Cost Recovery or Contribution?: An overview and Resolution of the Controversy Surrounding Private PRP Standing Under CERCLA Sections 107(a)(4)(B) and 113(f)(1)

By Alan Hanson

This note discusses the confusion created by the 1986 CERCLA amendments with respect to the doctrine of environmental remediation liability and proposes statutory amendments to resolve this confusion. The note describes the dichotomy created with the establishment of section 113(f)(1) in the 1986 amendments which allows for the recovery of contributions by a remediating potentially responsible party (PRP) from other PRPs, as related to the already established section 107 cost recovery provisions. As a result of this confusion, it is no longer clear to what extent section 107 cost recovery actions continue to be available to PRPs who have undertaken site remediation or whether section 113 actions act to the exclusion of PRP cost recovery actions under 107. The author reviews the current case law on whether PRPs who have expended funds may bring cost recovery actions under section 107 or must seek contribution under section 113. The case law indicates that the courts are split, although the current trend in the case law would appear to allow remediating PRPs to recover from other PRPs only through contribution actions.

The author notes that section 107 cost recovery provisions are more advantageous for remediating plaintiffs, while non-remediating defendants will seek to limit the scope of their liability by restricting such plaintiffs to actions for contribution under section 113. The author concludes, however, that denying all private PRPs section 107 standing would undermine CERCLA's goal of prompt cleanup by removing incentives for PRPs to promptly settle their liability with the government and remediate. Similarly, granting section 107 standing to all private PRPs would undermine CERCLA's goal of promoting voluntary settlement, in that it would render section 113(f)(2)'s contribution protection meaningless. For this reason, the author recommends judicial resolution whereby section 107 would be interpreted as applying only to those parties that undertake site remediation activities, thereby incurring direct cleanup costs. This approach would thus recognize that section 107 and section 113 each serve distinct purposes. However, the author ultimately recommends that Congress amend CERCLA in order to clarify a remediating PRP's standing under both sections 107 and 113, since no judicial resolution appears forthcoming the foreseeable future.