The Ninth Circuit Holds That Potentially Responsible Parties May Seek Cost Recovery Under Section 107(a) of CERCLA (Kotrous v. Bayer CropScience, Inc., et al.)

April 21, 2008

On April 17, 2008, the United States Court of Appeals for the Ninth Circuit issued its opinion in Kotrous v. Bayer CropScience, Inc., et al., No. 06-15162, holding that a potentially responsible party (“PRP”) may bring an action for cost recovery under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9607(a). In so doing, the three-judge panel held that the Supreme Court’s recent decision in United States v. Atlantic Research Corp., 127 S. Ct. 2331 (2007), overruled the Ninth Circuit’s opinion in Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298 (9th Cir. 1997). This continues the restructuring of CERCLA claims that began in 2004 with the Supreme Court’s decision in Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004), and brings substantial clarity to the nature of these claims in the Ninth Circuit. 

After Kotrous, the legal structure for CERCLA claims in the Ninth Circuit is as follows: 

• Parties that are themselves the target of a civil action brought under Sections 106 or 107(a) of CERCLA may bring an action for contribution under Section 113(f) of CERCLA. 
• Similarly, parties that have resolved their CERCLA liability pursuant to Section 113(f)(3)(B) of CERCLA may also bring an action for contribution. 
• Parties that have incurred response costs may bring an action for cost recovery under Section 107(a) of CERCLA. 

For parties considering new CERCLA claims in the Ninth Circuit, Kotrous clears what had been a minefield of conflicting precedent, and brings the Ninth Circuit in line with the statutory text and the Supreme Court. 

For parties with pending CERCLA actions under either Section 107(a) or 113(f), however, it may be advisable to engage in motions practice or to seek leave to amend complaints, as claims structured in light of Pinal Creek and Cooper may contain language inconsistent with the new regime. Furthermore, a question expressly left open in Kotrous may be at issue for some existing CERCLA claims: whether Section 107(a) contains an implied right to contribution. This interpretation, which initially arose as a means of providing for contribution claims before Section 113(f) was enacted, has recently been employed as a means of seeking to thread the needle created by Pinal Creek and Cooper. New plaintiffs will generally no longer need this interpretation, though it may be attractive in specific situations, but existing plaintiffs who have advanced claims based upon it will have to consider if they wish to litigate it further, or attempt to recast their claim as a Kotrous claim for cost recovery under Section 107(a). Such plaintiffs should note that the Kotrous court expressly directed the district courts in the combined cases that the plaintiffs should be granted leave to amend their complaints as needed. 

Finally, for parties with CERCLA claims outside the Ninth Circuit, Kotrous provides support for similar overruling of circuit court precedent which was inconsistent with Atlantic Research and the statutory structure of CERCLA. 

Kotrous was a consolidated decision covering four separate matters, including Goodrich Corp. v. United States, et al. Gibson Dunn Partner Michael Murphy argued in favor of the result reached by the court on behalf of Goodrich Corp.