Metro Water v. North American Galva

In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 05-3299

METROPOLITAN WATER RECLAMATION

DISTRICT OF GREATER CHICAGO,

Plaintiff-Appellee,

v.

NORTH AMERICAN GALVANIZING &

COATINGS, INCORPORATED,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 03 C 754—James B. Zagel, Judge.

____________

ARGUED JANUARY 20, 2006—DECIDED JANUARY 17, 2007

____________

Before BAUER, FLAUM and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge. Section 107(a) of the Comprehen-

sive Environmental Response, Compensation, and Lia-

bility Act (“CERCLA”), 42 U.S.C. § 9601 et seq., imposes

liability on certain private parties for the cleanup costs

associated with a hazardous waste contamination. In turn,

CERCLA Section 113(f), added by the Superfund Amend-

ments and Reauthorization Act of 1986 (“SARA”), Pub. L.

No. 99-499, 100 Stat. 1613 (1986), allows those responsible

for cleanup costs to bring actions for contribution against

2 No. 05-3299

one another as a means of apportioning fault. Metropolitan

Water Reclamation District of Chicago (“Metropolitan

Water”) has brought this action under both provisions,

seeking to recover cleanup costs that it voluntarily in-

curred in remedying a parcel of property that it has leased

for the past fifty years to Lake River Corporation (“Lake

River”). Lake River’s parent, North American Galvanizing

& Coatings, Inc. (“North American”), moved to dismiss

Metropolitan Water’s complaint for failure to state a claim,

see Fed. R. Civ. P. 12(b)(6). The district court granted the

motion in part, dismissing Metropolitan Water’s § 113(f)

contribution claim, but allowed the § 107(a) claim to go

forward. We have jurisdiction over North American’s

interlocutory appeal from this order, certified under 28

U.S.C. § 1292(b), and for the reasons set forth in the fol-

lowing opinion affirm the judgment of the district court.

I

BACKGROUND

A. Facts

In this appeal from the denial of a motion to dismiss,

we accept as true all well-pleaded allegations in Metropoli-

tan Water’s complaint and draw all reasonable inferences

in its favor. See Cler v. Illinois Educ. Ass’n, 423 F.3d 726, 729

(7th Cir. 2005). The facts of the present dispute concern a

parcel of contaminated property located on South Harlem

Avenue, about one quarter mile north of the Stevenson

Expressway in Forest View, Illinois. Metropolitan Water

owns this property, consisting of approximately fifty

acres. In the late 1940s, it entered into a long-term lease

with the Lake River Corporation, a wholly owned sub-

sidiary of North American. Lake River developed the

No. 05-3299 3

property, constructing a facility to store, mix and package

industrial chemicals for its own use and for the use of its

customers. Lake River’s operations involved accepting,

by truck, barge and rail, large amounts of chemicals that

it then held in above-ground storage tanks located on the

property.

These tanks, according to the complaint, were prone to

leaks. Over the course of Lake River’s tenancy, the tanks

allegedly spilled close to 12,000 gallons of industrial

chemicals into the soil and groundwater. These toxins, the

complaint further alleged, were “hazardous substances,” as

that phrase is defined in CERCLA, see 42 U.S.C. § 9601(11),

and posed an imminent danger to the environment. The

complaint also stated that Metropolitan Water has “in-

curred substantial expenses” investigating, monitoring

and remedying the contaminated portions of its property.

R.9 at 6.

B. District Court Proceedings

In February 2003, Metropolitan Water filed this action

against Lake River to recoup its costs in remedying the

contamination. The original complaint asserted a claim

under CERCLA § 107(a), see 42 U.S.C. § 9607(a), an alterna-

tive claim for contribution under CERCLA § 113(f), see id.

§ 9613(f), and state law claims for nuisance and breach of

contract. Lake River failed to answer the complaint,

resulting in a default judgment that ordered Lake River to

pay approximately $1.8 million in damages to Metropolitan

Water, in addition to future response costs. Metropolitan

Water then amended the complaint to add Lake River’s

parent, North American, as a defendant; the amended

complaint realleged the CERCLA counts and state law

4 No. 05-3299

claims. North American then moved to dismiss under

Federal Rule of Civil Procedure 12(b)(6).

In ruling on North American’s motion, the district court

began by distinguishing the two CERCLA claims being

asserted. The court first described § 107(a)’s liability

provisions as providing an implied cause of action for

cost recovery in cases “where a party is seeking direct

recovery of costs incurred in cleaning up a hazardous

waste site.” R.23 at 3. Section 113(f) claims for contribution,

by contrast, are asserted by “potentially responsible

parties,” or “PRPs,” seeking to apportion damages among

themselves. The court recognized that Metropolitan Water,

because it owned the property during the period of con-

tamination, must be considered a PRP under CERCLA’s

strict liability framework. Normally, the court noted,

PRPs are limited to claims for contribution under § 113(f)

and cannot recoup the full cost of remediation under the

joint and several recovery of § 107(a). The court then

observed that the Supreme Court had held recently in

Cooper Industries v. Aviall Services, Inc., 543 U.S. 157 (2004),

that parties like Metropolitan Water who have com-

menced cleanup voluntarily, rather than being com-

pelled to do so by a civil suit, have no right to contribu-

tion under the plain wording of § 113(f). See 42 U.S.C.

§ 9613(f)(1) (allowing contribution only “during or fol-

lowing any civil action”). The district court held that,

for this subset of PRPs who voluntarily undertake clean-

up, an implied right to contribution under § 107(a) remains

available, notwithstanding their status as strictly liable

parties under the statute. A contrary outcome, the court

reasoned, “would seem to lie contrary to the general

purposes of CERCLA to promote prompt and proper

cleanup of contaminated properties.” R.23 at 7.

