RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 15a0269p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
FLORIDA POWER CORP., dba Progress Energy ┐
Florida, Inc., │
Plaintiff-Appellant, │
│ No. 14-4126
│
v. >
│
│
FIRSTENERGY CORP., │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 1:12-cv-01839—Dan A. Polster, District Judge.
Argued: August 4, 2015
Decided and Filed: November 5, 2015
Before: SUHRHEINRICH and GRIFFIN, Circuit Judges; and STAFFORD, District Judge.
_________________
COUNSEL
ARGUED: John B. Nalbandian, TAFT, STETTINIUS & HOLLISTER LLP, Cincinnati, Ohio,
for Appellant. Paul D. Clement, BANCROFT PLLC, Washington, D.C., for Appellee. ON
BRIEF: John B. Nalbandian, Kim K. Burke, Matthew D. Lawless, TAFT, STETTINIUS &
HOLLISTER LLP, Cincinnati, Ohio, for Appellant. Paul D. Clement, George W. Hicks, Taylor
Meehan, BANCROFT PLLC, Washington, D.C., Ronald S. Kopp, Jessica A. Lopez, ROETZEL
& ANDRESS, LPA, Akron, Ohio, for Appellee.
GRIFFIN, J., delivered the opinion of the court in which STAFFORD, D.J., joined.
SUHRHEINRICH, J. (pp. 19–31), delivered a separate dissenting opinion.
The Honorable William H. Stafford, Jr., Senior United States District Judge for the Northern District of
Florida, sitting by designation.
1
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_________________
OPINION
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GRIFFIN, Circuit Judge. Almost seventy years ago, plaintiff’s predecessor in interest
owned and operated two coal gasification plants in Florida. In 1998 and 2003, plaintiff entered
into Administrative Orders by Consent (“AOCs”) with the U.S. Environmental Protection
Agency to assess the feasibility of remediation of environmental contamination at those sites. At
issue in this case is the narrow legal question of whether those AOCs constitute “administrative
settlements” for purposes of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (“CERCLA”), 42 U.S.C § 9601 et seq. We hold that they do not. We
therefore reverse the district court’s dismissal of plaintiff’s contribution action based on the
statute of limitations and remand for further proceedings.
I.
This case involves two Florida plants, one in Sanford and the other in Orlando. After
discovering hazardous contaminants on those sites in the 1990s, the EPA concluded that plaintiff
Florida Power Corporation, along with other previous owners of those sites, was liable for costs
associated with removal and remediation of contamination. In 1998, plaintiff entered into an
“Administrative Order by Consent for Remedial Investigation/Feasibility Study” with the EPA
for the Sanford site (“Sanford AOC”). In 2003, it entered into a similar agreement of the same
title for the Orlando site (“Orlando AOC”).
Under the terms of the AOCs, plaintiff agreed to conduct and implement a remedial
investigation and feasibility study for each site. The remedial investigation was intended to
determine the nature and extent of the public safety threat. The feasibility study was designed to
identify and evaluate options for remedial action. The AOCs established a plan for
implementation and set monetary penalties for violating the plan. Plaintiff also agreed to pay the
EPA $429,731.23 for past response costs it had incurred at the Sanford site and $104,751.46 for
such costs at the Orlando site. Following completion of the investigation and study at the
Sanford site, the EPA entered three Records of Decision―in 2000, 2001, and 2006. On
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January 16, 2009, the U.S. District Court for the Middle District of Florida approved a consent
decree between plaintiff and the EPA for actual performance of remediation at the Sanford site.
Regarding the Orlando site, plaintiff submitted a draft Remedial Investigation Report, Risk
Assessment, and Remedial Alternative Technical Memorandum that was under review by the
EPA at the time of this litigation.
On December 30, 2011, plaintiff filed this cost recovery and contribution CERCLA
action in the Middle District of Florida for costs related to both sites. It also sought a declaratory
judgment that defendant, as a successor in interest to a former owner-operator of the sites, was
liable for future response costs that plaintiff would incur. Upon defendant’s motion, the case
was transferred to the Northern District of Ohio. Defendant moved for judgment on the
pleadings under Federal Rule of Civil Procedure 12(c) on the basis that the 1998 and 2003 AOCs
had triggered CERCLA’s three-year statute of limitations and plaintiff’s claims were therefore
barred. Initially, the district court denied the motion on the grounds that the Sanford AOC was
not a settlement agreement because it did not release any party from any liability and preserved
the EPA’s right to sue plaintiff for CERCLA violations. Regarding the Orlando AOC, the court
ruled that plaintiff could only bring a cost recovery action because the AOC “by its own terms,
was not a settlement agreement.”
