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Asarco LLC v. Atlantic Richfield Co.

United States Court of Appeals, Ninth Circuit

August 10, 2017

Asarco LLC, a Delaware corporation, Plaintiff-Appellant,
v.
Atlantic Richfield Company, a Delaware corporation, Defendant-Appellee.

          Argued and Submitted February 8, 2017 Seattle, Washington

         Appeal from the United States District Court for the District of Montana No. 6:12-cv-00053-DLC, Dana L. Christensen, Chief Judge, Presiding

          Gregory Evans (argued), Laura G. Brys, and Daphne Hsu, McGuire Woods LLP, Los Angeles, California; Linda R. Larson, Nossaman LLP, Seattle, Washington; for Plaintiff-Appellant.

          Shannon Wells Stevenson (argued), William J. Duffy, and Mave A. Gasaway, Davis Graham & Stubbs LLP, Denver, Colorado; Elizabeth H. Temkin, Temkin Wielga & Hardt LLP, Denver, Colorado; Randy J. Cox and Randy J. Tanner, Boone Karlberg P.C., Missoula, Montana; for Defendant-Appellee.

          Before: Raymond C. Fisher, Richard A. Paez, and Consuelo M. Callahan, Circuit Judges.

          SUMMARY[*]

         Environmental Law

         The panel vacated the district court's summary judgment in favor of the defendant in a contribution action under § 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act.

         CERCLA § 113(f) provides that after a party has, pursuant to a settlement agreement, resolved its liability for a "response" action or the costs of such an action, that party may seek contribution from any person who is not a party to the settlement.

         The panel held that a 1998 settlement agreement under the Resource Conservation and Recovery Act between the plaintiff and the United States did not trigger the three-year statute of limitations for the plaintiff to bring a CERCLA contribution action concerning the East Helena Superfund Site. Agreeing with the Third Circuit, and disagreeing with the Second Circuit, the panel held that a settlement agreement entered into under an authority other than CERCLA may give rise to a CERCLA contribution action. In addition, a "corrective measure" under RCRA qualifies as a "response" action under CERCLA. The plaintiff did not, however, "resolve its liability" under the 1998 RCRA settlement agreement.

          Nonetheless, a later, 2009 agreement, on which the plaintiff based its present CERCLA contribution action, did resolve the plaintiff's liability. Because the plaintiff filed the present action within the three-year limitations period measured against entry of the 2009 agreement, it was timely. The panel remanded the case for further proceedings to determine whether the plaintiff was entitled to contribution for the response costs it incurred under the 2009 agreement.

          OPINION

          CALLAHAN, Circuit Judge:

         Section 113(f)(3)(B) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") allows persons who have taken actions to clean up hazardous waste sites to seek monetary contribution from other parties who are also responsible for the contamination. 42 U.S.C. § 9613(f)(3)(B). The provision provides that a person that has "resolved its liability" for "some or all of a response action or for some or all of the costs of such action" pursuant to a settlement agreement with the government "may seek contribution from any person who is not party to a settlement." Id. In other words, "a [potentially responsible party] that pays money to satisfy a settlement agreement . . . may pursue § 113(f) contribution." United States v. Atl. Research Corp., 551 U.S. 128, 139 (2007). CERCLA imposes a three-year statute of limitations after entry of a judicially approved settlement, during which a party may bring a contribution action. 42 U.S.C. § 9613(g)(3).

         This case presents three issues of first impression in our circuit. First, we must decide whether a settlement agreement entered into under an authority other than CERCLA may give rise to a CERCLA contribution action. Second, we must decide whether a "corrective measure" under a different environmental statute, the Resource Conservation and Recovery Act ("RCRA"), qualifies as a "response" action under CERCLA. And third, we must decide what it means for a party to "resolve[] its liability" in a settlement agreement-a prerequisite to bringing a § 113(f)(3)(B) contribution action. Our answers to these legal questions guide our inquiry into whether a 1998 settlement agreement under RCRA (the "1998 RCRA Decree") between Appellant Asarco LLC ("Asarco") and the United States, which was approved and entered by a federal district court, triggered the three-year statute of limitations for Asarco to bring a § 113(f)(3)(B) contribution action.

