Initiation of physical on-site
construction of the
“remedial action” = 6 year
SOL.
Unpacking the
distinctions between a
“removal action” and
“remedial action” is a
fact-intensive inquiry.
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Triggers: Cost Recovery (Removal Action)
Removal action for SOL purposes (Section 113(g)(2)(A))
– Includes all of the individual tasks in a cleanup, such as testing and
physical removal of hazardous materials, and cannot be broken down
into individual tasks for SOL purposes.
• Kelley v. E.I. DuPont de Nemours & Co., 17 F.3d 836, 940-44 (9th Cir. 1994)
– All removal activities at a site constitute a single “removal” for SOL
purposes
• California v. Hyampom Lumber Co., 903 F.Supp. 1389, 1394 (E.D. Cal. 1995)
Pinpointing the trigger for removal action can be tricky.
– Because a removal action may be conducted in several stages and
may involve several different types of activities, courts tend to look to
certain events, such as completion of a RI/FS, issuance of a ROD, or
some other determination that no further action is necessary, to mark
the completion of the entire removal action.
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Triggers: Cost Recovery (Removal Action)
Case examples of “removal action” triggers –
– U.S. v. Rohm & Haas Co., No. 09-5528, 2010 WL 3811302, at *4 (D. N.J. Sept.
22, 2010) (limitations period begins to accrue upon issuance of ROD).
– U.S. v. Chromatex, Inc., 832 F.Supp. 900, 902 (M.D. Pa. 1993), affirmed 39
F.3d 1171 (3d Cir. 1994) (completion of removal action triggered by “final
pollution report” determining that no further action was required).
– U.S. v. United Nuclear Corp., 814 F.Supp. 1552, 1562-63 (D. N.M. 1992) (cost
recovery action brought 3 years to the day from issuance of ROD was timely).
– U.S. v. Cantrell, 92 F.Supp.2d 704, 716 (S.D. Ohio 2000) (complaint was filed 3
years after final inspection of site where removal action was conducted was
timely).
– Pneumo Abex Corp. v. Bessemer & Lake Erie R.R. Co., 936 F.Supp.1250,
1261 (E.D. Va. 1996) (SOL did not begin to run until USEPA issued ROD).
– U.S. v. Petersen Sand & Gravel, Inc., 824 F.Supp. 751, 755 (N.D. Ill. 1991)
(SOL begins running when RI/FS is completed).
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Triggers: Cost Recovery (Remedial Action)
Circuit split exists on with the vast majority of Circuit Court’s adhering
strictly to the language of Section 113(g)(2)(B) and a minority liberally
construing the statute.
– This was discussed in detail above.
Majority Authority: the mere act of initiating on-site construction, even
without a final remedy selected, is sufficient to trigger SOL.
– MPM Silicones, LLC v. Union Carbide Corp., No. 11-1542, 2016 WL 3962630,
at *14 (N.D. N.Y. July 7, 2016).
Minority Authority: SOL triggered for “removal action” upon adoption of
final remediation action plan.
– California ex rel. Cal. Dept. of Toxic Substances Control v. Neville Chem. Co.,
358 F.3d 661, 665-71 (9th Cir. 2004).
• Neville decision has been rejected by other Circuit Courts b/c it blends the
bright-line rule/strict construction interpretation of initiation of on-site
construction.
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Triggers: Cost Recovery (Remedial Action)
Remedial action for SOL purposes (Section 113(g)(2)(B))
Initiation of on-site construction for a “remedial action”
– There can only be one remedial action at any given site, so regardless
of changes in ownership, the SOL begins to run as soon as on-site
construction is initiated.
• Attempt to find two “remedial actions” at one site were unsuccessful.
– NYSEG v. FirstEnergy Corp., 766 F.3d 212, 235-36 (2d Cir. 2014).
• Logic is that a “remedial action” is a permanent action to remediate
contamination.
– Colorado v. Sunoco, 337 F.3d 1233, 1241 (10th Cir. 2003).
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Triggers: Contribution (Section 113(g)(3))
4 triggers, but 2 get all the attention
– Date of judgment = 3 years
– Entry of a judicially approved settlement = 3
years
General Rule for 2 Most Common Triggers
– The SOL is triggered by the date upon which
the judgment or settlement is entered.