However, on reconsideration, following our decision in Hobart Corp. v. Waste
Management of Ohio, Inc., 758 F.3d 757 (6th Cir. 2014), the district court reversed itself and
dismissed plaintiff’s claims because it concluded the AOCs at issue resembled the settlement
agreement in Hobart and therefore triggered the statute of limitations. We disagree and, for the
reasons stated herein, reverse and remand for further proceedings.
II.
A.
“The district court’s decision regarding a motion for judgment on the pleadings pursuant
to Federal Rule of Civil Procedure 12(c) is analyzed using the same de novo standard of review
employed for a motion to dismiss under Rule 12(b)(6).” Tucker v. Middleburg-Legacy Place,
539 F.3d 545, 549 (6th Cir. 2008). We take as true all well-pleaded material allegations in the
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opposing party’s pleadings, and affirm the district court’s grant of the motion only if the moving
party is entitled to judgment as a matter of law. JPMorgan Chase Bank, N.A. v. Winget,
510 F.3d 577, 581 (6th Cir. 2007).
Broadly speaking, CERCLA “facilitates cleanup and remediation of contaminated lands,
and shifts the financial burden of such environmental response actions to the parties responsible
for releasing hazardous substances.” ITT Indus., Inc. v. BorgWarner, Inc., 506 F.3d 452, 456
(6th Cir. 2007); see Walls v. Waste Res. Corp., 823 F.2d 977, 981 (6th Cir. 1987). The statute
imposes liability on several categories of potentially responsible parties (“PRPs”), including
current owners or operators of a contaminated facility, owners or operators of a facility at the
time hazardous substances were disposed, any person who arranged for disposal of such
hazardous substances at a facility, and any person who accepted such hazardous substances for
transport to disposal or treatment facilities. 42 U.S.C. § 9607(a)(1)−(4). When the EPA
identifies a contaminated site, it has several options. It may clean up the site itself under
CERCLA § 104, 42 U.S.C. § 9604, compel a PRP to clean up the site under § 106, id. § 9606, or
enter into an agreement under § 122 by which a PRP agrees to clean up the site, id. § 9622.
Hobart, 758 F.3d at 762.
CERCLA provides two express cost-shifting actions for costs incurred in remediating a
site. Under the “cost recovery” provision of CERCLA § 107(a)(4), the EPA may bring an action
against PRPs to recover “all costs of removal or remedial action incurred by the United States
Government.” 42 U.S.C. § 9607(a)(4)(A). A PRP that cleans up a site may likewise bring a cost
recovery action against other PRPs. See id. § 9607(a)(4)(B); ITT Indus., 506 F.3d at 456. This
cause of action “grants one PRP the same rights as an innocent party to sue another PRP for
cleanup costs incurred in a removal or remedial action.” Bernstein v. Bankert, 733 F.3d 190, 201
(7th Cir. 2012) (citing United States v. Atl. Research Corp., 551 U.S. 128 (2007)). The second
cost-shifting option is a “contribution” action under CERCLA § 113(f)(1). 42 U.S.C.
§ 9613(f)(1). “Contribution is defined as the ‘tortfeasor’s right to collect from others responsible
for the same tort after the tortfeasor has paid more than his or her proportionate share, the shares
being determined as a percentage of fault.’” Atl. Research Corp., 551 U.S. at 138 (quoting
Black’s Law Dictionary 353 (8th ed. 2004)).
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To proceed with a contribution action, a plaintiff must satisfy one of two statutory
conditions. Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 162−63 (2004); see Hobart,
758 F.3d at 767. First, a plaintiff may sue for contribution after the government has compelled it
to clean a site or after the government (or a private party) has brought a cost recovery action
against the plaintiff. 42 U.S.C. § 9613(f)(1); Cooper Indus., 543 U.S. at 166−67; Hobart,
758 F.3d at 762. Second, at issue here, a plaintiff may sue for contribution after the government
has responded to a hazardous site itself and then entered a settlement agreement with a plaintiff
to compensate the government for its response costs. Cooper Indus., 543 U.S. at 167; Hobart,
758 F.3d at 768. In that case, a plaintiff may proceed against other PRPs who were not parties to
the settlement if the plaintiff “has resolved its liability to the United States . . . for some or all of
a response action or for some or all of the costs of such action in an administrative or judicially
approved settlement.” 42 U.S.C. § 9613(f)(3)(B).