         In this contribution action against Appellee Atlantic Richfield Company ("Atlantic Richfield"), the district court answered the first two questions in the affirmative but did not address the third. On Atlantic Richfield's motion for summary judgment, the district court concluded that Asarco's action accrued with entry of the 1998 RCRA Decree. Because Asarco brought its action in 2012-well beyond the three-year statute of limitations under CERCLA-the district court determined that its claim was time-barred.

         We agree with the district court on the first two issues but, as to the third, conclude that Asarco did not "resolve[] its liability" under the 1998 RCRA Decree. Asarco therefore could not have brought its contribution action in 1998, and the statute of limitations did not begin to run with entry of the 1998 RCRA Decree. By contrast, a later, 2009 agreement, on which Asarco bases its present contribution action, did resolve Asarco's liability. And because Asarco filed that action within the three-year limitations period measured against entry of the 2009 agreement, it is also timely. The district court therefore erred in dismissing Asarco's action on statute of limitations grounds. Accordingly, we vacate the district court's judgment and remand for further proceedings to determine whether Asarco is entitled to contribution for the response costs it incurred under the 2009 agreement.

         I. Factual Background

         The East Helena Superfund Site (the "Site") is located in and around an industrial area in Lewis and Clark County, Montana. The Site includes the City of East Helena, Asarco's former lead smelter, and a nearby zinc fuming plant that was operated by Atlantic Richfield's predecessor, Anaconda Mining Company ("Anaconda"), and later by Asarco.

         The Site has been a locus of industrial production for more than a century, resulting in decades of hazardous waste releases. The lead smelter, which Asarco operated from 1888 until 2001, discharged toxic compounds into the air, soil, and water, such as lead, arsenic, and other heavy metals. Asarco alleges that the zinc fuming plant, which Anaconda operated from 1927 to 1972, also contributed to the contamination. Asarco purchased the zinc fuming plant in 1972 and apparently ceased operations in 1982.[1] In 1984, the United States Environmental Protection Agency ("EPA") added the Site to the National Priorities List under CERCLA.

         In the late 1980s, EPA identified Asarco and Anaconda as potentially responsible parties ("PRPs") under CERCLA, meaning-in CERCLA vernacular-that they bore at least some responsibility for the contamination. See 42 U.S.C. § 9607(a). EPA sought remedial action only from Asarco, which resulted in three CERCLA settlements between Asarco and the United States in the late 1980s and early 1990s. Those early settlements are not at issue in this litigation.

         In 1998, the United States brought claims against Asarco for civil penalties and injunctive relief under RCRA and the Clean Water Act ("CWA"). The complaint alleged that Asarco had illegally disposed of hazardous waste at the Site, and sought an order requiring Asarco to, inter alia, "conduct corrective action pursuant to Section 3008(h) of RCRA, 42 U.S.C. § 6928(h) . . . ." A "corrective action" under RCRA is a type of "response measure" necessary to protect human health or the environment, see 42 U.S.C. § 6928(h), and is "designed to clean up contamination, " J. Stanton Curry, James J. Hamula, Todd W. Rallison, The Tug-of-War Between RCRA and CERCLA at Contaminated Hazardous Waste Facilities, 23 Ariz. St. L.J. 359, 369 (1991).

         Asarco settled the case with the United States. The settlement agreement was approved by the federal district court in Montana, and entered on the court's docket as a consent decree. The 1998 RCRA Decree assessed civil penalties against Asarco and also required Asarco to take certain remedial actions to address past violations. Those actions included "[c]orrective [m]easures" to, inter alia, "remediate, control, prevent, or mitigate the release, potential release or movement of hazardous waste or hazardous constituents into the environment or within or from one media to another."

         Despite the 1998 RCRA Decree's lofty goals, Asarco failed to meet its cleanup obligations. Further complicating matters, in 2005 Asarco filed for Chapter 11 bankruptcy protection. The United States and Montana filed proofs of claim in the bankruptcy proceeding asserting joint and several liability claims under CERCLA. On June 5, 2009, the bankruptcy court entered a consent decree under CERCLA (the "CERCLA Decree") between Asarco, the United States, and Montana. The CERCLA Decree established a custodial trust for the Site, and turned over cleanup responsibility to a trustee. As part of the agreement, Asarco paid $99.294 million (plus other expenses), which, inter alia, "fully resolved and satisfied" its obligations under the 1998 RCRA Decree.[2]

          II. Procedural Background

         On June 5, 2012, Asarco brought an action against Atlantic Richfield under CERCLA § 113(f)(3)(B), seeking contribution for its financial liability under the CERCLA Decree. Atlantic Richfield filed a motion for summary judgment, arguing that Asarco's action was untimely because the three-year statute of limitations under § 113 began running with the 1998 RCRA Decree. Asarco countered that "RCRA, a statute that does not authorize contribution claims, [cannot] trigger the limitations period under another law, CERCLA." Asarco also argued that the CERCLA Decree created "new" and "different" work obligations from the 1998 RCRA Decree, thereby triggering a new statute of limitations period for at least the costs associated with those new obligations.