No. 05-3299 5

After hearing oral argument from the parties, we invited

the Environmental Protection Agency (“EPA”) to submit

its views as amicus curiae. The EPA accepted our invita-

tion,1 and, with the permission of the court, Lockheed

Martin Corporation also has submitted an amicus curiae

brief. Both Metropolitan Water and North American now

have filed supplemental briefs in response.

II

DISCUSSION

A.

1. CERCLA

In the 1970s and 80s, a number of high-profile environ-

mental disasters, including the “Love Canal” dumping at

Niagara Falls, New York, drew the public’s attention to

the environmental risks and health hazards posed by

improper hazardous waste disposal.2 In response to rising

public concern and the view that “existing law [was]

clearly inadequate to deal with this massive problem,” H.R.

Rep. No. 96-1016, pt. 1, at 22 (1980), as reprinted in 1980

U.S.C.C.A.N 6119, 6120, Congress enacted the CERCLA.

The law’s purpose was twofold. It was intended, for one,

to “establish a comprehensive response and financing

mechanism to abate and control the vast problems associ-

1

The court expresses its thanks to the EPA for its valuable

assistance.

2

For details on the Love Canal site, see A. Theodore Steegmann,

Jr., History of Love Canal and SUNY at Buffalo’s Response: History,

The University Role, and Health Research, 8 Buff Envtl. L.J 173

(2001).

6 No. 05-3299

ated with abandoned and inactive hazardous waste

disposal sites.” H.R. Rep. No. 96-1016, at 1. Second,

CERCLA was meant to shift the costs of cleanup to the

parties responsible for the contamination. See Meghrig v.

KFC Western, Inc., 516 U.S. 479, 483 (1996).

Enforcement of CERCLA rests primarily with the EPA,

and the statute gives the agency a broad range of enforce-

ment options. To implement the statute’s goals at a na-

tional level, the EPA is directed by CERCLA to formulate

a National Contingency Plan outlining specific steps

that parties must take in choosing a remedial action plan

and in cleaning up hazardous waste. See 40 C.F.R. pt. 300.

In addition, for specific sites that the EPA deems an

imminent threat, the agency is authorized to issue an

administrative compliance order or obtain a court injunc-

tion, directing any responsible party to respond to the

contamination. See 42 U.S.C. § 9606(a). Additionally, if

it chooses, the EPA may commence cleanup on its own

using monies from the Hazardous Substances Superfund,

see id. § 9604, a fund established by CERLCA and financed

through a combination of appropriations, EPA fees and

industry taxes. 42 U.S.C. § 9605; United States v. Hercules,

Inc., 247 F.3d 706, 715 (8th Cir. 2001).

After Superfund money has been spent by the EPA,

CERCLA allows the agency to recover its costs from the

responsible parties, who are divided by CERLCA § 107(a)

into the following four statutory categories:

(1) the owner and operator of a vessel or a facility,

(2) any person who at the time of disposal of any

hazardous substance owned or operated any facility

at which such hazardous substances were disposed of,

(3) any person who by contract, agreement, or other-

wise arranged for disposal or treatment, or arranged

No. 05-3299 7

with a transporter for transport for disposal or treat-

ment, of hazardous substances owned or possessed by

such person, by any other party or entity, at any facility

or incineration vessel owned or operated by another

party or entity and containing such hazardous sub-

stances, and

(4) any person who accepts or accepted any hazardous

substances for transport to disposal or treatment

facilities, incineration vessels or sites selected by

such person, from which there is a release, or a threat-

ened release which causes the incurrence of response

costs, of a hazardous substance . . . .

42 U.S.C. § 9607. For these statutorily defined parties, or

PRPs, liability under § 107(a) is strict, joint and several. In

other words, by invoking § 107(a), the EPA may recover

its costs in full from any responsible party, regardless of

that party’s relative fault.3

2. SARA

In the wake of CERCLA’s passage, an important question

emerged: Whether a responsible party, who had been

sued to commence cleanup or repay response costs, may

obtain contribution from other responsible parties. As

originally enacted in 1980, CERCLA did not provide

expressly for a right of contribution. See generally Cooper

Indus., 543 U.S. at 162. Courts filled this vacuum by recog-

nizing an implied right of contribution for PRPs who had

been sued under Section 107(a) and, because of that

3

The only exception to joint liability is when the harm is

divisible, but this is a rare scenario.

8 No. 05-3299

provision’s joint-liability scheme, had been ordered to pay

more than their pro rata share of the cleanup costs. See id.

(citing cases).

In 1986, Congress amended CERCLA by way of SARA to

authorize expressly a contribution action. See SARA, Pub.

L. No. 99-499, 100 Stat. 1613. The provision allowing

for contribution states in relevant part: “Any person may

seek contribution from any other person who is liable or

potentially liable under section 9607(a) of this title, dur-

ing or following any civil action under section 9606 of this

title or under section 9607(a) of this title.” 42 U.S.C.

§ 9613(f)(1). In actions under this provision, the court

allocates costs using equitable principles. Liability is

several, as opposed to Section 107(a)’s joint and several

scheme. In addition, SARA encourages parties to settle

with the government by insulating any party that

settles from being sued in a contribution action. See id.

§ 9613(f)(2).

SARA, in turn, produced its own set of new questions.

