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Colorado District Magistrate Judge Holds That PRPs To A Contribution Claim Do Not Themselves Have A Contribution Claim Under CERCLA

On August 19, 2022, a magistrate judge of the Colorado District Court held that contribution-defendants cannot assert their own contribution claims under section 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) because they are only liable for their fair share of response costs.  Atlantic Richfield Co. v. NL Indus., Inc., No. 20-cv-00234-NYW-KLM, 2022 WL 3577261, at *6 (D. Colo. Aug. 19, 2022). The magistrate judge’s analysis resolved questions for potentially responsible parties (“PRPs”) seeking to assert contribution claims against other PRPs based on a claim of inequitable distribution of common liability in a 113(f) action. Id. at *4.

The case arose out of claims brought by Atlantic Richfield Company (“ARCO”) against NL Industries (“NL”) alleging that ARCO had and would incur costs in responding to releases of hazardous substances at certain facilities and locations within the Rico-Argentine Site, near Rico, Dolores County, Colorado. Id. (“ARCO site”) at *1. NL is the alleged successor to a mining and reduction company that conducted operations at the ARCO site prior to 1943, although NL’s position was that it never owned, operated, or conducted any activities at the Site. Id. Three other PRPs included the United States as owner of the land at the ARCO site where hazardous substances were release and located, J.S. Redpath Construction Company (“Redpath”) as the successor to a company that built various drill stations at the ARCO site in the 1980s, and El Paso as the successor to companies that operated during the disposal of hazardous substances at the ARCO site. Id. at *1-2.

In response to the release of hazardous substances at the ARCO site, the Environmental Protection Agency issued a unilateral administrative order against ARCO. ARCO then filed a CERCLA action against NL under Section 107(a) to recover unreimbursed costs that ARCO incurred or would incur in response to the release of hazardous substances at the site. As Section 107(a) provides, generally, for joint and several liability, NL filed both a counterclaim and a third-party complaint against the United States El Paso, and Redpath asserting that if NL was found to be liable, Section 113(f) proved a statutory right to seek contribution. NL subsequently amended its third-party complaint to include a claim of declaratory relief pursuant to Section 113(g)(2).  After these pleadings were filed, the United States and ARCO resolved ARCO’s liability pursuant to an Administrative Settlement Agreement and Consent for Removal Action. Given the agreement, the court granted ARCO’s motion to amend its complaint withdrawing the claim under Section 107(a) and instead asserting a contribution claim against NL under section 113(f) of CERCLA. The third-party defendants then sought to dismiss the complaint asserting that NL failed to meet CERCLA’s statutory pre-requisites for its third-party contribution claim.

The magistrate judge agreed with the third-party defendants holding that NL could not maintain a contribution claim under section 113(f). Id. at *4. The magistrate judge interpreted the plain meaning of “contribution” and reasoned that section 113(f) authorized a PRP to seek contribution before or after the establishment of common liability. Id. However, a PRP’s right to contribution under the section is contingent upon an inequitable distribution of common liable among all liable parties. Id. Thus, the magistrate judge held that if NL was found liable in ARCO’s 113(f) action, the court would equitably allocate the response costs among all liable parties and NL would only be liable for its several equitable share of clean up costs. Id. In other words, contribution defendants as well as parties brought in by contribution defendants cannot maintain contribution actions of their own because they are only liable for their fair-and-several share of cleanup liability. Id. at *5.

The magistrate judge also rejected two other of NL’s arguments, namely that it would be subject to an inequitable share merely because ARCO did not assert CERCLA claims against any other solvent PRP and that if it was found liable for any orphan share it would bear more than its several share. Id. at *6. Agreeing with El Paso, the magistrate judge found these arguments were based on an unsupported assumption that the court would improperly allocate NL’s liability Id.  The magistrate judge thus held that NL did not meet its burden of showing that it was subject to inequitable distribution of common liability, and thus NL failed to state a legally cognizable contribution claim pursuant to section 113(f) of CERCLA. Id.  The magistrate judge then wrapped up its opinion by dismissing NL’s declaratory judgement claim as NL failed to assert a legally cognizable contribution claim, which served as the basis for declaratory relief. Id.

The magistrate judge afforded each party a fourteen-day window to object. Id. at *7. NL wrote a statement of agreement and limited objection.  First, it stated that it agreed and did not object  if the court adopted the recommendation’s language that ARCO had, by bringing its action only against NL, assumed the liability of third-party defendants and orphans such that none of their liability would not be allocated to NL.  However, it objected if this were not the case, contending first that since the initial action filed against it was under Section 107, under the plain language of 113(f) NL still retained its contribution claim and second, that binding Tenth Circuit caselaw rejected the magistrate judge’s requirement that NL allege and existing overpayment in order to assert its contribution action. These arguments have yet to be addressed by the magistrate, and as of today, this summary is consistent with the magistrates most recent recommendation.