Thoughts on Oral Argument in U.S. v. Atlantic Research

The following entry is by Sarah Rispin, an associate in Akin Gump’s DC office who participated in this case as counsel for the United Conference of Mayors, which submitted an amicus brief supporting respondent. Her preview of this can be found here.

The Court heard argument on Monday in United States v. Atlantic Research, the second of two highly anticipated environmental cases this term (after Massachusetts v. EPA). The issue presented was whether Section 107(a) of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) provides a right of contribution to land owners who remediate contaminated land before they are the subject of a federal or state enforcement action. (The Court had interpreted the right of contribution from section 113(f) to be so limited two terms ago, in Cooper Services v. Aviall Systems.) Deputy Solicitor General Thomas Hungar argued for the United States, Thomas Armstrong of Von Briesen & Roper argued on behalf of Atlantic Research, and Washington State Deputy Solicitor General Jay Geck argued on behalf of Washington, forty additional states, Washington D.C., and Puerto Rico, who had filed as amici.

As in the briefs, argument centered on the liability provisions of Section 107, from which a contribution right has been implied (although it is not explicit). That section provides that potentially responsible parties (PRPs) shall be responsible for: “all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan; [and] any other necessary costs of response incurred by any other person consistent with the national contingency plan[.]”

Prior to this case, most courts have interpreted Section 107 to imply a cause of action on the part of PRPs that undertake cleanups by making other PRPs liable for “any other necessary costs of response incurred by any other person.” The United States argued that “any other person” was limited to innocent parties — i.e. persons besides PRPs. Justice Souter expressed his doubts, wondering aloud “who’s going to bring these actions” other than “owners of the land now”? Cities that undertake clean-up actions of their own accord might, Mr. Hungar suggested, bring such actions. Justice Souter was puzzled by this response, noting that the Court had previously held (in Key Tronic Corp. v. United States), that Section 107(a) supplied a cause of action to private parties, and “we wouldn’t normally refer to [cities] as private parties.” Mr. Hungar then suggested other possible innocent parties, such as bona fide purchasers or parties to whose land contamination had leaked. Justice Souter remained skeptical, asking how that would work: “[W]ould we [first] have a collateral trial on the innocent party defense in the cause of action for reimbursement?” Stepping back, Chief Justice Roberts observed that “it just seems that the most natural reading of that construction is that ‘other’ refers to other than the United States or an Indian tribe.”

Justice Breyer asked Mr. Hungar, “How will the sky fall if in fact [Atlantic Research] win[s] and [PRPs] bring suits under [Section] 107?” Mr. Hungar expressed concern that PRPs would use Section 107 to evade the settlement bar in Section 113 — which, he argued, was structured to push PRPs toward settlement to be able to take advantage of its contribution provisions.

Justice Ginsburg then pushed the discussion into the realm of the pragmatic, asking, in effect, who will bring all the enforcement actions and seek settlement with PRPs? In response to Mr. Hungar’s suggestion that the States could bring the enforcement actions, Justice Ginsburg noted that “we have a brief from the States telling us that look, we don’t want to put our money into that kind of thing. We’ve got very high-risk sites and we want to spend our resources making sure those are cleaned up.”

Mr. Hungar’s answers did not seem to satisfy Justice Ginsburg, so she went on to raise a point earlier broached briefly by Justice Breyer: “[T]he United States [which] is a big polluter could avoid its own responsibility by not bringing any enforcement action and by not settling.” Mr. Hungar contended that as the chief enforcer of CERCLA, EPA could bring enforcement actions against the federal government. Justice Souter pressed him on this point, ultimately getting Mr. Hungar to admit that EPA would not sue another agency, “because in our view EPA can’t sue the United States.” Mr. Hungar contended, however, that EPA would seek settlement with the private PRPs, at which point they could seek contribution from the federal government under Section 113.

Justice Breyer, still looking for Chicken Little, asked Mr. Hungar again how the sky would fall if Atlantic Research prevailed. And Mr. Hungar again noted that PRPs would lose their incentive to settle under Section 113(f)’s settlement bar. Chief Justice Roberts expressed his doubts about even that eventuality, positing that the settlement bar would also cover parties that settled under Section 107.

