Allocating The Liability Shares of Settling PRPs Under CERCLA

Allocation of liability under CERCLA can get messy.  One particularly complex issue arises in a private cost recovery action where some but not all the PRPs have settled with the private party.  In contrast to a government cost recovery action, where CERCLA Section 113(f)(2) expressly provides that the response costs sought to be recovered by the government are reduced dollar-for-dollar by any settlement proceeds, CERCLA is silent with respect to the treatment of settlements in private party CERCLA claims.

That issue arose in Ameripride Serv v. Texas Eastern Overseas.  There, the Ninth Circuit held that, where a PRP had incurred cleanup costs and entered into settlements with some but not all of the other PRPs, the correct treatment under CERCLA was not simply to subtract the sums obtained from the settling PRPs from the total costs sought to be recovered.  After discussing the difference between the so-called pro tanto rule (dollar-for-dollar subtraction of settlement receipts) under the Uniform Contribution Among Joint Tortfeasors Act and the proportionate share rule under the Uniform Comparative Fault Act, the court found that federal common law should decide the issue.  According to the court, federal common law at least in California and the rest of the Ninth Circuit requires that the amount to be recovered by the private party should be reduced by the equitable share of each of the settling parties.  In effect, the court transformed the private party cost recovery claim against the settling parties to one for contribution, effectively assigning to the private party the benefit of each settling party’s contribution based on an equitable factor analysis under Section 113(f)(1).  Ultimately, under an equitable factor analysis, a court could select either the pro tanto or proportionate share approach or something different.

The Ninth Circuit’s treatment of the settling PRPs’ share seems sound as far as it goes.  However, the court does not address a more vexing issue.  It turns out that the private party plaintiff,which was itself a PRP, was seeking to recover not only response costs it incurred in cleaning up the contaminated site; that party was also seeking to recover sums it had paid to settle claims by downgradient property owners.  While the private party was entitled to recover its response costs under Section 107(a), it should only have a contribution claim under Section 113(f)(1) with respect to the sums it paid to settle the claims of downgradient property owners (at least to the extent the downgradient owners had incurred response costs).  Whether a PRP can simultaneously pursue CERCLA claims for cost recovery under Section 107(a) for some of its costs and for contribution under Section 113(f)(1) for other of its costs continues to be the subject of differing views.

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