Last month in Atlantic Richfield Company v. NL Industries, the Tenth Circuit Court of Appeals held that plaintiff Atlantic Richfield’s action under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) was timely, reversing the District Court’s determination applying the statute of limitations for cost recovery actions and granting summary judgment to the defendant NL Industries entities on that basis.

The contamination at issue came from sulfuric acid related to mining operations which leaked into a nearby river.  Over many years, mine owners prior to plaintiff—and then plaintiff—built sludge ponds in order to try to contain the sulfuric acid.  These efforts were not wholly successful, and, in 2011, EPA ordered plaintiff to build water treatment systems to address the contamination, and plaintiff spent several million dollars doing so.  In 2021, plaintiff settled with EPA, agreeing to continue to address the leaking sulfuric acid and to pay a lump sump to EPA.  Approximately half a year later, plaintiff initiated the instant case, seeking contribution from defendants for the clean-up costs it had just settled with the Agency.  The district court held plaintiff’s claim was for cost recovery and was time-barred.

On appeal, the Tenth Circuit’s analysis of the issue took place in two parts.  First, it reviewed the nature of the cause of action brought by plaintiff and determined it was a contribution claim.  In doing so, it overruled its 1997 opinion Sun Company, Inc. v. Browning-Ferris, Inc., 124 F.3d 1187.  In Sun Company, it characterized “the contribution action as a type of cost-recovery action” and applied the statute of limitations for cost-recovery.  124 F.3d at 1191–92.  Since that decision, however, the Supreme Court clarified in Cooper Industries, Inc. v. Availl Services, Inc. that cost recovery and contribution actions are distinct.  543 U.S. 157, 163 n.3 (2004).  In light of Availl, viewing “a contribution action as a subset of a cost-recovery action” was no longer possible—the Supreme Court had “unambiguously abrogated” Sun Company’s reasoning.

Having firmly determined that plaintiff’s claim was a distinct cause of action for contribution, the Tenth Circuit proceeded to the second step of its analysis—identifying the appropriate statute of limitations.  It concluded that because plaintiff’s claim seeks “contribution based on a settlement approved by an administrative agency (the EPA) . . . [the] suit involves contribution under § 113(f)(3)(B).”  In doing so, the Tenth Circuit rejected arguments by defendants that plaintiff was “gaming the system” by seeking costs now through its contribution claims that it previously tried to recoup from defendants.  Specifically, plaintiff had sent demand letters to defendants many years prior and had instituted a cost recovery action against defendants for the same costs in 2020, before plaintiff inked its settlement with EPA in 2021.  The Court perceived no issue, noting that the terms of the settlement agreement “changed the nature of the claim, foreclosing relief for cost recovery and triggering a right to seek contribution.”  

The Court turned to the statutory period of limitations for contribution actions, § 113(g)(3), but found that none of the contribution claims described in its subcategories expressly applied to the contribution action before it.  Agreeing with the parties that a limitations period must apply, the Tenth Circuit determined it must borrow the most closely analogous statute of limitations.  It held—consistent with other Circuits—that borrowing CERCLA’s statute of limitations in § 113(g)(3) for any contribution action is appropriate given the nature of the action and congressional design.  Applying the three-year period, plaintiff’s action brought within one year of settlement with EPA was timely.  

The decision counsels that characterization of claims under CERCLA is critical for their success and potentially offers a pathway to recover costs that might otherwise be time-barred—settlement on the right terms with the EPA. 

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