Foremost was whether the new, codified right of con-

tribution was now the only cause of action available to a

PRP seeking to recover its cleanup costs. PRPs who had

expended costs in remedying a site or settling liability

understandably wished to seek joint and several cost

recovery under § 107(a). Litigation ensued. Every circuit

to decide the issue held that, after SARA, PRPs were

precluded generally from seeking joint and several cost

recovery under § 107(a), and that any claim seeking to

shift costs from one responsible party to another must be

No. 05-3299 9

brought as a § 113(f) claim for contribution.4 These courts

reasoned that a PRP, by definition, shares in some of the

responsibility for the contamination. Therefore, any ac-

tion by one PRP against another to equitably apportion

liability is a “quintessential claim for contribution” and it

would be unfair to allow a PRP to recover “100 percent of

the response costs from others similarly situated.” Bedford

Affiliates v. Sills, 156 F.3d 416, 424 (2d Cir. 1998). Moreover,

these courts reasoned that permitting a PRP to elect

recovery under § 107(a) would render § 113(f) meaning-

less, as a PRP “would readily abandon a § 113(f)(1) suit

in favor of the substantially more generous provisions of

§ 107(a).” Id. We were among the courts to adopt this

reasoning and held in Akzo Coatings, Inc. v. Aigner Corp., 30

F.3d 761, 764 (7th Cir. 1994), that a claim “by and between

jointly and severally liable parties for an appropriate

division of the payment one of them has been compelled

to make” sounds in contribution, and must be brought

under § 113(f)(1).

3. The Innocent Landowner Exception

CERCLA’s strict liability regime yields a great number

of potentially liable individuals, in large part due to the

4

See Morrison Enters. v. McShares, Inc., 302 F.3d 1127, 1133 (10th

Cir. 2002); Axel Johnson, Inc. v. Carroll Carolina Oil Co., 191 F.3d

409, 415 (4th Cir. 1999); Bedford Affiliates v. Sills, 156 F.3d 416, 424

(2d Cir. 1998); Centerior Serv. Co. v. Acme Scrap Iron & Metal Corp.,

153 F.3d 344, 351 (6th Cir. 1998); Pinal Creek Group v. Newmont

Mining Corp., 118 F.3d 1298, 1301 (9th Cir. 1997); United Techs.

Corp. v. Browning-Ferris Indus. Inc., 33 F.3d 96, 101 (1st Cir. 1994);

New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1122

(3d Cir. 1997).

10 No. 05-3299

practical reality that those truly responsible may not have

the necessary money for the cleanup. For example, an

absentee landowner may be liable under § 107(a) for the

full cost of remedying a hazardous site caused by its

tenant, even if the landowner had no reason to know

that hazardous waste was being stored on its land.5 To

blunt the force of a rule that limits the rights of these

“innocent” parties to contribution under § 113(f), our case

law has developed what is known as the “innocent land-

owner” exception. Under the exception, which originated

in Akzo and was reaffirmed in Rumpke of Indiana, Inc. v.

Cummins Engine Co., Inc., 107 F.3d 1235, 1241 (7th Cir.

1997), a joint and several cost recovery action under Sec-

tion 107(a) remains available to “landowners who allege

that they did not pollute the site in any way.”

In Rumpke, the owner of a dump discovered, some

six years after purchasing the site, that a “cocktail of

hazardous wastes” had been deposited there regularly by

a nearby recycling company. Id. at 1236. Recognizing

that it now owned a veritable environmental disaster,

the dump owner commenced voluntary cleanup and

brought an action for both cost recovery under § 107(a)

and for contribution under § 113(f)(1) against the com-

pany that had arranged the delivery of the toxins. Revers-

ing an entry of summary judgment for the defendants,

we decided that the dump owner, who was strictly liable

5

Section 107(b) provides a limited set of affirmative defenses

for parties who would otherwise be strictly liable. The defenses

require showing that the damage was caused by (1) “an act of

God;” (2) “an act of war;” or (3) an act of a third party who has

no contractual privity to the defendant. Metropolitan Water

has not pleaded any of these affirmative defenses.

No. 05-3299 11

but who had not actually contributed to the hazardous

conditions, could maintain a direct cost recovery claim

under § 107(a). In doing so, we emphasized that the

dump owner had not been the subject of either govern-

mental or private compulsion to initiate cleanup. It under-

took cleanup on its own and, maintaining that it shared

no actual responsibility for the site, was not trying to

divide up its own liability or apportion costs. Therefore,

we held that the claim was not one for contribution that

had to be brought under § 113(f); a full cost recovery

action remained available to the dump owner under

§ 107(a).6

4. Cooper Industries, Inc. v. Aviall Services, Inc.

Recently, the Supreme Court had occasion to discuss the

interplay between sections 107(a) and 113(f), and decided

a key issue concerning the timing of a § 113(f) claim for

contribution. In Cooper Industries, 543 U.S. 157, an owner

and one time operator of several airplane maintenance

sites had sold the properties to another company in the

early 1980s. After operating the sites for a number of

years, the buyer, Aviall Services, discovered that both it

and the seller, Cooper Industries, had contaminated the

6

We imagined in Rumpke that “one of two outcomes would

follow from a landowner suit under § 107(a): either the facts

would establish that the landowner was truly blameless, in

which case the other PRPs would be entitled to bring a suit

under § 113(f) . . ., or the facts would show that the landowner

was also partially responsible, in which case it would not be

entitled to recover under its § 107(a) theory and only the § 113(f)

claim would go forward.” Rumpke of Indiana, Inc. v. Cummins

Engine Co., Inc., 107 F.3d 1235, 1240 (7th Cir. 1997).

