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By Allison A. Torrence
The U.S. Supreme Court has denied cert in the widely-followed case of Bernstein v. Bankert, No. 13-568, [enhanced version available to lexis.com subscribers], declining to review the Seventh Circuit's ruling on the availability of CERCLA cost recovery and contribution actions following entry of an Administrative Order on Consent ("AOC") with U.S. EPA. The Seventh Circuit originally ruled on this case on December 19, 2012, [enhanced version available to lexis.com subscribers], and then issued an Amended Opinion on July 31, 2013, [enhanced version available to lexis.com subscribers], in order to clarify its opinion. As discussed previously in this blog, the Seventh Circuit addressed, among other things, the circumstances in which a plaintiff can bring a contribution claim under section 113 of CERCLA [enhanced version available to lexis.com subscribers] verses a cost recovery claim under section 107 of CERCLA [enhanced version available to lexis.com subscribers]. The Seventh Circuit held that the plaintiff did not have a contribution claim under section 113 of CERCLA because the AOC at issue did not resolve the plaintiff's liability until the remediation work was completed and the covenant not to sue from U.S. EPA was effective (which had not yet occurred). Because the plaintiff did not have a CERCLA 113 claim, the court held that it could pursue a cost recovery claim under section 107 of CERCLA. The court's amended opinion explained that although the AOC in the Bernstein case did not trigger contribution rights because the covenant not to sue was not effective until remedial work was completed, U.S. EPA can enter into settlement agreements with future parties that contain an immediately-effective release from U.S. EPA, in which case, the party will have resolved its liability and could seek contribution under section 113 of CERCLA.
Now that the U.S. Supreme Court has denied cert, Bernstein is the law in the Seventh Circuit. When a party to a CERCLA AOC with U.S. EPA seeks to recover the costs it has incurred under that AOC, trial courts in the Seventh Circuit will have to closely evaluate the terms of the AOC to determine what type of CERCLA claim can be brought. If the AOC does not have an immediately-effective release from U.S. EPA, the courts will likely find that contribution is not ripe, and that the party to the AOC should instead bring a section 107 cost recovery action.
To date, no other circuit court has taken a position similar to the Seventh Circuit. However, federal courts across the county continue to see numerous CERCLA cases and other circuit courts will likely be called on to address issues similar to those in Bernstein in the near future. Litigants will continue to challenge the boundaries and intersection of CERCLA 107 and 113 claims, and these issues may very well be back before the Supreme Court before long.
By Allison Torrence, Associate, Jenner & Block
Read more at Corporate Environmental Lawyer Blog by Jenner & Block LLP.
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