[*PG779]Reviving CERCLA’s Liability: Why Government Agencies Should Recover Their Attorneys’ Fees in Response Cost Recovery Actions

K. Jason Northcutt*

The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) imposes strict, retroactive liability on owners or operators of sites contaminated with hazardous waste. CERCLA also authorizes private parties and the Environmental Protection Agency (EPA) to initiate the cleanup process and to recover the costs of that cleanup from the responsible party. The language of section 7 of CERCLA, however, is ambiguous as to whether attorneys’ fees incurred in litigation to recover these response costs are recoverable. The Supreme Court in Key Tronic Corp. v. United States, held that private parties cannot recover attorneys’ fees in such actions. Even so, the Court expressly reserved judgment on the issue of whether, in recovery actions taken by EPA, attorneys’ fees could be recovered. This Comment argues that the history, structure, and purpose of CERCLA all suggest that the Supreme Court should follow the decision of the Ninth Circuit in United States v. Chapman, and hold that EPA attorneys’ fees are recoverable as part of the response costs of cleanup.

Introduction

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)1 imposes retroactive liability on a broad basis and prompts environmental restoration where hazardous materials have been released.2 As part of its scheme, it provides a party or parties that clean up a release of hazardous materials an opportunity to recover their costs.3 CERCLA’s provisions for governmental cost recovery and private party cost recovery are in different subsections.4 Since neither cost recovery directly addresses whether [*PG780]attorneys’ fees are included, it is unclear whether Congress intended them to be recoverable.5 Two recent cases, Key Tronic Corp. v. United States6 and United States v. Chapman,7 have addressed whether Congress intended to authorize the recovery of attorneys’ fees in actions to recover response costs under CERCLA.8 In Key Tronic, the Supreme Court held that private parties could not recover attorneys’ fees in such an action,9 while in Chapman, the Ninth Circuit limited Key Tronic, holding that EPA could recover its attorneys’ fees under CERCLA.10 This Comment argues that, in reading Key Tronic narrowly and awarding attorneys’ fees to government agencies for their response costs, the Ninth Circuit has taken the correct approach because CERCLA’s legislative history and language express an intent to award the government its attorneys’ fees, and the policy objectives achieved by fee shifting further justify imposing the costs upon the responsible party.11

Section I discusses fee-shifting in the United States and the “American Rule” presumption against shifting fees without clear legislative intent to do so. Section II outlines and discusses CERCLA in general as well as the specific provisions that address actions to recover the costs of response. Section III then addresses the case law that has developed with respect to the recoverability of attorneys’ fees under CERCLA in actions to recover costs of response. Section III also addresses the tools of statutory interpretation that these courts relied upon in analyzing congressional intent. Finally, Section IV analyzes the case law in light of CERCLA’s language, the remedial purpose canon of construction and legislative intent, and the public policy implications underlying awarding attorneys’ fees to governmental agencies when they seek to recover their costs of response under CERCLA.

I.  Fee Shifting in the United States

When evaluating fee shifting, courts deal with two competing principles: (1) the American Rule generally prohibiting fee shifting [*PG781]absent express statutory authority to do so; and (2) policy objectives favoring fee shifting.12

A.  The American Rule

There are two fee-shifting paradigms. In the United States, each party must bear its own litigation costs.13 As early as 1796, the Supreme Court said: “The general practice of the United States is in opposition to [awarding attorneys’ fees to prevailing parties]; and even if that practice were not strictly correct in principle, it is entitled to the respect of the court, until it is changed, or modified, by statute.”14 This rule, known as the “American Rule,” contrasts with the “loser pays” rule used in most modern countries where the losing party pays the costs associated with litigation.15

The American judiciary has been reluctant to modify its traditional notions of allocating attorneys’ fees.16 Usually, exceptions are legislatively created to further some specific policy.17 Even when the statutory language and construction seem to indicate a legislative intent to shift attorneys’ fees, our courts have expressed reluctance to do so.18

Although the American Rule is firmly entrenched in United States jurisprudence, it has several exceptions.19 For example, courts have awarded attorneys’ fees where a statute authorizes it or where a contract provides for it.20 In equity, courts have shifted fees to the losing party when “overriding considerations of justice seemed to compel such a result.”21

Courts have created another exception to the American Rule with the “private attorney general” doctrine.22 This doctrine, which [*PG782]broadened the exception to the American Rule in the 1960s and 1970s, reflected a policy of encouraging socially beneficial litigation.23 The theory of the doctrine was that a “successful litigant can sometimes act as a ‘private attorney general’ by detecting statutory violations and encouraging compliance through private actions. In such cases, where the court is seeking to promote private enforcement, awarding attorneys’ fees reduces the barrier to suit created by high litigation costs.”24

