Ninth Circuit Weighs in on CERCLA’s Statute of Limitations Defense in Contribution Actions

By: Jay Tufano

The Ninth Circuit, in Arconic, Inc. v. APC Inv. Co., No. 19-55181, 2020 WL 4579511 (9th Cir. Aug. 10, 2020), recently weighed in on the statute of limitations defense in contribution actions arising under CERCLA section 113(g) (42 U.S.C. 9613 (g).) The panel held that a party’s settlement with EPA for one portion of a site triggers the three-year statute of limitations period to recover costs associated with that portion of the site. But it does not trigger the limitations period as to other portions of the site and costs not covered by the settlement.

At issue in Arconic was the Omega Chemical Corporation site in Whittier, California which was added to the National Priorities List in 1999. In 2001, a group of Potentially Responsible Parties composed of Omega’s customers, termed the Omega Chemical Potentially Responsible Parties Organized Group (OPOG), entered into a consent decree with EPA covering response costs and remediation obligations for Operable Unit 1, an area adjacent to Omega’s plant. Three years later, OPOG recovered $1.7 million from a number of de minimis parties covering cleanup costs for Operable Unit 1 and all future claims. The settlement was approved in 2007.

Meanwhile, EPA turned its attention to another portion of the site, Operable Unit 2, which required an extensive pump-and-treat remedy. OPOG once again led the cleanup efforts and in 2014, sued APC Investment Company and other defendants (collectively “APC Defendants”) under CERCLA for cost recovery and contribution. Three years later, in 2017, OPOG entered into a consent decree with EPA obligating the group to finance and implement the remediation system and post a $70 million performance bond. The court approved the consent decree in 2017. OPOG amended its complaint against the APC Defendants, dropping the cost-recovery claim and focusing on contribution.

The APC Defendants moved for summary judgment, contending that OPOG’s 2007 settlement with the de minimis parties triggered CERCLA’s three-year statute of limitations for contribution claims. Because the 2007 settlement covered all future claims, they argued that it addressed the same costs sought by OPOG for Operable Unit 2, thus triggering the limitations period.

While the APC Defendants prevailed in district court, the Ninth Circuit reversed. The panel held that the statute of limitations is triggered under Section 113 no earlier than the date a party resolves its liability with EPA via settlement or consent decree for the specific area of the site at issue. Id. at 16-19. Because OPOG did not settle with EPA as to Operable Unit 2 until 2017, the statute of limitations for Operable Unit 2 response costs did not begin to run until then (as opposed to the earlier 2007 date advanced by the APC Defendants).

The panel likewise found it irrelevant that OPOG’s settlement with the de minimis parties included all future claims (i.e. Operable Unit 2). The 2007 settlement did not resolve OPOG’s liability with the United States for Operable Unit 2, nor did it address any cleanup costs actually incurred by OPOG for Operable Unit 2. Id. at 13-15. Moreover, OPOG’s contribution rights had not yet accrued as of 2007. The panel found that these rights did not accrue until 2016 when the United States formally sued OPOG for Operable Unit 2 response costs. Id. at 15-16. Thus, no basis existed for the statute of limitations to run.