12 No. 05-3299

facilities with hazardous substances that had leaked into

the ground from storage containers. Aviall notified Texas

authorities of the contamination, who in turn directed

Aviall to clean up the site. Aviall then commenced cleanup

and, after it had incurred some $5 million in response

costs, brought an action for contribution against Cooper

Industries under CERCLA § 113(f).

The Supreme Court held that § 113(f) did not authorize

Aviall’s suit for contribution. The Court began by noting

that the cost recovery remedy of § 107(a) and the con-

tribution remedy of § 113(f)(1) are “clearly distinct.” Id. at

163 & n.3. The Court then examined the text of § 113(f)(1),

which provides that a claim for contribution may be

brought “during or following any civil action under section

9606 of this title or under section 9607(a) of this title.” 42

U.S.C. § 9613(f)(1). As the Court emphasized, Aviall had

not been the subject of any civil enforcement action, and

its claim based on Section 113(f) therefore was not “during

or following any civil action.” Id. On this basis, the Court

deemed Aviall’s contribution action premature.

Notably, the Court did not rule out the availability of a

§ 107(a) action, observing in dictum that § 113(f)(1) is

not the “exclusive cause of action for contribution avail-

able to a PRP.” Cooper Indus., 543 U.S. at 167. The Court

refused to speculate, however, on the precise nature of

the alternative remedy and decided only the question of

Aviall’s right to a § 113(f) cause of action.7 The limited

7

Justice Ginsburg in dissent, joined by Justice Stevens, argued

that Aviall, despite being a PRP, retained a cause of action

under § 107(a) to recover a proportionate share of its cleanup

costs. In the dissent’s view, the Court should have reached this

(continued...)

No. 05-3299 13

holding of Cooper Industries is that a party first must have

settled its liability with a government entity or been

sued, either for costs under § 107(a) or for compliance

under § 106, before it may look to other responsible

parties for contribution under § 113(f)(1).

B.

We now must decide, in the wake of Cooper Industries,

what rights of action, if any, are available to Metropolitan

Water under CERCLA. It is clear, at the very least, that

Metropolitan Water cannot bring suit under § 113(f)

because it has not been the subject of an action for damages

or compliance under CERCLA.8 This conclusion, as the

district court held, follows from a straightforward applica-

tion of Cooper Industries.9

7

(...continued)

issue, even though Aviall brought its action ostensibly under

§ 113(f). According to the dissent, Aviall’s reliance on § 113(f)

instead of 107(a) was simply an effort to “conform[] its plead-

ing to then-governing Fifth Circuit precedent, which held that

a CERCLA contribution action arises through the joint opera-

tion of § 107(a) and § 113(f)(1).” Cooper Indus., Inc. v. Aviall Servs.,

Inc., 543 U.S. 157, 173 (2004) (Ginsburg, J., dissenting). Acknowl-

edging these arguments, the majority nevertheless declined to

address the issue because it had neither been briefed nor

addressed in the decisions below.

8

Indeed, as far as the limited record indicates, Metropolitan

Water has not come under any governmental scrutiny what-

soever.

9

Remarkably, Metropolitan Water refuses to concede that its

§ 113(f) contribution claim is barred by Cooper Industries. We

must reject this contention because the Supreme Court could

(continued...)

14 No. 05-3299

Metropolitan Water and Lockheed urge us to hold, as the

district court did, that a right of action exists under § 107(a)

for private parties that, although potentially strictly liable

for the costs of cleanup, have voluntary undertaken

remediation and have no right to contribution under

§ 113(f)(1). They invite our attention first to the statutory

text of § 107(a), which they believe authorizes such a

cause of action. The language in focus provides that four

statutorily defined categories of parties “shall be liable

for” the government’s remedial and removal costs, see 42

U.S.C. § 9607(a)(4)(A), and for

(B) any other necessary costs of response incurred by

any other person consistent with the national contin-

gency plan; . . . .

Id. § 9607(a)(4)(B). Metropolitan Water maintains that,

under this provision’s plain wording, the only question is

whether it is a “person” and whether it has incurred

“necessary costs of response.” Id. Undoubtedly, as it

points out, Metropolitan Water is a “person” within the

meaning of CERCLA, which defines that term, inter alia, as

a “firm” or “corporation.” Id. § 9601(21). Moreover, Metro-

politan Water, as its complaint alleges, has incurred costs

of response by taking “remedial action,” to “prevent or

minimize the release of hazardous substances so that they

do not migrate to cause substantial danger to present or

future public health or welfare or the environment.” Id.

9

(...continued)

not have been clearer when it said: “The issue we must decide

is whether a private party who has not been sued under § 106 or

§ 107(a) may nevertheless obtain contribution under § 113(f)(1)

from other liable parties. We hold that it may not.” Cooper Indus.,

543 U.S. at 160-61.

No. 05-3299 15

§ 9601(24). Thus, Metropolitan Water contends, § 107(a)

makes its cost recovery remedy available, in very straight-

forward language, to any person that has incurred neces-

sary costs of response, including PRPs.

North American responds that § 107(a)(4)(B) does

nothing more than spell out the potential liability of

responsible parties and does not create an authorization to

sue. Although § 107(a)(4)(B) includes liability for the

response costs of “any other person,” North American

maintains that this language does not create a cause of action

for “any other person,” particularly for PRPs such as

Metropolitan Water. The EPA agrees that Metropolitan

Water has no cause of action under § 107(a), but inter-

prets § 107(a)(4)(B) in a slightly different manner. Unlike

North American, the EPA acknowledges that the sub-

section creates a cause of action for some private parties.

