Opinion ID: 791867
Heading Depth: 2
Heading Rank: 3

Heading: Subject Matter Jurisdiction Does Exist Under Section 107(a)

Text: 24 We believe, however, that Con Ed may pursue its suit under section 107(a) because, in light of Cooper Industries, Con Ed's costs to clean up the sites of the Westchester Plants are costs of response within the meaning of that section. 25 After CERCLA's enactment in 1980 but before section 113(f)(1) was enacted, certain courts held that section 107(a) permitted certain private parties that, if sued, would be held liable under section 107(a)—often called potentially responsible persons, or PRPs—to sue other parties to recover response costs incurred voluntarily. 8 See Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 890-92 (9th Cir.1986); Pinole Point Props., Inc. v. Bethlehem Steel Corp., 596 F.Supp. 283, 290-91 (N.D.Cal.1984); City of Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135, 1143 (E.D.Pa.1982). Section 107(a) does not, however, grant to parties against whom liability has been imposed any express right to sue other parties for contribution, which Black's defines as [t]he right that gives one of several persons who are liable on a common debt the ability to recover ratably from each of the others. Black's Law Dictionary 352 (8th ed.2004); see also United Techs. Corp. v. Browning-Ferris Indus., 33 F.3d 96, 99 (1st Cir.1994) (defining contribution as 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.) (internal quotation marks and citation omitted). Despite the omission of express contribution language, certain courts had held, before the enactment of section 113(f)(1), that CERCLA did in fact establish contribution rights. See Sand Springs Home v. Interplastic Corp., 670 F.Supp. 913, 916-17 (N.D.Okla.1987) (holding that a CERCLA contribution right existed as a matter of federal common law); United States v. New Castle County, 642 F.Supp. 1258, 1262-69 (D.Del.1986) (same); United States v. Conservation Chemical Co., 619 F.Supp. 162, 227-29 (W.D.Mo.1985) (holding that a CERCLA contribution right was implied in the statute's language). But see United States v. Westinghouse Elec. Corp., 1983 WL 160587 (S.D.Ind. June 29, 1983), 1983 U.S. Dist. LEXIS 15850, at - (declining to find a CERCLA contribution right). 26 Congress amended CERCLA when it passed SARA in 1986. See generally Pub.L. No. 99-499, 100 Stat. 1613. That legislation enacted section 113(f)(1), which, as described supra, creates an express cause of action for contribution. 42 U.S.C. § 9613(f)(1). 27 After section 113(f)(1)'s enactment, this circuit considered the relationship between section 107(a) and section 113(f)(1) in Bedford Affiliates v. Sills, 156 F.3d 416 (2d Cir.1998). In that case, negotiations between the plaintiff Bedford and the Department had culminated in two consent orders pursuant to which Bedford agreed to clean up contamination at a site it owned. Id. at 421. Bedford then sought recovery in the district court under both section 107(a) and section 113(f)(1). Id. at 422. The district court denied Bedford's section 107(a) claim but ruled that it was entitled to contribution under section 113(f)(1). Id. In equitably apportioning responsibility for the response costs, the district court found that Bedford was liable for five percent of those costs based on its ownership of the contaminated site and was thus limited to recovering only ninety-five percent of what it was seeking. Id. On appeal, Bedford challenged the district court's ruling that it was not entitled to proceed under section 107(a), and, importantly, it argued that it should be able to recover one hundred percent of its costs. Id. at 423. 28 This court observed that [t]o bring a derivative action to recoup the portion of costs exceeding a potentially responsible person's equitable share of the overall liability ... is a quintessential claim for contribution, where a party seeks to apportion liability for an injury for which it is also directly liable. Id. at 424. Concluding that CERCLA § 113(f) plainly governs such contribution actions, this court reasoned that the plaintiff could not pursue a § 107(a) cost recovery claim against [the defendants] due to its status as a potentially responsible person. Id. at 423-24. The court observed that section 113(f)(1) has a three-year statute of limitations, whereas section 107(a) has a six-year statute of limitations, and added that [w]ere we to permit a potentially responsible person to elect recovery under either § 107(a) or § 113(f)(1), § 113(f)(1) would be rendered meaningless, because [a] recovering liable party would readily abandon a § 113(f)(1) suit in favor of the substantially more generous provisions of § 107(a). Id. at 424. Thus, in Bedford Affiliates, the court proceeded to analyze the plaintiff's claim only as one for contribution under section 113(f)(1). Id. at 425, 427-30. 29 Con Ed appears willing to accept that Bedford Affiliates stands for the proposition that section 107(a) may never provide a right of action for a party that, if sued, would be held liable under that section. We disagree, concluding that the facts of Bedford Affiliates differ from the case before us in a significant way. Before we explain that difference—and the reason why we need not revisit Bedford Affiliates 's section 107(a) holding—we lay out our own understanding of how, in light of Cooper Industries, section 107(a) applies to the facts of this case. 30 Following the enactment of section 113(f), some courts concluded that even though any party could seek reimbursement for costs under section 107(a), actions by parties that might themselves be liable under section 107(a) were necessarily actions for contribution, and [were] therefore governed by the mechanisms set forth in § 113(f). Centerior Serv. Co. v. Acme Scrap Iron & Metal Corp., 153 F.3d 344, 350 (6th Cir.1998). See also Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1302 (9th Cir.1997) ([W]hile § 107 created the right of contribution, the `machinery' of § 113 governs and regulates such actions, providing the details and explicit recognition that were missing from the text of § 107.). 