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Seventh Circuit Holds That Resolving Some Cleanup Liability Under Any Statute Triggers a Contribution Action

On August 22, 2019, the Seventh Circuit held that a plaintiff had sufficiently settled its cleanup liability under a settlement agreement with the U.S. Environmental Protection Agency (“EPA”) and the State of Indiana, which triggered the plaintiff’s right to bring a contribution claim, but that the statute of limitations on the plaintiff’s contribution claim had run. See Refined Metals Corp. v. NL Industries Inc., No. 1-17-cv-2565 (S.D. Ind. Aug. 22, 2019).

In 1998, Refined Metals Corp. (“Refined”) entered into a settlement with EPA and the State of Indiana which required Refined to close and remediate a contaminated lead smelter site and pay a fine, in exchange for which EPA and the State provided covenants not to sue on at least some of their potential claims. In 2017, nearly nineteen years later, Refined sued NL Industries Inc. (“NL”) to recoup some of the cleanup costs incurred under the 1998 settlement.

Under Section 113(f)(3)(B) of CERCLA, 42 U.S.C. § 9613(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 a settlement may seek contribution from any person who is not party to a settlement under Section 113(f)(2). The Supreme Court has held that if a contribution action is available to a potentially responsible party (“PRP”), then the PRP may only bring a contribution claim and not a cost recovery claim. See United States v. Atlantic Research Corp., 551 U.S. 128 (2007). This result has a dramatic impact on the applicable statute of limitations. The statute of limitations for a contribution claim is three years from the date of the settlement, while the statute of limitations for a cost recovery claim is six years from the initiation of physical on-site construction of a remedial action, which often occurs long after a settlement is reached. 42 U.S.C. § 9613(g). Refined asserted three primary bases for its claim that the 1998 settlement did not give rise to a contribution claim such that the three-year limitations period had not been triggered, each of which the Court rejected.

First, the Seventh Circuit found that, because the covenant not to sue contained in the 1998 settlement was effective immediately, Refined’s refusal to admit to liability under the 1998 settlement, one of the arguments put forth by Refined, was not enough to exempt the 1998 settlement from Section 113(f)(3)(B)’s contribution claim requirement.

Refined also contended that the 1998 settlement only resolved Refined’s liability under the Resource Conservation and Recovery Act (“RCRA”) and the Clean Air Act, not under CERCLA and thus did not bar its claim, but the Court held that a settlement need only resolve some portion of a PRP’s liability for a cleanup—under any statute—to trigger a contribution action. The Seventh Circuit’s holding on this point is consistent with the majority of circuits that have address this issue. See Asarco LLC v. Atlantic Richfield Company, 866 F.3d 1108 (9th Cir. 2017); Trinity Industries, Inc. v. Chicago Bridge & Iron Co., 735 F.3d 131 (3d Cir. 2013); but see Consolidated Edison Co. of New York v. UGI Utilities, 423 F.3d 90 (2d Cir. 2005).

Finally, the Court rejected what it called Refined’s “puzzling” argument that, while it was seeking contribution from NL, the parties were not jointly liable because RCRA does not provide for a private right of action to recover costs. The Court noted the inconsistency in Refined’s argument, and rejected it both on that basis and on the ground that Refined had not raised the argument in any prior briefing.

The Seventh Circuit’s holding in Refined Metals Corp. is a reminder that PRPs must always be cognizant of CERCLA’s statutes of limitations and should be aware of the nuances in the law from circuit to circuit.