The agency, however, disagrees with Metropolitan Water

about who specifically is authorized to sue under the

subsection. According to the EPA, the word “other” in the

phrase “any other person” distinguishes those who may

sue for cleanup costs from the four classes of potentially

responsible parties listed earlier in subsections (1) through

(4) of Section 107(a).10 Thus, as the EPA reasons, the phrase

“any other person” refers to a class of individuals who

by definition are not potentially responsible for cleanup

costs. For parties like Metropolitan Water who are poten-

10

As discussed earlier, § 107(a) enumerates four classes of

potentially responsible parties: (1) owners of facilities with

hazardous substances; (2) former owners of facilities with

hazardous substances; (3) generators of hazardous substances;

and (4) transporters of hazardous substances. 42 U.S.C.

§ 9607(a)(1)-(4).

16 No. 05-3299

tially liable for cleanup costs, the EPA submits, their only

cause of action lies in the contribution provisions of

§ 113(f), when available.

Relevant Supreme Court precedent compels us to reject,

at the very least, the view taken by North American that

§ 107(a) does not create a cause of action at all. In Key

Tronic Corp. v. United States, 511 U.S. 809, 818 (1994), the

Supreme Court stated that Ҥ 107 unquestionably pro-

vides a cause of action for private parties to seek recovery

of cleanup costs.” In that case, Key Tronic Corporation,

one of several parties responsible for contaminating a

landfill, settled a lawsuit with the EPA and then brought

an action against the Air Force and several other parties

responsible for the contamination. Key Tronic’s com-

plaint asserted a contribution claim under § 113(f) for

recovery of part of its multi-million dollar commitment

to the EPA. Additionally, Key Tronic advanced a claim

under § 107(a)(4)(B) for the costs that it had incurred

voluntarily before settling with the EPA.

The Supreme Court accepted certiorari only to decide

whether § 107(a) authorized Key Tronic to recover its

attorneys fees. Although the Court held ultimately that

attorneys fees were unavailable, it also undertook a

comprehensive discussion of the rights of action available

under CERCLA. The Court began with the premise that

Ҥ 107 unquestionably provides a cause of action for

private parties to seek recovery of cleanup costs.” Id. at 818.

According to the Court, this right of action was implied

rather than express. As the Court explained, by imposing

liability on responsible parties for costs “incurred by any

other person,” 42 U.S.C. § 9607(a)(4)(B), § 107(a) “im-

plies—but does not expressly command—that [PRPs] may

have a claim for contribution against those treated as

No. 05-3299 17

joint tortfeasors.” Key Tronic Corp., 511 U.S. at 818 n.11.

The Court noted additional support for this reading in

the statute’s multiple references to an “ ‘action . . . under

section [9607(a)(4)(D)].’ ” Id. at 816 (quoting 42 U.S.C.

§ 9613(f)(1) and citing id. § 9607(a)(4)(D)). As for the

interplay between sections 107(a) and 113(f), the Court

observed that, after SARA, “the statute now expressly

authorizes a cause of action for contribution in § 113

and impliedly authorizes a similar and somewhat over-

lapping remedy in § 107.” Key Tronic Corp., 511 U.S. at 816.

The Court’s discussion in Key Tronic therefore dismisses

any notion that § 107(a) does not authorize at least some

parties to sue. Moreover, in Cooper Industries, the Court

reaffirmed Key Tronic’s recognition of a “cost recovery

remedy of § 107(a)(4)(B)” that is “clearly distinct” from

the contribution remedy in Section 113(f)(1). Cooper Indus.,

543 U.S. at 163 n.3.

C.

Despite recognizing an implied cause of action under

§ 107(a), however, these cases appear to leave open the

question we now face of whether § 107(a) authorizes a

cause of action by potentially liable parties in Metropolitan

Water’s situation.11 This precise question has been ad-

11

We recognize that the plaintiff in Key Tronic was, just like

Metropolitan Water, a potentially responsible party who

brought suit under Section 107(a). However, the issue before

the Court in Key Tronic was attorneys’ fees, not the availability

of a right of action under Section 107(a). We therefore cannot

read Key Tronic’s discussion as anything more than the tacit

approval of a PRP’s right of action in these circumstances.

18 No. 05-3299

dressed by three federal courts of appeals in the aftermath

of Cooper Industries.12 In Consolidated Edison Co. of New York,

Inc. v. UGI Utilities, Inc., 423 F.3d 90 (2d Cir. 2005), our

colleagues on the Second Circuit held that parties such as

Metropolitan Water may bring an action under § 107(a) for

response costs incurred voluntarily. Shortly thereafter,

the Court of Appeals for the Eighth Circuit adopted the

reasoning set forth in Consolidated Edison. See Atl. Research

12

Since Cooper Industries, a number of district courts have held

that a PRP, who cannot seek recovery under section 113(f), may

nonetheless bring a cause of action under section 107(a). See

Raytheon Aircraft Co. v. United States, 435 F. Supp. 2d 1136, 1145-

49 (D. Kan. 2006); Seneca Meadows, Inc. v. ECI Liquidating, Inc.,

427 F. Supp. 2d 279, 288-91 (W.D.N.Y. 2006); Sunnyside Dev.

Corp., LLC v. Opsys U.S. Corp., No. 3:05-CV-01447-MHP, 2006

WL 1128039, at *2 (N.D. Cal. April 27, 2006); Ferguson v. Arcata

Redwood Co. LLC, No. 3:03-CV-056352-SI, 2005 WL 1869445 at *6

(N.D. Cal. Aug. 2, 2005); Viacom, Inc. v. United States, 404

F. Supp. 2d 3, 6-9 (D.D.C. 2005); Vine Street LLC v. Keeling, 362

F. Supp. 2d 754, 760-64 (E.D. Tex. 2005). Several district courts

have reached the opposite conclusion, but most did so because

they found themselves bound by pre-Cooper Industries case law

in their circuit. See, e.g., R.E. Goodson Constr. Co. Inc. v. Int’l Paper

Co., No. 4:02-4184-RBH, 2005 WL 2614927, at *5-6, 8 (D. S.C. Oct.