Alyeska Pipeline Service Co. v. Wilderness Society,25 however, curtailed this exception.26 The Supreme Court declared that the power to establish a private attorney general exception belonged to Congress rather than the Judiciary.27 In the absence of express statutory authority, courts were not to shift attorneys’ fees based upon public policy.28 The Court reasoned that because Congress had remained silent on the allocation of fees, it intended the traditional American Rule to apply.29

While Aleyska supports the proposition that courts are not to shift fees unless the underlying statute provides for it,30 it left unanswered how explicit Congress needed to be to manifest its intention to shift fees. The Court addressed this question in Runyon v. McCrary.31 There, the Court focused on whether there was enough congressional intent to justify fee shifting.32 The plaintiffs argued that the applicable civil rights statute gave private parties broad authority to enforce civil rights.33 The Court rejected this argument because the statute contained no explicit provision for fee shifting and was too “generalized” to be a clear indication of congressional intent to set aside the American Rule.34 By relying on legislative history, the Court implicitly validated the practice of looking beyond the mere words of the statute to determine whether enough congressional intent existed to supplant the American Rule.35

[*PG783]B.  Policy Objectives Considered in Fee Shifting

A major criticism of the American Rule is that it prevents a large portion of the population from bringing lawsuits.36 For individuals who have no hope of recovering attorneys’ fees, the legal redress might not be justified by the costs incurred in retaining able counsel.37 Lawyers’ hourly rates can be prohibitively expensive for a large portion of the population, especially the financially underprivileged.38 On the other hand, contingency fee payment systems are criticized for encouraging counsel to accept early, lower, settlement offers,39 thereby depriving the aggrieved party of his or her due damages.

Moreover, detractors of the American Rule argue that absent fee shifting, a wronged plaintiff often cannot be made whole again.40 When the jury is not allowed to consider the plaintiff’s lawyer’s fees in granting an award, the plaintiff cannot be in the same position in which he or she would have been had he or she not suffered a legal wrong.41 The English Judiciary justifies its fee-shifting rule using a similar rationale: because the victor incurs litigation expenses due to the losing party’s conduct, the losing party should have to pay those expenses.42

Proponents of the American Rule argue that imposing a “loser pays” rule deters law suits by the financially-challenged because the uncertainty of litigation discourages poorer plaintiffs from instituting actions by confronting them with the prospect of paying the defendant’s fees.43 Although this may be true in very close cases, it is probably untrue where the plaintiff is likely to win.44

Proponents of the American Rule also argue that a party’s legal expenses are a function of its own strategy decisions, and the opposing party should not be held responsible for expenses it cannot control.45 These proponents believe that the uncertainty of litigation in U.S. courts justifies the American Rule,46 reasoning that parties should not be forced to abstain from bringing or defending litigation [*PG784]due to the possibility of being penalized.47 These competing rationales surface whenever a party tries to shift attorneys’ fees to a polluting party under CERCLA’s cost of response provisions.

II.  CERCLA Generally

A.  History and Goals

CERCLA was enacted in part to assuage public outrage towards the parties responsible for high profile releases of hazardous substances.48 One such high profile example is Love Canal.49 The tragedy at Love Canal prompted the passing of CERCLA in the last days of the Carter Administration.50

The legislative history of CERCLA lacks clarity, making it difficult for the judiciary to discern the full legislative intent of the law.51 In 1980, the bills eventually comprising CERCLA were hurriedly passed with only limited debate over its intricacies and implementation.52 They were put together by a bipartisan group of senators.53 After the Senate passed the bill, it was presented to the House as an amendment to a former House bill.54 The House considered and passed the [*PG785]bill with only limited debate because the House was acting under a take-it-or-leave-it policy that allowed no amendment.55

In 1986, Congress amended CERCLA with the Superfund Amendments and Reauthorization Act (SARA).56 The main focus of SARA was to effectuate faster response and subsequent cleanup.57 SARA simultaneously re-authorized CERCLA and changed much of the Act.58 Because the Environmental Protection Agency (EPA) had de-listed only six sites from the National Priorities List (NPL) in the five years since CERCLA was passed, many of the changes enacted by SARA concerned EPA’s authority to initiate and expedite environmental restoration.59