         The district court granted summary judgment for Atlantic Richfield and dismissed the case. It concluded that the plain language of CERCLA § 113(f)(3)(B) requires only that a settlement agreement address a "response action, " not that it be entered into under CERCLA. The court also determined that Asarco had incurred response costs under the 1998 RCRA Decree, and therefore held that the 1998 RCRA Decree provided the necessary predicate for a CERCLA contribution action. Finally, the court rejected Asarco's argument that the CERCLA Decree contained matters not addressed by the 1998 RCRA Decree. Accordingly, it held that the CERCLA Decree did not reset the statute of limitations for any response costs incurred under that agreement, and deemed Asarco's claim for contribution untimely. Asarco appealed.

          III. Statutory Context

         Congress enacted CERCLA in 1980 with two goals in mind: (i) to encourage the "'expeditious and efficient cleanup of hazardous waste sites, '" and (ii) to ensure that those responsible for hazardous waste contamination pay for the cleanup. Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 880 (9th Cir. 2001) (en banc) (quoting Pritkin v. Dep't of Energy, 254 F.3d 791, 795 (9th Cir. 2001)); see S. Rep. No. 96-848, at 13 (1980). Hazardous waste sites- also known as Superfund sites-contain toxic substances often deposited by multiple entities. See 42 U.S.C. § 9607(a)(1)-(4). In order to spread responsibility among those entities, Congress included a provision in CERCLA providing for reimbursement of costs incurred by the government or a liable PRP. Section 107(a) provides a cause of action for a "cost recovery" claim against PRPs for a wide range of expenses, including "'any . . . necessary costs of response incurred'" that result from a release of a hazardous substance. Whittaker Corp. v. United States, 825 F.3d 1002, 1006 (9th Cir. 2016) (quoting 42 U.S.C. § 9607(a)).

         "Response" is a term of art under CERCLA and means "remove, removal, remedy, and remedial action." 42 U.S.C. § 9601(25). Congress even gave those defining terms their own definitions. A "removal" means, inter alia, "the cleanup or removal of released[3] hazardous substances from the environment" and any actions that may be necessary "in the event of the threat of release of hazardous substances into the environment." Id. § 9601(23). A "remedial action" means, inter alia, "actions consistent with permanent remedy taken instead of or in addition to removal actions . . . 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. § 9601(24). Put simply, a "response action" covers a broad array of cleanup activities.

         Section 107(a) is limited to recovery of response costs the suing PRP itself directly incurred. See Atl. Research, 551 U.S. at 139 ("[Section] 107(a) permits recovery of cleanup costs but does not create a right to contribution."). At the time of enactment, CERCLA included no express right to contribution for a PRP that did not itself incur response costs, but that reimbursed another party that did incur response costs. See Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 162 (2004). Such a situation arises under two circumstances: (i) where the PRP is the defendant in a CERCLA § 106 or § 107(a) action and a money judgment issues against it; or, as with the CERCLA Decree in the matter before us, (ii) where the PRP pays the United States' or a State's response costs pursuant to a settlement agreement. See id. at 160-61; Atl. Research, 551 U.S. at 138-39; Whittaker, 825 F.3d at 1006-07.

         Congress added an express right to contribution with the Superfund Amendments and Reauthorization Act of 1986 ("1986 CERCLA Amendments"), Pub. L. No. 99-499, to address these two circumstances. See Atl. Research, 551 U.S. at 132. Section 113(f)(1) captures the first, and provides that "[a]ny person may seek contribution from any other person who is liable or potentially liable under [§ 107(a)] of this title, during or following any civil action . . . under [§ 106 or § 107(a)] of this title." 42 U.S.C. § 9613(f)(1). Section 113(f)(1) is not at issue in the instant matter, but, as discussed infra in Part IV.A, it is relevant to resolving the first issue we must decide: whether the 1998 RCRA Decree may give rise to a CERCLA contribution action. Section 113(f)(3)(B), which is directly at issue, captures the second scenario, and provides that

[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 [that immunizes such person from a contribution action].