13, 2005); Montville Township v. Woodmont Builders, LLC, No.

03-2680DRD, 2005 WL 2000204, at *3 (D. N.J. Aug. 17, 2005);

Boarhead Farm Agreement Group v. Advanced Envtl. Tech. Corp., 381

F. Supp. 2d 427, 435 (E.D. Pa. 2005); City of Waukesha v. Viacom

Int’l, Inc., 362 F. Supp. 2d 1025 (E.D. Wis. 2005); Mercury Mall

Assocs., Inc., v. Nick’s Mkt., Inc., 368 F. Supp. 2d 513, 519-20 (E.D.

Va. 2005) (following 1998 Fourth Circuit precedent but charac-

terizing the result as “quixotic”). It is unclear what result these

district courts would have reached had they been uncon-

strained by older circuit precedents.

No. 05-3299 19

Corp. v. United States, 459 F.3d 827 (8th Cir. 2006). However,

most recently, a divided panel of the Court of Appeals

for the Third Circuit held that the Supreme Court’s deci-

sion in Cooper Industries did not require it to revisit its prior

holdings that “a PRP seeking to offset its cleanup costs

must invoke contribution under § 113.” E.I. DuPont De

Nemours & Co. v. United States, 460 F.3d 515, 528 (3d Cir.

2006).13 We review these decisions below.

Turning first to the decision of the Second Circuit,

Consolidated Edison sought reimbursement from the

operator of one of its power plants for cleanup costs

that Consolidated Edison had incurred in remedying

hazardous waste contamination. Consolidated Edison’s

complaint asserted claims under both § 107(a) and § 113(f).

The court held first that a § 113(f) claim for contribution

was unavailable under these circumstances because Con-

solidated Edison had not been sued under CERCLA or

resolved CERCLA liability through settlement.

Instead, the court held, Consolidated Edison was entitled

to pursue its action under § 107(a). After reviewing the

statutory scheme and the effect of the Supreme Court’s

decision in Cooper Industries, the Second Circuit concluded

that sections 107(a) and 113(f) each “embod[y] a mecha-

nism for cost recovery available to persons in different

procedural circumstances.” Consol. Edison, 423 F.3d at 99.

For parties that have not been sued or made to participate

in an administrative proceeding, but that “if sued, would

be held liable under section 107(a),” the court held that

§ 107(a) authorizes a suit to recover voluntary response

costs. Id. at 100. In this particular procedural circum-

13

Judge Sloviter filed a dissenting opinion.

20 No. 05-3299

stance, the court noted, a § 113(f) claim for contribution

is unavailable because, as Cooper Industries held, that

claim would not arise “ ’during or following any civil

action,’ ” Cooper Indus., 543 U.S. at 160 (quoting 42 U.S.C.

§ 9613(f)(1)). To preclude these parties also from recover-

ing necessary response costs under § 107(a), the Second

Circuit reasoned, would discourage voluntary cleanup

and thereby undermine a key feature of CERLCA.

Like the Second Circuit, the Eighth Circuit in Atlantic

Research was faced with the following question: “Can one

liable party recover costs advanced, beyond its equitable

share, from another liable party in direct recovery, or by

§ 107 contribution, or as a matter of federal common law?”

459 F.3d at 834. The court answered in the affirmative

and, following the Second Circuit, held “that it no longer

makes sense to view § 113 as a liable party’s exclusive

remedy.” Id. The Eighth Circuit further explained that

“[t]he Supreme Court [had] emphasized that §§ 107 and

113 are ‘distinct.’ ” Id. at 835. “Accordingly,” the court

continued, “it [wa]s no longer appropriate to view § 107’s

remedies exclusively through a § 113 prism,” and it

“reject[ed] an approach which categorically deprive[d] a

liable party of a § 107 remedy.” Id. Like the Second Circuit,

it found “no such limitation in Congress’s words.” Id.14

The Court of Appeals for the Third Circuit, however,

reached a conclusion different from that of the Second and

Eighth Circuits. In E.I. Dupont, the company-plain-

tiff owned property which “was owned or operated by

14

The Eighth Circuit went on to conclude that “the broad

language of § 107 supports not only a right of cost recovery

but also an implied right to contribution.” Atl. Research Corp.

v. United States, 459 F.3d 827, 836 (8th Cir. 2006).