CERCLA creates a system for cleaning hazardous waste sites in order “to protect public health and the environment from dangers posed by [these sites],” and for holding responsible parties liable for the costs thereof.60 The party faced with restoring the environment or paying recovery costs to the government may attempt to recover its costs from any other Potentially Responsible Party (PRP) under common law doctrines of joint and several liability61 and the statutory right of recovery provision of section 113.62 Rather than attempting to achieve these goals by broad regulation of the thousands of actors across the United States that handle hazardous substances, Congress chose to impose strict, joint and several liability for costs of response on PRPs.63

Section 106 of CERCLA authorizes the President to issue a cleanup order to a PRP.64 The President may delegate this authority to [*PG786]EPA under section 115.65 Thus, Congress empowered EPA to bring administrative or judicial enforcement actions against PRPs to force them to perform the remediation.66 Section 10467 of CERCLA authorizes EPA to initiate the remediation of hazardous wastes at “release”68 sites and section 111 allows EPA to pay for it out of the “Superfund.”69 Section 107 allows EPA to recover its costs by bringing actions against PRPs.70 CERCLA also permits private parties to initiate the cleanup process themselves and to recover their costs under section 113.71 This system created by CERCLA is designed to increase the speed with which the environment is restored.72

B.  Defining the Process and Standards

Underlying CERCLA’s liability structure of imposing liability is the belief that those responsible for creating hazardous materials problems should bear the cleanup costs.73 Ultimately, EPA must establish processes, standards, and methods by which to effectuate this goal.74 After identifying hazardous substance release sites, CERCLA requires EPA to prioritize sites by hazard in the Hazard Ranking System (HRS).75 From the HRS, EPA establishes the NPL, which operates to ensure the sites that pose the greatest risk to human health and the environment are cleaned up first.76 EPA periodically updates the NPL to account for information regarding new sites and the status of existing sites.77

The National Contingency Plan (NCP), section 105 of CERCLA,78 is a set of guidelines that prescribes the procedures and actions [*PG787]to be taken in cleaning a particular site with hazardous substances upon it.79 Pursuant to the NCP, EPA is to “establish procedures and standards for responding to releases of hazardous substances, pollutants, and contaminants.”80 These procedures and standards must, at a minimum: (1) delineate methods for investigating, evaluating, and cleaning sites; (2) delegate the roles of the Federal, State, and local governments; and (3) ensure that remediation is cost-effective.81

C.  CERCLA’s Response Authority

CERCLA provides for two types of cleanup response authority: removal actions and remedial actions.82 Generally, “‘removal’ actions are primarily those intended for the short-term abatement of toxic waste hazards, while ‘remedial’ actions are typically those intended to restore long term environmental quality.”83 Subsection C.1 herein addresses governmental response authority and subsection C.2 addresses private party response authority.

1.  Government’s Response Authority

Whenever hazardous substances are released or a threat of release exists, the President and EPA have authority either to undertake remediation or removal consistent with the NCP.84 The government may invoke either the administrative process or the judicial process to restore the environment.85 For example, section 106 allows EPA, through the President’s delegation, to issue an administrative order compelling a PRP to clean up a site.  The party compelled may then seek to recover its costs from other PRPs through section 107(a)(1)-(4).86

If, on the other hand, EPA prefers to initiate the process on its own rather than expending time and other valuable resources searching for PRPs, it may do so using funds from the Superfund.87 Under [*PG788]section 107(a)(4)(A), the government may then seek to recover “all costs of removal or remedial action”88 from the PRPs to replenish the fund.89 Since liability is joint and several, the government can choose to recover from only one party,90 rather than expending resources to find other PRPs. In that case, the party held responsible might seek to avoid disproportionate cost bearing through common law contribution or indemnification actions against other PRPs.91

2.  Private Party’s Response Authority

Compared to the government, a private party is subject to stricter requirements when he or she attempts to recover response costs for voluntary cleanup initiatives.92 A private party may hold a PRP liable for “any other necessary costs of response incurred by any other person consistent with the national contingency plan,”93 but has the additional burden of proving its costs were “necessary.”94

3.  CERCLA’s Broad Liability

The liability for response costs under CERCLA is very broad and applies retroactively.95 Four categories of PRPs are subject to CERCLA’s scope of environmental liability: (1) current owners and operators of a vessel or facility with hazardous wastes; (2) persons who owned or operated the facility at the time of disposal; (3) persons who arranged for the disposal, treatment, or transportation of the hazardous substances that contaminated the facility; and (4) any person who accepts any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person.96 [*PG789]The liability imposed is consistent with CERCLA’s major purposes—to force responsible parties to internalize the costs.97

4.  Response Costs and Amount Recoverable

Section 107(a)(4) of CERCLA states that a party which:

causes the incurrence of response costs, of a hazardous substance, 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 contingency plan. . . . 98

