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W.R. Grace & Co. v. Zotos Int'l, Inc.

ELR Citation: 39 ELR 20066
Nos. No. 05-2798, (2d Cir., 03/04/2009)

The Second Circuit held that potentially responsible parties (PRPs) who have not been subject to a civil action under §§106 or 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) but who have remediated a contaminated site pursuant to a consent order entered with a state agency may bring a cause of action for response costs under CERCLA §107(a). In United States v. Atlantic Research Corp., 127 S. Ct. 2331, 37 ELR 20139 (2007), the U.S. Supreme Court held that CERCLA provides a PRP who has incurred response costs cleaning a contaminated site with a cause of action to recover those costs from other PRPs. Here, the PRP incurred costs due to compliance with a consent order. Because the consent order did not resolve CERCLA claims that could be brought by the federal government, the PRP may not seek contribution under §113(f)(3)(B). The company, however, has incurred response costs within the meaning of §107(a). The fact that a party enters into a consent order before beginning remediation is of no legal significance with respect to whether or not the party has incurred response costs as required under §107(a). The relevant inquiry is whether the party undertook the remedial actions without the need for the type of administrative or judicial action that would give rise to a contribution claim under §113(f). Here, the PRP chose to enter into an agreement with the state to investigate and remediate a contaminated site. The PRP saved the parties and the government litigation costs, and presumably also limited ongoing contamination by promptly remediating the site. That it entered into a consent order with the state does not preclude it from bringing an action pursuant to §107(a). The case was therefore remanded to the district court for further proceedings.