No. 05-3299 21

the United States at various times during World War I,

World War II, and/or the Korean War, during which

time the United States was responsible for some contami-

nation.” E.I DuPont De Nemours, 460 F.3d at 525. The

company had undertaken a voluntary cleanup of one of

the sites, in the absence of a preexisting § 106 or § 107

action, and also in the absence of a § 113(f)(3) settlement,

and later instituted a contribution action against the

United States. The district court rejected the company’s

claim, and the judgment was affirmed by the Third

Circuit. In doing so, the Third Circuit believed that it

was bound by its precedent, which held that “a PRP

seeking to offset its cleanup costs must invoke contribu-

tion under § 113.” Id. at 528. It declined to follow the lead of

the Second Circuit and limit its prior case law “factually to

those circumstances where a PRP has already satisfied the

prerequisites for § 113 contribution set forth in Cooper

Industries.” Id. at 530. The Third Circuit also determined

that nothing in Cooper Industries required it to reevaluate

that precedent: “Cooper Industries did not explicitly or

implicitly overrule our precedents; indeed, the Supreme

Court expressly declined to consider the very questions at

issue here.” Id. at 532. Finally, the court rejected DuPont’s

argument that “in the wake of Cooper Industries, our [prior]

decisions . . . are in direct opposition to CERCLA’s broad

remedial purpose as expressed in its legislative history.” Id.

at 533. The court held that “a thorough review of CERCLA,

as amended by SARA, does not support the conclusion”

that, “because CERCLA’s general goal was to assure

prompt and effective cleanups, and sua sponte cleanups by

PRPs may be prompt and effective, those PRPs must be

able to seek contribution.” Id. at 541. Instead, “Congress in-

tended to allow contribution for settling or sued PRPs as

a way to encourage them to admit their liability, settle

22 No. 05-3299

with the Government, and begin expeditious cleanup

operations pursuant to a consent decree or other agree-

ment.” Id.15

After reviewing the rationales of our sister circuits, we

find ourselves in agreement with the conclusion reached

by the Second and Eighth Circuits, and by Judge Sloviter

in her dissenting opinion in E.I. DuPont. The Supreme

Court’s continued recognition of an implied cause of

action in § 107(a), coupled with that subsection’s plain

language, convince us that Metropolitan Water may sue

under § 107(a) to recover necessary response costs.

Section 107(a) states in relevant part that a responsible

party

(4) . . . shall be liable for—

(A) all costs of removal or remedial action incurred by

the United States Government or a State or an Indian

tribe not inconsistent with the national contingency

plan;

(B) any other necessary costs of response incurred by

any other person consistent with the national contin-

gency plan; . . . .

42 U.S.C. § 9607(a)(4). Nothing in subsection (B) indicates

that a potentially liable party, such as Metropolitan Water,

15

In her dissenting opinion, Judge Sloviter disagreed with the

majority’s conclusion that Cooper Industries did not “weaken[]

the conceptual underpinnings” of the court’s prior case law. E.I.

DuPont de Nemours & Co. v. United States, 460 F.3d 515, 545 (3d

Cir. 2006). She also believed that, in light of Cooper Industries,

the court’s precedent could no longer “be reconciled with

the policies Congress sought to encourage when it enacted

CERCLA.” Id.

No. 05-3299 23

should not be considered “any other person” for purposes

of a right of action.

Certainly, as the EPA points out, the word “other” in that

phrase should be given meaning as a distinguishing term.

Yet, we disagree that the word “other” distinguishes “any

other person” from the four categories of potentially

responsible parties listed earlier in subsections (1) through

(4) of § 107(a). Rather, we read “other” as distinguishing

“any other person” from the “United States Government,”

a “State” or an “Indian tribe,” the parties listed in the

immediately preceding subsection. Id. These parties, as

subsection (A) states, may recover costs “not inconsistent

with the national contingency plan.” Id. § 9607(a)(4)(A)

(emphasis added). By contrast, “any other person” is

limited to recovery of those costs “consistent with the

national contingency plan.” Id. § 9607(a)(4)(B) (emphasis

added). Thus, we read the two subsections, and the

reference to “any other person,” simply as the statute’s

way of relaxing the burden of proof for governmental

entities as opposed to private parties.16

16

Indeed, other circuits have understood this portion of the

statute as distinguishing between the Government’s burden of

proof and that of private citizens. In United States v. E.I. DuPont

de Nemours & Co., 432 F.3d 161, 178 (3d Cir. 2005) (en banc), the

Third Circuit held that, in a suit by a governmental entity

under § 107(a)(4)(A), cleanup costs are presumed consistent

with the national contingency plan, and the burden rests on the

defendant to prove that they are inconsistent. Correspondingly,

in a suit by “any other person” under § 107(a)(4)(B), the burden

rests on the plaintiff to establish that its response costs are

consistent with the national contingency plan. See Carson Harbor

Vill., Ltd. v. County of Los Angeles, 433 F.3d 1260, 1265 (9th Cir.

2006).

24 No. 05-3299

The only remaining questions, then, under § 107(a) are

whether Metropolitan Water is a “person” and whether

it has incurred “necessary costs of response.” Id.

§ 9607(a)(4)(B). Without question, Metropolitan is a

“person” under CERCLA because it is a “firm” or a

“corporation” within the meaning of the act. Id. § 9601(21).

Moreover, the complaint in the present case alleges that

Metropolitan Water incurred “ ‘response’ costs within the

meaning of § 101(25) of CERCLA (42 U.S.C. § 9601(25))

including investigation, monitoring and clean-up costs.”

R.17 at 14. Finally, the allegations in the complaint make

clear that Metropolitan Water neither has settled any

liability with a government entity nor has been the subject

of a CERCLA suit for damages. These allegations ade-

quately plead a cause of action under § 107(a).