Subsection (A) deals with governmental cost recovery, whereas subsection (B) deals with private party cost recovery.99 The definition of “respond” includes the terms “removal” and “remedial action.”100

Two textual differences exist between cost recovery provisions involving the government and those involving private parties.101 First, the government may recover “all costs” incurred by the government102 while a private party may recover only “any other necessary costs” incurred by other persons.103 The government’s response costs implicitly are presumed necessary and, consequently, recoverable, whereas private parties explicitly bear the burden of proving that the costs incurred are “necessary” for the response.104 The second textual difference is that the government’s response cost must be “not inconsistent” with the NCP,105 whereas a private party’s response costs must be [*PG790]“consistent” with the NCP.106 The difference in statutory language probably creates a presumption in favor of the government’s response expenditures vis--vis a defendant,107 while a private party seeking contribution carries the burden of proving its response costs were consistent with the NCP.108

IV.  Caselaw on Fee Shifting Under CERCLA

Though the language differs between the two subsections, nothing in CERCLA directly addresses whether attorneys’ fees are recoverable for a party, private or governmental, seeking to recover response costs.109 Since CERCLA does not explicitly address whether attorneys’ fees are recoverable, the statutory interpretation has been left to the judiciary. The Supreme Court’s decision in Key Tronic Corp. v. United States110 addressed the recoverability of attorneys’ fees by private parties. The recent Ninth Circuit case, United States v. Chapman,111 addressed the recoverability of attorneys’ fees by EPA and other governmental agencies.

A.  Key Tronic

1.  Facts and Procedural Background

In the late 1970s, Key Tronic Corporation (Key Tronic) and other parties, including the United States Air Force, disposed of liquid chemicals at the Colbert Landfill in eastern Washington.112 In 1980, the Washington Department of Ecology (WDOE) found that the water supply deteriorated due to these chemicals and brought an action against Key Tronic, the Air Force, and other PRPs.113 After Key Tronic settled with EPA and WDOE for $4.2 million, it brought an action to seek contribution from other PRPs under CERCLA sec[*PG791]tion 113(f).114 Additionally, Key Tronic sought $1.2 million from other PRPs for response costs incurred before the settlement in a cost recovery claim under CERLCA section 107(a)(4)(B).115 Included in the $1.2 million were costs incurred by Key Tronic for the following legal services: (1) litigation expenses associated with prosecuting the costs of response recovery; (2) identifying other PRPs that were liable for the Colbert Landfill cleanup; and (3) preparing and negotiating the settlement.116

The district court ruled that Key Tronic could pursue the $1.2 million cost of response recovery action under CERCLA section 107(a)(4)(B).117 Section 107(a)(4)(B) states that parties shall be liable for “necessary costs of response . . . consistent with the national contingency plan.”118 Section 101(25) defines “respond” as “remove, removal, remedy, and remedial action . . . includ[ing] enforcement activities related thereto.”119 The district court construed sections 107(a)(4)(B) and 101(25) “liberally so as to achieve the overall objectives of the statute.”120 The court ruled that private parties may incur costs for enforcement activities.121 The court also ruled that attorneys’ fees incurred in searching for other PRPs and negotiating the settlement were “necessary” under section 107.122

On appeal, the Ninth Circuit reversed the decision.123 The Circuit Court held that the district court lacked the authority to award attorneys’ fees as “necessary.”124 The Circuit Court relied upon its earlier decision in Stanton Road Associates v. Lohrey Enterprises, where it held that a private party seeking to recover response costs from a party responsible for pollution was prohibited from obtaining attorneys’ fees.125 The Circuit Court interpreted CERCLA’s language strictly, emphasizing that “Congress had not explicitly authorized private litigants to recover their legal expenses incurred.”126

[*PG792]2.  The Supreme Court in Key Tronic

Justice Stevens, delivering the opinion of the Court, identified the first issue in Key Tronic III as “whether the fees for prosecuting this action against the Air Force are recoverable [by a private party] under CERCLA.”127 In order to decide this issue, the Court had to determine whether the phrase “enforcement activities” within the section 101(25)128 definition of “response”129 included a private party’s action to recover cleanup costs.130 Thus, it had to determine whether private party attorneys’ fees associated with that action would be within the “necessary costs of response” of section 107(a)(4)(B).131 The Court also recognized that an award to recover private party attorneys’ fees would have to be justified by CERCLA’s language and intent, given the long-standing American Rule against fee shifting.132

The Supreme Court categorized attorneys’ fees into three groups: (1) fees incurred while prosecuting recovery actions; (2) fees incurred in non-litigation response related activities; and (3) fees incurred during negotiations with EPA.133 It then analyzed each of the three categories to see whether they fit within CERCLA’s “necessary costs of response.”134