– Using varying dates from its bankruptcy
proceedings, Asarco has unsuccessfully
tested this general rule in Circuit and District
Court’s around the Country
• Asarco, LLC v. Celanese Chemical Co., 792 F.3d
1203, 1210 (9th Cir. 2014) (entry of judicially
approved settlement triggers SOL not
subsequent date of funding of settlement).
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Triggers: Contribution (Judicially Approved
Settlement) Date of entry of judicially approved
settlement starts the clock.
– RSR Corp. v. Com. Metals Co., 496 F.2d
552, 558 (6th Cir. 2007)
Judicially approved is all that is
necessary; parties to settlement are
irrelevant.
– Asarco LLC v. Shore Terminals LLC, No.
11-1384, 2012 WL 2050253 (N.D. Cal.
June 6, 2012) (settlement between either
Federal/State regulators and private
parties or private parties exclusive triggers
SOL so long as judicial approval sought)
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Triggers: Contribution (UAOs and AOCs)
UAOs and AOCs do not trigger contribution SOL
– Cooper Indus., Inc. v. Aviall Services, Inc., 543 U.S. 157, 158-
59 (2004).
– Diamond X Ranch LLC v. Atlantic Richfield Co., No. 13-570,
2016 WL 4498211, at *6 (D. Nev. Aug. 26, 2016).
– Premier Underwriters Inc. v. Gen. Elec. Co., 866 F.Supp.2d
883, 905 (S.D. Ohio 2012).
– Florida Power Corp. v. FirstEnergy Corp., 810 F.3d 996, 1009-
10 (6th Cir. 2015).
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Asarco Case Study: Background
Mining, smelting, and refining
company that filed Chapter 11
bankruptcy in August 2005.
“Dubious distinction” of having the
largest amount of environmental
claims brought against it in any
bankruptcy proceeding, totaling
approximately $6.5B of non-
duplicated proofs of claim.
– In re Asarco LLC, No. 05-bk-21207,
2009 WL 8176641 (Bankr. S.D. Tex.
June 5, 2009).
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Asarco Case Study: Bankruptcy Settlement
Asarco agreed to pay approximately $1.79B to resolve
environmental claims at 52 sites in 19 states.
Settlement was divided into 5 independent settlement groups of
related sites.
Reservation of rights included –
– Settling governments covenanted not to sue Asarco for liabilities related
to sites.
– Asarco received CERCLA contribution protection against other PRPs
for covered sites.
– Neither the government nor Asarco were giving up any claims they
might have against non-settling PRPs related to the sites.
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Asarco Case Study: Bankruptcy Dates
Significant Dates for Bankruptcy and Subsequent
CERCLA Cases –
– 2005: Asarco files for bankruptcy.
– 2009: Asarco plan for reorganization became
effective and funds for settlement distributed.
• June 2009: Bankruptcy court approves environmental settlements.
• November 2009: Asarco funds environmental settlements.
• December 2009: Asarco reorganization plan becomes effective.
– 2011: Asarco commences CERCLA contribution
cases across Country.
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Asarco Case Study: Selby Site
Background –
– 1880: Operations begin at lead and silver smelting site
– 1970: Site contamination identified
– 2011: Asarco commences CERCLA contribution case
SOL Issues –
– Judicially approved settlement trigger for contribution claims in
bankruptcy proceedings.
• Asarco argued that b/c Federal/State government were not parties to prior
judicially approved settlements that those settlements did not trigger SOL.
– Asarco lost the argument
– Prior judicially approved settlement covered costs sought in contribution
claim so they were time barred.
Asarco LLC v. Shore Terminals LLC, 792 F.3d 1203 (9th Cir. 2014); No.
11-1384, 2012 WL 2050253 (N.D. Cal. June 6, 2012)
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Asarco Case Study: Van Stone Mine Site
Background –
– June 2009: Court approves Asarco settlement
for site with State of Washington for $3.5M
– November 2009: Asarco funds settlement for
site
– December 2009: Asarco reorganization plan
becomes effective
SOL Issues –
– Trigger date is date of judicial approval of
settlement, not the date of reorganization when
Asarco funded the settlement.