Recognizing in § 107(a) a right of action for Metropolitan

Water also appears in line with the explicit savings clause

found in § 113(f)(1). The last sentence of § 113(f)(1) pro-

vides: “Nothing in this subsection shall diminish the right

of any person to bring an action for contribution in the

absence of a civil action under [§ 106] of this title or [§ 107]

of this title.” 42 U.S.C. § 9613(f)(1). As the Supreme Court

stated in Cooper Industries, “the sentence rebuts any pre-

sumption that the express right of contribution provided by

the enabling clause [of § 113(f)] is the exclusive cause of

action for contribution available to a PRP.” Cooper Indus.,

543 U.S. at 166-67.

Our holding today does not require us to revisit our pre-

Cooper Industries decision in Akzo Coatings, in which we

held that a claim “by and between jointly and severally

liable parties for an appropriate division of the payment

one of them has been compelled to make” must be brought

under § 113(f)(1). Akzo Coatings, 30 F.3d at 764. In Akzo, the

No. 05-3299 25

plaintiff, before bringing suit against another PRP, had

been the subject of an EPA administrative order under

§ 106 requiring Akzo Coatings and several other “liable

persons” to conduct certain emergency removal activities.

Id. at 762. Here, by contrast, there has been no EPA order

and no proceeding apportioning necessary costs of re-

sponse to Metropolitan Water. Thus, unlike in Akzo,

Metropolitan Water has not been compelled to initiate

cleanup or repay the EPA, and Metropolitan Water’s

action against North American is not an action “for an

appropriate division of the payment one of them has been

compelled to make.” Id. at 764.17

In addition, we are concerned that prohibiting suit by

a voluntary plaintiff like Metropolitan Water may under-

mine CERCLA’s twin aims of encouraging expeditious,

voluntary environmental cleanups while holding responsi-

ble parties accountable for the response costs that their

past activities induced. As Consolidated Edison, Atlantic

17

For this reason, we hesitate to label Metropolitan Water’s right

of action under § 107 an “implied right to contribution,” as the

district court did. Under the technical definition of contribu-

tion at common law, a volunteer who is not itself liable may

not pursue contribution. See 18 Am. Jur. 2d Contribution § 15;

Restatement (Second) of Torts § 886A(1) & cmts. b & e. Section

107(a) only imposes liability on private parties to the extent

there have been “necessary costs of response” already incurred.

42 U.S.C. § 9607(a)(4). If no costs qualifying under this language

have been incurred or awarded against the volunteer, then

that party has no right to contribution. When Metropolitan

Water commenced cleanup, no other party had taken remedial

action and there was no common liability. Therefore, Metropoli-

tan Water’s action under § 107 is characterized more appropri-

ately as a cost-recovery action than as a claim for contribution.

26 No. 05-3299

Research and several post-Cooper Industries district court

decisions have recognized, in order to further CERCLA’s

policies, potentially responsible parties must be allowed

to recover response costs even before they have been

sued themselves under CERCLA or have settled their

CERCLA liability with a government entity. Were a cost

recovery action unavailable in these circumstances, the

Second Circuit reasoned, “such parties would likely

wait until they are sued to commence cleaning up any

site for which they are not exclusively responsible because

of their inability to be reimbursed for cleanup expendi-

tures in the absence of a suit.” Consol. Edison, 423 F.3d at

100. As the court concluded, this result “would undercut

one of CERCLA’s main goals, ‘encourag[ing] private

parties to assume the financial responsibility of cleanup

costs by allowing them to seek recovery from others.’ ” Id.

(quoting Key Tronic, 511 U.S. at 819 n.13 (internal quota-

tion marks omitted)).

North American and the EPA respond to this policy

argument with one of their own. They contend that the

United States may lose valuable settlement leverage if

parties such as Metropolitan Water are allowed to bring

an action under § 107(a) in these circumstances. They

point out that PRPs who choose to settle with the United

States enjoy protection from contribution suits by other

parties and retain the ability to seek contribution them-

selves. See 42 U.S.C. § 9613(f)(2). By contrast, PRPs who

choose not to settle are barred from seeking contribu-

tion under § 113(f) from the settling parties and thus

face potentially disproportionate liability. If the statute

were to allow non-settling parties to sue under § 107(a),

even when unable to do so under § 113(f), North American

and the EPA contend that PRPs would be discouraged

from settling with the United States.

No. 05-3299 27

We are sensitive to the EPA’s concerns regarding dimin-

ished settlement leverage. Certainly, the contribution

protection provision in § 113(f)(2) appears to reflect a

congressional desire that PRPs ought to be encouraged to

settle their liability with the United States. However, these

concerns simply do not exist in the circumstances pre-

sented here. In this case, the allegations of the com-

plaint make clear that neither the EPA nor any other

government entity has involved itself in the cleanup

undertaken by Metropolitan Water. As far as the complaint

indicates, Metropolitan Water’s undertaking was com-

pletely voluntary and financed by Metropolitan Water

alone. In the present case, the EPA simply is not in the

picture and has no reason to purse a settlement.

We hold that Metropolitan Water has a right of action

under CERCLA § 107(a).18

Conclusion

For the foregoing reasons, the judgment of the district

court is affirmed.

AFFIRMED

18

In reaching this holding, we find it unnecessary to decide

whether Metropolitan Water falls within the “innocent land-

owner” exception recognized by some of our pre-Cooper Indus-

tries decisions. See, e.g., Rumpke, 107 F.3d at 1240. Rumpke was

decided in a statutory regime in which landowners who

undertook voluntary cleanup efforts had the option of recover-

ing costs via an action for contribution under § 113(f). Given that

Cooper Industries has foreclosed that option, we find the “inno-

cent landowner” exception of little value in deciding the pres-

ent dispute.

28 No. 05-3299

A true Copy:

Teste:

_____________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit

USCA-02-C-0072—1-17-07