As for attorneys’ fees incurred while prosecuting recovery actions, the majority rejected, on three bases, Key Tronic’s argument that the attorneys’ fees in its recovery action against the Air Force were “enforcement activities.”135 The Court found that section 107 merely implied a private party’s costs of response recovery action,136 thereby bringing the provision into conflict with the American Rule. The Court then reasoned that using an implied provision to create an exception to the American Rule “would be unusual if not unprece[*PG793]dented” given the clarity of the American Rule.137 The Court was not willing to stretch the Rule that far.138

The Court also employed a structural argument based on CERCLA’s language.139 Pointing out that Congress had omitted language expressly allowing recovery of attorneys’ fees in section 107(a)(4)(B)140 while expressly providing for them in other sections,141 the Court found that Congress had in fact affirmatively decided “not to authorize such awards.”142 Finally, the Court rejected Key Tronic’s argument on the basis of the “plain meaning of the text.”143 According to the majority, it would torture its interpretation of “enforcement activities” to squeeze within it a private action to recover attorneys’ fees.144

As for the second category of attorneys’ fees sought by Key Tronic, non-litigation attorneys’ fees, the Court held that these costs were recoverable if “closely tied to the actual cleanup”145 under section 107. The Court followed the Tenth Circuit’s decision in FMC Corp. v. Aero Industries, Inc., holding that non-litigation fees are an exception to the American Rule.146 Key Tronic argued that attorneys’ fees used to find PRPs “benefit the entire process” and should therefore be recoverable.147 The Court agreed and found a distinction between litigation fees and non-litigation fees, reasoning that any number of professionals might perform PRP-searching, which may include attorneys.148 Therefore, non-litigation fees incurred by a private party’s attorney in searching for other PRPs were distinguishable from attorneys’ fees incurred in litigating the cost recovery action.149

The third category of attorneys’ fees the Court analyzed in Key Tronic related to negotiating its settlement with EPA.150 Key Tronic [*PG794]argued that attorneys’ fees incurred in preparing studies for negotiating the consent decree that were ultimately used in the cleanup process were “closely tied to the actual cleanup.”151 The Court held that attorneys’ fees incurred in settling consent decrees were unrecoverable in a private party recovery action under section 107.152 It reasoned that Key Tronic prepared the studies to limit its scope of liability, rather than to “benefit the entire cleanup.”153

By interpreting its provisions broadly, the Court declined to utilize a canon of construction that would further CERCLA’s purposes.154 Rather, the Court relied upon the plain terms of the phrase “enforcement activities” to conclude that Congress had not expressed a clear intention to shift fees.155

Justice Scalia, in his dissent, criticized the majority’s reasoning and conclusions.156 He chastised them for characterizing the right of cost recovery as “implied.”157 According to Scalia, the provision that “covered persons . . . shall be liable for . . . necessary costs of response incurred by any other person”158 created an express right of recovery.159 He also criticized them for requiring a “magic phrase” to effectuate Congress’ intent.160 Finally, he attacked the majority for interpreting “enforcement activities” so strictly as to deprive it of any meaning in its context.161 Although he concurred that the non-[*PG795]litigation attorneys’ fees were recoverable,162 Scalia thought private parties should also be able to recover attorneys’ fees associated with litigation and negotiation.163

Since Key Tronic dealt with private party attorneys’ fees, it did not resolve whether government’s attorneys’ fees are recoverable under section 107(a)(4)(A).164 In Key Tronic, the Supreme Court expressly refused to offer “comment on the extent to which [the] phrase [‘enforcement activities’] forms the basis for the Government’s recovery of attorneys’ fees.”165 However, the Court did not rule out the possibility that it might have to decide the question later.166

B.  The Ninth Circuit’s Decision in United States v. Chapman167

1.  Facts and Procedural Background

In United States v. Chapman, Harold B. Chapman, Jr. manufactured small metal collars, and stored and resold surplus chemicals on his five-acre parcel of land in Palomino Valley, Washoe County, Nevada.168 In 1989, Washoe County requested that EPA investigate the site.169 Ecology & Environment (E&E) was hired to inspect and photograph the site in October.170

