On May 25, 2021, the U.S. Supreme Court issued a unanimous opinion in a case addressing whether a settlement agreement resolving Clean Water Act (CWA) liability can ripen a cause of action for contribution action under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund). For companies crafting settlement language related to environmental contamination or preparing to file contribution claims, Guam v. United States provides an important consideration regarding what potential liabilities to include or leave out.
CERCLA allows a party that incurs CERCLA response costs to spread those costs among other potentially responsible parties (PRPs) by bringing either a cost recovery action under Section 107(a) or a contribution action under Section 113(f). Section 113(f)(3)(B) authorizes a contribution claim by parties that have resolved their CERCLA liability to the government via settlement. Such an agreement starts the clock on the settling party’s three-year statute of limitations to file a contribution claim against other PRPs under Section 113(f).
In Guam, the Supreme Court faced the question of whether a settlement agreement resolving environmental liabilities under the CWA could also trigger a party’s right (and, by extension, the limitations period associated with that right) to file a contribution claim under CERCLA. The case involved a dump that the U.S. had used for the disposal of toxic military waste. The U.S. eventually handed over the dump to Guam, which continued to use it. After the handoff, the U.S. Environmental Protection Agency identified contamination coming from the dump, and the U.S. sued Guam, alleging the releases were unauthorized discharges under the CWA. The parties agreed to resolve the CWA claim and entered into a consent decree “in full settlement and satisfaction of the civil judicial clams of the United States … as alleged in the Complaint.” Over a decade later, Guam sued the U.S. under CERCLA Sections 107 and 113. The district court dismissed and the U.S. Court of Appeals for the D.C. Circuit affirmed, holding that Guam could not assert a Section 107 claim because it had a Section 113(f) claim (stemming from the CWA settlement), and claim was time barred given the age of the prior settlement agreement.
The Supreme Court held that the CWA settlement did not trigger Guam’s right to assert a contribution claim against the U.S. While the remedial measures undertaken to address Guam’s CWA liability may have overlapped with an eventual CERCLA response action at the same site, the CWA settlement did not trigger Guam’s 113(f) claim under a plain reading of the statute. The Court explained that (1) Section 113(f) “anticipates a predicate CERCLA liability”; (2) petitioner’s argument that “remedial measures” taken pursuant to the CWA could also be “response actions” under CERCLA stretched the language of Section 113(f) beyond its limits; and (3) the argument that a resolution of CWA liability “resolved” CERCLA liability made no sense when Guam remained vulnerable to a CERCLA lawsuit itself.
This decision suggests but does not hold that any non-CERCLA settlement that is remedial in nature may not be a sufficient basis for asserting a later CERCLA contribution claim — but likewise would not necessarily trigger the CERCLA contribution statute of limitations. Companies preparing settlement language for potential environmental liabilities (or already in CERCLA contribution litigation premised on liabilities under a non-CERCLA settlement) should consider Guam. Although the decision held that Guam’s Section 113(f) claim was not triggered by the CWA settlement agreement at issue in that case, other settlement agreements with broader language could produce a different result.