31 In Cooper Industries, however, the Supreme Court expressly stated that the section 107(a) cost recovery remedy and the section 113(f)(1) contribution remedy, though similar at a general level in that they both allow private parties to recoup costs from other private parties, are clearly distinct. Id. at 582 n. 3. Moreover, the Court held in Cooper Industries that a section 113(f)(1) action is only available during or following a specified civil action. Cooper Industries, 125 S.Ct. at 583. This holding impels us to conclude that it no longer makes sense to view section 113(f)(1) as the means by which the section 107(a) cost recovery remedy is effected by parties that would themselves be liable if sued under section 107(a). Each of those sections, 107(a) and 113(f)(1), embodies a mechanism for cost recovery available to persons in different procedural circumstances. 32 Given that section 107(a) is distinct and independent from section 113(f)(1), and that section 113(f)(1)'s remedies are not available to a person in the absence of a civil action as specified in that section, determining whether a party in Con Ed's circumstances may sue under section 107(a) is easily resolved based on that section's plain language. Section 107(a) makes parties liable for the government's remedial and removal costs and for any other necessary costs of response incurred by any other person consistent with the national contingency plan. 42 U.S.C. § 9607(a)(4)(B). The only questions we must answer are whether Con Ed is a person and whether it has incurred costs of response. We have no doubt that Con Ed is a person under CERCLA because it is a firm or corporation within the meaning of the act. 42 U.S.C. § 9601(21). Moreover, Con Ed has incurred and is incurring costs of response, in that it is incurring costs of removal and remedial action, § 9601(25), at the sites of the Westchester Plants, and those costs were not imposed on Con Ed as the result of an administrative or court order or judgment. 33 Unlike some other courts, we find no basis for reading into this language a distinction between so-called innocent parties and parties that, if sued, would be held liable under section 107(a). See, e.g., United Techs. Corp., 33 F.3d at 100 ([I]t is sensible to assume that Congress intended only innocent parties—not parties who were themselves liable—to be permitted to recoup the whole of their expenditures.). Section 107(a) makes its cost recovery remedy available, in quite simple language, to any person that has incurred necessary costs of response, and nowhere does the plain language of section 107(a) require that the party seeking necessary costs of response be innocent of wrongdoing. 9 34 Moreover, we believe we would be impermissibly discouraging voluntary cleanup were we to read section 107(a) to preclude parties that, if sued, would be held liable under section 107(a) from recovering necessary response costs. Were this economic disincentive in place, 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 expenditures in the absence of a suit. See Syms v. Olin Corp., 408 F.3d 95, 106 n. 8 (2d Cir.2005) (observing that the combination of Cooper Industries and Bedford Affiliates ... would create a perverse incentive for PRPs to wait until they are sued before incurring response costs). 10 This would undercut one of CERCLA's main goals, `encourag[ing] private parties to assume the financial responsibility of cleanup by allowing them to seek recovery from others.' Key Tronic Corp. v. United States, 511 U.S. 809, 819 n. 13, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994) (quoting FMC Corp. v. Aero Indus., Inc., 998 F.2d 842, 847 (1993)). 35 For these reasons, we hold that section 107(a) permits a party that has not been sued or made to participate in an administrative proceeding, but that, if sued, would be held liable under section 107(a), to recover necessary response costs incurred voluntarily, not under a court or administrative order or judgment. 11 36 This holding does not require us to revisit Bedford Affiliates because of critical distinctions between that case and this one. 12 37 First, unlike in this case where there has been no adjudication of Con Ed's liability for response costs and no administrative or judicially approved settlement requiring Con Ed to incur those expenses, in Bedford Affiliates, the plaintiff had entered into two consent orders with the Department, pursuant to which the plaintiff began cleanup and remedial action. Bedford Affiliates, 156 F.3d at 421. An administrative consent order is a final agency order which is reviewable as if it were the product of a hearing.' A.R. v. N.Y. City Dep't of Educ., 407 F.3d 65 n. 12 (2d Cir.2005) (quoting 2 Charles H. Koch, Jr., Administrative Law and Practice § 5.43, at 155 (2d ed.1997)). 