On December 20, 1989, EPA’s On Scene Coordinator (OSC), Robert Bornstein, conducted a preliminary assessment of the site.171 Mr. Bornstein found approximately 2000 5-gallon containers holding a wide assortment of known chemicals, oil, and paint.172 Approximately 100 55-gallon drums of unknown substances were present as well.173 Most of the drums were stored outside, and the soil was visibly [*PG796]stained from substances leaking out of deteriorated containers.174 After E&E found that a sample of the substances exhibited qualities of flammability, corrosivity, and combustibility, Washoe County attempted to force Chapman to comply with the cleanup order.175 The County issued Chapman a misdemeanor citation, revoked his business license, and asked for assistance from EPA.176

Using its power under section 106, EPA issued an Administrative Order compelling Chapman to take immediate action to secure the site and contain (or prevent) the release of hazardous substances.177 He was to submit site security and safety plans, a detailed work plan, and remove any hazardous substances.178

In January 1991, Mr. Bornstein again investigated Chapman’s property and found several hundred 1- to 5-gallon containers of waste and flammable liquids.179 He also found approximately fifty 55-gallon drums containing flammable liquids.180 Since Chapman failed to comply with the Administrative Order, EPA initiated a response action according to CERCLA by determining what actions would be necessary to remove the hazardous substances.181

In February 1991, Chapman began to comply with the Administrative Order and, under the supervision of EPA and E&E, removed the containers from the site and submitted soil samples to EPA.182 EPA incurred response costs totaling approximately $34,000.183 EPA sent letters demanding that Chapman reimburse EPA for the $34,000 it had incurred.184 Chapman resisted.185 The United States then brought an action in district court against Chapman to recover response costs.186 The district court judge granted summary judgment in favor of the United States.187 Chapman appealed to the Ninth Circuit.188

[*PG797]2.  The Ninth Circuit in Chapman

The Ninth Circuit first concluded that the district court had not erred in holding that EPA had established a prima facie case which Chapman failed to rebut and that EPA’s response action was “not inconsistent” with the NCP.189 It next turned to the question of whether EPA was entitled to recover its attorneys’ fees as part of its response costs.190 Based on statutory language and public policy, the court concluded that EPA could recover attorneys’ fees related to litigating its recovery action, but the court limited the amount recoverable.191

In its analysis, the Ninth Circuit acknowledged that under the American Rule, attorneys’ fees are generally not recoverable “absent explicit congressional authorization.”192 The court distinguished the language in section 107(a)(4)(A), which allows government to recover response costs, from that in section 107(a)(4)(B), which allows a private party to recover response costs.193 It reasoned that because “respond” is defined in section 101(25) to mean “remove, removal, remedy or remedial action” including “enforcement activities,”194 the government’s recoverable costs include not only remedial costs, but also attorneys’ fees.195 It also rested its conclusion on the broad language in CERCLA.196 Language in section 107(a)(4)(A) making parties liable for “all costs of removal”197 and in section 104(b) allowing the government to “undertake such planning, legal, fiscal, economic, engineering or architectural, and other studies or investigations . . . to recover the costs”198 helped convince the court that CERCLA specifically allows for the recovery of attorneys’ fees.199 Further, the court relied upon Justice Scalia’s dissent in Key Tronic to conclude that [*PG798]Congress did not have to use the term “attorneys’ fees” to evince its intent that they should be included.200

The Ninth Circuit recognized public policy as a relevant consideration because “Congress intended to ‘facilitate the prompt cleanup of hazardous waste sites by placing the ultimate financial responsibility for cleanup on those responsible for hazardous waste.’”201 The court relied on CERCLA’s remedial purpose to justify considering general policy reasons to award the government attorneys’ fees.202 It declared that CERCLA’s purpose is to clean the environment; thus, liberally construing its provisions furthers that purpose.203 The court, then, recognized CERCLA’s remedial purpose and construed its terms broadly consistent with that purpose.204 Further, awarding attorneys’ fees could deter both contamination and delaying cleanups.205

In Chapman, the Ninth Circuit imposed a “reasonableness” limit on the amount of attorneys’ fees EPA can recover in a response cost recovery action.206 EPA’s costs of actual cleanup, disregarding the litigation, were $34,000, but the litigation expenses incurred in pursuing those costs were over $400,000.207 The court remanded the case for a finding of whether the attorneys’ costs were reasonable.208

V. The Ninth Circuit Court Correctly Interpreted CERCLA and Key Tronic to Allow for Recovery of Governmental Attorneys’ Fees

A.  Statutory Authority for Fee Shifting Under CERCLA

1.  Express Statutory Language of CERCLA

The textual provisions of CERCLA dealing with government cost recovery are sufficiently clear to create a legislative exception to the American Rule.209 The argument allowing government plaintiffs to [*PG799]recover costs of response is based on the contention that section 107(a)(4)(A)’s “costs of removal or remedial action”210 encompass attorneys’ fees through sections 101(23)211 and 104(b).212