Id. § 9613(f)(3)(B). In other words, "a PRP that pays money to satisfy a settlement agreement or a court judgment may pursue § 113(f) contribution." Atl. Research, 551 U.S. at 139; see Cooper, 543 U.S. at 163, 167 (recognizing that § 113(f)(1) and § 113(f)(3)(B) set forth separate rights of contribution).

         While § 107(a) cost recovery actions and § 113(f) contribution actions offer "complementary yet distinct" remedies, there is overlap between them. Atl. Research, 551 U.S. at 138, 139 n.6. For example, a PRP may undertake its own response actions pursuant to a settlement agreement with the government. See id. That PRP will have incurred its own response costs, meaning it is eligible for cost recovery under § 107(a), but it has also settled with the government, giving rise to a contribution action under § 113(f)(3)(B). The question is whether both or only one of these avenues of relief is available. Our circuit, and "every federal court of appeals to have considered the question since Atlantic Research, " has concluded that "a party who may bring a contribution action for certain expenses must use the contribution action [under § 113(f)(3)(B)], even if a cost recovery action [under § 107(a)] would otherwise be available." Whittaker, 825 F.3d at 1007 (emphasis in original); see, e.g., Bernstein v. Bankert, 733 F.3d 190, 206 (7th Cir. 2013) (party may not pursue cost recovery claim where a contribution claim is available); Solutia, Inc. v. McWane, Inc., 672 F.3d 1230, 1236-37 (11th Cir. 2012) (same); Morrison Enters., LLC v. Dravo Corp., 638 F.3d 594, 603-04 (8th Cir. 2011) (same); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 602 F.3d 204, 229 (3d Cir. 2010) (same); Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 128 (2d Cir. 2010) (same); ITT Indus., Inc. v. BorgWarner, Inc., 506 F.3d 452, 458 (6th Cir. 2007) (same). Thus, a PRP that incurs its own response costs pursuant to a settlement agreement may only bring a claim for contribution.

         Sections 107(a) and 113(f) have different statutes of limitations periods. An action for "recovery of . . . costs" under § 107(a) "must be commenced . . . within 6 years after initiation of physical on-site construction of the remedial action" or "within 3 years after the completion of the removal action." 42 U.S.C. § 9613(g)(2)(A), (B). An action for contribution of "response costs or damages" under § 113(f), by contrast, "may be commenced" no more than "3 years after . . . the date of . . . entry of a judicially approved settlement with respect to such costs or damages." Id. § 9613(g)(3)(B).[4] The shorter three-year limitations period for contribution actions is intended "to ensure that the responsible parties get to the bargaining-and clean-up- table sooner rather than later." RSR Corp. v. Commercial Metals Co., 496 F.3d 552, 559 (6th Cir. 2007); see Whittaker, 825 F.3d at 1013 (Owens, J., concurring in part) (observing that § 113(f) was intended to "'bring[] all such responsible parties to the bargaining table at an early date'" (quoting H.R. Rep. (Energy and Commerce Committee) No. 99-253, pt. 1, at 80 (1985), [5] reprinted in 1986 U.S.C.C.A.N. 2835, 2862)).

         IV. Discussion

         Asarco's action is untimely if it could have brought a contribution action after judicial approval and entry of the 1998 RCRA Decree. Such would be the case if three conditions are met: (i) a non-CERCLA authority may give rise to a CERCLA contribution action, (ii) Asarco took a response action or incurred response costs under the 1998 RCRA Decree, and (iii) the 1998 RCRA Decree resolved Asarco's liability for at least some of those response actions or costs. The district court analyzed the first two conditions but not the third. We evaluate all three issues.

         Our review of the district court's grant of summary judgment is de novo, as is our review of the court's determination that Asarco's contribution claim under the CERCLA Decree is barred by the statute of limitations. Hernandez v. Space labs Med. Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). Our review of the district court's interpretation of the RCRA and CERCLA Decrees is also de novo, except that we defer to any factual findings unless they are clearly erroneous. City of Emeryville v. Robinson, 621 F.3d 1251, 1261 (9th Cir. 2010).

         A. A Non-CERLCA Settlement Agreement May Form the Basis for a ...


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