38 It may be that when a party expends funds for cleanup solely due to the imposition of liability through a final administrative order, it has not, in fact, incurred necessary costs of response within the meaning of section 107(a). As the District Court for the Middle District of North Carolina stated in United States v. Taylor, 909 F.Supp. 355 (M.D.N.C.1995), when a party does not conduct its own cleanup, it has not incurred recovery costs. Id. at 365. If a party expends funds out of obligation under an administrative or court order or final judgment, its liability may be similar to that of a tort feasor's liability for the doctor's bills of the injured party. Payment by the tort feasor does not mean it has incurred doctor's bills itself. Id.; see Michael V. Hernandez, Cost Recovery or Contribution?: Resolving the Controversy Over CERCLA Claims Brought by Potentially Responsible Parties, 21 Harv. Envtl. L.Rev. 83, 95-97 (1997) (suggesting that section 107(a) does not expressly authorize suits seeking costs of liability imposed in a prior recovery action or settlement). 13 39 Second, the Bedford Affiliates plaintiff, having agreed to the consent order, put the extent of its liability at issue by proceeding to seek recovery under both sections 107(a) and 113(f)(1). As noted, under section 113(f), the district court found that the plaintiff was partially liable for the costs of response. To rule that in those circumstances Bedford could have proceeded under section 107(a) to seek recovery of one hundred percent of the costs, this court would have had to hold in substance that a party already adjudicated liable for a portion of the costs of response under section 113(f)(1) could circumvent that section by recovering under section 107(a) that portion of the costs attributed to it by the adjudication. That is, having found that the district court did not abuse its discretion in attributing to Bedford responsibility for five percent of the necessary response costs, the court did not have to reach the question of whether Bedford could proceed under section 107(a) to recoup those costs. 40 Here, there have been no consent orders and no proceeding apportioning necessary costs of response to Con Ed, and these differences distinguish this case from Bedford Affiliates. In sum, we read Bedford Affiliates to hold that a party that has incurred or is incurring expenditures under a consent order with a government agency and has been found partially liable under section 113(f)(1) may not seek to recoup those expenditures under section 107(a). Our holding here—that a party that has not been sued or made to participate in an administrative proceeding, but, if sued, would itself be liable under section 107(a), may still recover necessary response costs incurred voluntarily, not under a court or administrative order or judgment—does not conflict with Bedford Affiliates. 41 We are, of course, cognizant that the Supreme Court in Cooper Industries declined to resolve whether a party that would itself be liable under section 107(a) may bring a section 107(a) cost recovery action. See Cooper Industries, 125 S.Ct. at 584. But see id. at 588 (Ginsburg, J., dissenting) (urging the court to permit such parties to proceed under section 107(a)). This fact does not weigh on one side or the other in our analysis here. In justifying its refusal to resolve the question, the Court cited a long list of circuit court cases—including Bedford Affiliates —stating that so-called PRPs could not pursue a section 107(a) action. See id. at 585. All but one of those cases are inapposite for the reason described supra: they considered plaintiffs that had either been held liable—or, because they had been sued, might imminently be held liable—under an administrative or court order or judgment. See Centerior Serv., 153 F.3d at 346 (stating that the EPA issued a unilateral Administrative Order to the plaintiffs); Pneumo Abex Corp. v. High Point, Thomasville & Denton R.R., 142 F.3d 769, 773 (4th Cir.1998) (stating that the plaintiff began response activities at the site pursuant to state and federal EPA orders); New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1119 (3d Cir.1997) (stating that the United States had filed suit against the plaintiff); Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1495 (11th Cir.1996) (stating that the plaintiff had entered into two consent orders with the EPA); United States v. Colorado & E. R.R. Co., 50 F.3d 1530, 1533 (10th Cir.1995) (stating that the party seeking to assert section 107(a) claims against third-party defendants had been sued by the EPA); United Techs. Corp. v. Browning-Ferris Inc., 1993 WL 660007 (D.Me. May 27, 1993), 1993 U.S. Dist. LEXIS 19160, at - (stating that the United States had filed a civil action under CERCLA against a predecessor of the plaintiff in United Technologies Corp. v. Browning-Ferris Industries, Inc., 33 F.3d 96 (1st Cir.1994), another case cited by the Supreme Court in Cooper Industries ). The only other case cited in this vein in Cooper Industries is Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298 (9th Cir.1997). We simply and respectfully disagree with the Ninth Circuit's holding in Pinal Creek that a party that has incurred response costs voluntarily and, if sued, would be held liable under section 107(a), may only bring a contribution claim governed by section 113(f)(1). See id. at 1301-06. In particular, Cooper Industries is at odds with Pinal Creek Group 's view that while § 107 created the right of contribution, the `machinery' of § 113 governs and regulates such actions, providing the details and explicit recognition that were missing from the text of § 107. Id. at 1302. According to Cooper Industries, the two remedies are clearly distinct. 125 S.Ct. at 582 n. 3. 42 Consequently, we conclude that a party in Con Ed's circumstances may pursue a cost recovery action under section 107(a). 43