CERCLA section 101(23)213 defines a removal action with reference to section 104(b).214 Section 104(b) expressly allows the government, through the President and EPA, to “undertake such planning, legal . . . and other studies as [it] may deem necessary or appropriate . . . to recover the costs [of response actions].”215 Thus, these sections should be read as allowing the government, usually acting through EPA, to recover costs for all its investigation and enforcement activities, including legal work.216

Further textual support is found in CERCLA section 107(a)(4)(A), which makes “all costs” recoverable by a government plaintiff in a removal or remedial response action.217 Although this section does not use the term “respond,”218 section 101(25) defines “respond” as a removal or remedial action, and includes “enforcement activities related thereto.”219 Since attorneys’ fees associated with litigating response cost recovery are “enforcement activities related” [*PG800]thereto,220 the term “enforcement activities” would be superfluous if not interpreted to include activities that compel a PRP to internalize the cost of polluting.221 To give plain meaning to CERCLA’s terms without rendering “enforcement activities” superfluous requires a broad reading of “enforcement activities.”222 Enforcement activities should include the legal expenses incurred by EPA in trying to recover its response costs under section 107(a)(4)(A).223 Therefore, in the context of government plaintiffs trying to recover costs associated with litigating response cost recovery, the text of CERCLA supports fee shifting.224

Moreover, while Congress did not use the terms “attorneys’ fees” or “legal expenses,” it should not be required to do so to evince an intent to shift attorneys’ fees to a PRP.225 Since Congress used the phrase “enforcement activities” and these activities primarily include attorneys’ fees, the text is sufficiently clear to avoid the application of the American Rule.226

2.  Remedial Purpose Canon of Construction

CERCLA is generally seen as a remedial statute and should be interpreted with this purpose in mind.227 The remedial purpose canon of construction states that remedial legislation should be construed liberally to effectuate the beneficial purpose for which it was enacted.228 Since all legislation is theoretically remedial,229 the reme[*PG801]dial purpose canon has become a post-hoc explanation for the purpose of construing a statute’s terms broadly.230 It is most often invoked when the underlying statute is curative in nature.231

Courts look at many factors when determining whether to employ the remedial purpose canon.232 For example, courts have looked at the intrinsic nature of the legislation, its legislative history, as well as its text and structure, but these factors are by no means exclusive.233

Lower courts have almost universally held that CERCLA is remedial in nature.234 In fact, every circuit that has considered CERCLA has analyzed it using the remedial purpose canon as an interpretive principle.235 In light of CERCLA’s legislative history, structural scheme, and congressional intent, use of the remedial purpose canon is justified as an interpretive tool.236 A liberal interpretation to effectuate CERCLA’s remedial purpose in accordance with the canon would hold that Congress intended CERCLA to create a legislative exception to the American Rule that would allow fee shifting.

CERCLA is an excellent candidate for the application of the remedial purpose canon.237 It has been characterized as “overwhelmingly remedial,”238 and its history and structure indicate that courts should give a liberal construction to its terms in order to effectuate its goals.239 CERCLA’s overriding purpose is to protect human health and the environment from the dangers posed by hazardous sub[*PG802]stances.240 Further, it accomplishes this in two ways: (1) enabling more expeditious cleanup of toxic spills; and (2) allocating the costs of cleanup to those responsible for the harm.241

CERCLA is, by its nature, more remedial than other non-penal statutes.242 Its fundamental focus is to remedy the harmful effects of hazardous substance releases to protect human health and the environment.243 Rather than regulating future actions by requiring compliance with regulatory standards, CERCLA imposes liability on past actions.244 Contrasted with the Resource Conservation and Recovery Act (RCRA),245 which regulates storage, transportation, and disposal of hazardous wastes via a permitting system, CERCLA in no way directly regulates future behavior by standard setting or permitting.246

Additionally, congressional intent, as documented in the legislative history of S. 1480 (one of the bills that eventually constituted CERCLA), indicated that Congress wanted CERCLA to be remedial in nature.247 Although the majority of its most controversial features were deleted, what survived was the remedial focus.248 “The basic concept of creating response authority and a response fund to prevent and remedy health and environmental threats from releases or [*PG803]threatened releases of hazardous substances is the same in both the House and Senate version of H.R. 7020.”249

3.  Remedial Purpose and Legislative Intent in Enacting CERCLA

CERCLA’s fundamental purposes are to provide for the rapid cleanup of hazardous materials release in order to protect human health and the environment, and to impose the costs of cleanups upon the PRP.250 The legislative history indicates congressional intent to further CERCLA’s goals by making the scope of liability more inclusive.251