Chief Justice Roberts then circled back to Justice Souter’s earlier concerns. First, he raised the concern that in the innocent-party Section 107(a) actions that Mr. Hungar seemed to envision, the court would first have to determine whether the plaintiff was indeed innocent before the suit could proceed. He also noted that the pool of innocent parties was very small: under CERCLA’s liability provisions, even owners of sites adjacent to contaminated sites, upon whose land contamination leaked, are considered PRPs.

Thomas Armstrong, arguing for Atlantic Research, focused on arguing that Section 113(f)’s settlement bar would also apply to parties that settled under Section 107(a). The Chief Justice and Justices Breyer and Stevens engaged in a somewhat unfruitful discussion with Mr. Armstrong about how this would work in practice. Justice Ginsburg then turned the discussion to “the government’s concern that prenups shouldn’t go unsupervised”–i.e., that if PRPs could clean up and then sue other PRPs for contribution without any federal or state government involvement, the clean-ups might not be optimal. Mr. Armstrong caught this one perfectly, explaining that “in almost every case a PRP is well advised to bring in experts to make sure that the cleanup is consistent with the national contingency plan, because absent that . . . the PRP is not entitled to recover any of its costs.”

Chief Justice Roberts then resumed his quest for the elusive innocent party that might seek to take advantage of Section 107, and asked if there might be white knights, i.e. non-PRPs that went around the country remediating sites and then seeking contribution from the PRPs.

The remainder of Mr. Armstrong’s time was spent in discussions with Justices Ginsburg, Souter, and Scalia about the reasons that Section 113(f)’s settlement bar could be deemed to apply to Section 107, and why, by implication, granting a right of contribution under Section 107 would not eviscerate Section 113(f)’s settlement incentives.

Jay Geck, from the Washington State Attorney General’s office, took up the remainder of the argument time. He was given plenty of lead time to explain why the States believe granting a pre-enforcement contribution right is essential to actually getting contaminated sites cleaned up. Revisiting the debate that Justice Ginsburg and Mr. Hungar had had about States bringing enforcement actions, Justice Scalia asked why the states wouldn’t ” prefer to . . . force people to proceed under [Section] 113, so that [they] would have a . . . hand in deciding how the cleanup should go?” Mr. Geck explained that the states have limited resources, and, perhaps more importantly, noted that the law was uncertain about whether state enforcement actions were sufficient to trigger Section 113(f)’s contribution right. Because, he observed, “[u]ncertainty does not drive settlement,” PRPs might lack any incentive under Section 113(f) to settle with the states.

Mr. Geck expanded further on why granting a Section 107(a) contribution right would not eviscerate Section 113(f)’s provisions encouraging settlement. He argued that one always has a powerful incentive to settle with the federal government, and that PRPs facing a government enforcement action would be unlikely to walk away and commence clean-up for the contribution right granted by Section 107(a). Mr. Geck’s planned argument, as well as a few gentle questions from Justice Scalia on the meaning of Section 113(f)’s savings provision, concluded his argument.

On rebuttal, Mr. Hungar again tried to argue that EPA might bring enforcement actions against other federal agencies–not suits per se, but unilateral administrative orders. Justice Scalia began to show his colors, jumping in to point out that, based on Mr. Armstrong’s and Mr. Geck’s arguments, it did not really seem like granting a Section 107(a) contribution right would eviscerate Section 113(f)’s settlement incentives.

Justice Scalia then asked Mr. Hungar “what [other] argument would you make for having us read the word ‘other’ in the what seems to me strange way you want?” When Mr. Hungar then tried to argue that the settlement bar did not cover Section 107(a) settlements, and that the Court would have to import it into that provision, Justice Scalia responded, in essence, that in his view it already had been based on its introduction in Section 113(f) in light of the already extant Section 107(a). Further, he noted, prior to Section 113(f)’s introduction in 1986, the government’s “best argument”–i.e. that Section 107(a) should not be interpreted to grant a contribution right so as to save the settlement bar in Section 113(f)–”would not have been available.”

At the end of argument, then, it seemed clear that Chief Justice Roberts and Justices Ginsburg, Souter, Stevens, Breyer, and Scalia were inclined to rule for Atlantic Research. It became obvious that the government’s interpretation was a stretch: the class of hypothetical parties that could use Section 107(a) under its interpretation was diminishingly small, the states could not be counted on to spur clean-ups, and the settlement bar of Section 113(f) would not be eviscerated as the government warned.

An opinion in United States v. Atlantic Research is expected by the end of the Court’s Term in late June.