– District Court did not resolve the SOL motion to
dismiss because the 9th Circuit had not yet
weighed in on the subject.
Asarco LLC v. Hecla Mining Co., No. 12-381, 2012
WL 5929962 (E.D. Wash. Nov. 27, 2012).
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Asarco Case Study: Richardson Flat/Park City
Mining District Site
Background –
– 2006: USEPA files suit and settlements with group of PRPs that does not
include Asarco
– 2012: Asarco files CERCLA contribution suit
SOL Issues –
– Multiple settlements in bankruptcy were evaluated to determine trigger for
SOL. Ultimately, settlement with USEPA identified as trigger for SOL b/c the
costs sought by Asarco were covered by that settlement (not the private party
settlement that settled costs between Asarco and ARCO).
• Asarco filed suit 3 years to the date from its settlement with USEPA thereby saving
contribution claim.
– Relation back saved Asarco b/c it had named wrong corporate entity as
defendant.
Asarco LLC v. Xstrata PLC, No. 12-527, 2013 WL 2949046 (D. Utah June 14,
2013).
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Asarco Case Study: Omaha Lead Site
Background –
– 1871-1997: Asarco operated metals refinery and smelter at
site
– 2009: Bankruptcy court approves Asarco settlement for site
for $187.5M
– 2011: Railroad enters into judicially approved
settlement for site that was memorialized into consent
decree
SOL Issues –
– Asarco entered into tolling agreement with Railroad in
hopes of saving SOL, but Railroad had already obtained
contribution protection for site from separate settlement with
USEPA.
– Tolling agreement saved SOL for Asarco, but not obviate
contribution protections otherwise applicable to Railroad.
Asarco LLC v. Union Pacific R. Co., No. 12-416, 2013 WL
3989181 (D. Neb. Aug. 2, 2013).
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Asarco Case Study: Vasquez Site
Background –
– 1870-2006: major metals smelting site for rocky mountains. 3 OUs designated.
– 2009: Asarco settles liability for site with City of Denver for $1.5M
– December 2012: Asarco files CERCLA contribution suit
SOL Issues –
– Date of approval of settlement in bankruptcy proceedings time-barred Asarco
claims.
Asarco LLC v. Union Pacific R. Co., 755 F.3d 1183 (10th Cir. 2014); No. 12-3216,
2013 WL 5291422 (D. Colo. Sept. 19, 2013).
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Asarco Case Study: East Helena Site
Background –
– 1888-2001: Asarco operates lead smelter
– 1998: USEPA and Asarco enter into CD for violations of RCRA and CWA
– 2009: Bankruptcy court approves Asarco settlement for site for $99M
– June 2012: Asarco files CERCLA contribution claims
SOL Issues –
– 1998 CD triggered SOL and 2009 CD did not create new obligations not
already covered by 1998 CD.
– 1998 CD contained very broad description of costs covered, thereby barring
contribution claim.
Asarco LLC v. Atlantic Richfield Co., No. 12-53,
2012 WL 5995662 (D. Mont. Nov. 30, 2012);
73 F.Supp.2d 1285 (D. Mont. 2014).
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Asarco Case Study: Coeur D’Alene Site
Background –
– 1990s: Federal and state regulators file claims
against PRPs
– 2003: Trial where Court apportioned CERCLA
liability
– 2008: Railroad and Asarco reach settlement
for all claims related to site for $4M
– 2012: Asarco files contribution suit
SOL Issues –
– Complaint filed in June 2012 did not include Railroad costs previously settled,
but amended complaint included costs b/c not entire share of costs.
– Asarco uses relation-back doctrine to overcome SOL despite expressly
disclaiming costs in original complaint now sought in amended complaint.
– Asarco filed on last day possible and counting days theories were discussed.
Asarco, LLC v. Union Pacific R. Co., 765 F.3d 999 (9th Cir. 2014).
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Contact Info
Christopher ‘Smitty’ Smith
Environmental Attorney
+ 1 213 439 9452 (office)
+ 1 310 218 6510 (mobile)
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