When SARA was enacted in 1986,252 part of it modified the definition of “response” explicitly to include “enforcement activities.”253 The Conference Committee commented that the purpose of the amendment was to clarify that “such costs are recoverable from responsible parties, as removal and remedial costs under section 107.”254 Although Congress explicitly provided for attorneys’ fees in other portions of SARA,255 it does not follow that its failure to use identical language in section 107 suggests a decision not to shift fees.256 According to Justice Scalia, “enforcement activities” unambiguously refers to attorneys’ fees, and Congress therefore did not need to mention them by name.257

Also, by redefining “response” in SARA, Congress endorsed the lower courts’ interpretation of CERCLA to allow EPA to recover its attorneys’ fees.258 Arguably, if Congress had disapproved of such in[*PG804]terpretation, it would have restricted the scope of liability to exclude shifting attorneys’ fees.

Awarding attorneys’ fees to EPA furthers both of CERCLA’s overriding purposes.259 Courts must effectuate congressional purpose in accordance with Alyeska’s mandate that courts not substitute their own judgment for that of the legislature.260 Shifting fees helps protect human health and environment by encouraging PRPs to undertake the cleanup process rather than relying on EPA, thereby conserving EPA resources for cleaning sites that have no identified PRP.261 It also promotes the principle that the polluter must pay.262 If EPA faces uncompensated litigation fees from pursuing a costs of response recovery action, the polluter will not have internalized all the costs associated with the remediation or removal.263

B.  Public Policy

Policy objectives support awarding attorneys’ fees in cost recovery actions by the government.264 The Ninth Circuit in Chapman supported its conclusion that EPA could recover its attorneys’ fees by pointing out that awarding attorneys’ fees could act as a powerful deterrent to similarly situated polluters.265 The court reasoned that polluters such as Chapman, when faced with the added liability of attorneys’ fees, would be more likely to undertake the cleanup process themselves.266 Providing incentive for PRPs to clean up hazardous substance releases not only reduces the number of actions EPA must bring to recover its cost, but also reduces the burden on the judicial system.267 PRPs faced with the possibility of paying EPA’s attorneys’ fees might consider more carefully the merits of resisting the action to recover costs.268

[*PG805] The court in Chapman also intimated that fee shifting might actually deter hazardous substance releases.269 Imposing attorneys’ fees upon the responsible party increases the liability facing polluters and helps ensure that polluters pay all of the cleanup costs.270 Were the government prohibited from collecting its attorneys’ fees, imposition of cleanup costs on the responsible party would be undermined.271

Conclusion

CERCLA does not specifically address whether plaintiffs seeking to recover their costs of response may recover their attorneys’ fees. In 1994, the Supreme Court in Key Tronic interpreted section 107(a)(4)(B) to conclude that Congress had not provided enough evidence of its intent to create a legislative exception to the American Rule against fee shifting for private party plaintiffs. Since then, the recoverability of EPA’s attorneys’ fees has been questionable because the Supreme Court intimated that it might yet have to decide that question.

Although courts have been reluctant to shift fees in light of Supreme Court precedent mandating express legislative authority, CERCLA’s history, text, and purpose provide the judiciary with enough evidence to find that Congress indeed wanted to impose costs upon polluters. Furthermore, public policy justifies shifting fees to polluters when EPA seeks to recover its costs of response under CERCLA section 107(a)(4)(A).

For example, the language of CERCLA’s provisions suggest that the term “enforcement activities” must include response activities besides remediation and removal, and it is reasonable to conclude that these other activities would include the litigation expenses involved in seeking contribution or indemnification from a PRP. Further, given the uniformity with which CERCLA has been held as a remedial statute, its terms should be construed broadly consistent with that purpose under the remedial purpose canon of construction. As CERCLA’s goals are to effectuate environmental restoration while imposing the costs of doing so on those who are responsible for releasing pollutants, requiring a polluter to pay for the government’s attorneys’ fees when it is forced to litigate is consistent with these [*PG806]goals. It furthers these goals by conserving EPA’s resources so that they might be spent on actual restoration. Fee shifting also forces polluters to internalize the costs they impose upon society, thereby acting as an incentive to reduce the release of materials hazardous to human health or the environment. It also increases the potential liability polluters face by choosing to litigate rather than voluntarily to indemnify EPA, thereby providing more incentive to settle and conserve both EPA and judicial resources. Finally, increased liability might encourage polluters to undertake the cleanup process themselves in order to minimize costs. All these incentives provide a public policy justification for shifting fees to those who release hazardous materials.

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