Recovery and contribution actions apply to “persons in different procedural
circumstances,” Atl. Research Corp., 551 U.S. at 139, and “provide mutually exclusive
remedies,” Hobart, 758 F.3d at 768. Unlike a cost recovery action―in which a party seeking
reimbursement of response costs need not be liable to a third party, such as the EPA―a party
seeking contribution must already be liable to a third party. See id. Recovery actions allow a
plaintiff to recoup only “necessary costs of response incurred by that party.” 42 U.S.C.
§ 9607(a)(4)(B). However, a plaintiff does not “incur” its own response costs when it pays to
satisfy a settlement agreement or court judgment; rather, it reimburses other parties for the costs
they incur. Atl. Research Corp., 551 U.S. at 139. Thus, a plaintiff that has entered settlement
may only bring a contribution action against other PRPs, not a cost recovery action. Hobart,
758 F.3d at 767.
The effective date of a settlement agreement under CERCLA § 113(f)(3)(B) triggers the
running of a three-year statute of limitations for a contribution action. Hobart, 758 F.3d at 775.
However, to trigger the statute of limitations, an agreement must constitute an “administrative or
judicially approved settlement” within the meaning of § 113(f)(3)(B). See 42 U.S.C.
§ 9613(f)(3)(B). The “defining feature of an ‘administrative settlement’ is that the agreement
‘resolve[s] [the PRP’s] liability to the United States . . . for some or all of a response action or for
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 6
some or all of the costs of such action.’” Hobart, 758 F.3d at 768 (quoting 42 U.S.C.
§ 9613(f)(3)(B)).
To determine whether the agreement resolves a PRP’s liability, we look to the specific
terms of the agreement. Id. at 770. “Whether or not liability is resolved through a settlement
simply is not the sort of question which can or should be decided by a universal rule. Instead, it
requires a look at the terms of the settlement on a case-by-case basis.” Bernstein, 733 F.3d at
213. In interpreting the agreement, we apply state contract law. Hobart, 758 F.3d at 768. Under
Florida law, “the actual language of the [contract] is the best evidence of the parties’ intent, and
its plain meaning controls.” MDS (Canada) Inc. v. Rad Source Techs., Inc., 143 So. 3d 881, 890
(Fla. 2014); see also Richland Towers, Inc. v. Denton, 139 So. 3d 318, 321 (Fla. Dist. Ct. App.
2014) (observing that courts must “construe the agreement according to its plain language and
consider the provisions at issue in the context of the entire agreement in order to achieve a
reasonable construction to accomplish the intent and purpose of the parties”).
B.
Plaintiff maintains that the district court erred in concluding that the statute of limitations
barred its contribution action because the Sanford and Orlando AOCs do not resolve plaintiff’s
liability to the EPA. Plaintiff argues that the AOCs closely resemble the agreement in
ITT Industries, Inc. v. BorgWarner, Inc., 506 F.3d 452, and in the Seventh Circuit case Bernstein
v. Bankert, 733 F.3d 190―consent orders that did not resolve liability to the EPA and were
therefore not administrative settlements under § 113(f)(3)(B).
In ITT, the plaintiff voluntarily entered into a 2002 “Administrative Order by Consent”
with the EPA to perform a remedial investigation and feasibility study on a contaminated site in
Michigan. 506 F.3d at 455. Shortly before the anticipated three-year statute of limitations
expired, the plaintiff filed a lawsuit for cost recovery and contribution. Id. The plaintiff argued
that the AOC was an “administrative settlement” for purposes of a contribution action under
§ 113(f)(3)(B). Like the district court, we disagreed, holding that the AOC did not resolve any of
the plaintiff’s liability for at least two reasons. First, the EPA broadly reserved its rights to take
legal action to adjudicate the plaintiff’s liability for failure to comply with the AOC, for costs of
response (past, present, or future), for costs of injunctive relief or enforcement, criminal liability,
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and other damages. Id. at 459. Second, the plaintiff had not conceded the question of its
liability, and the AOC expressly stated that the plaintiff’s “participation in this Consent Order
does not constitute an admission of liability.” Id. at 460.
The Seventh Circuit case, Bernstein, is especially illuminating because it involved two
distinct AOCs at different stages of performance. There, the plaintiffs entered into an
“Administrative Order by Consent” in 1999 to study removal alternatives at a contaminated site
in Indiana and established a trust to reimburse the EPA for past response and oversight costs, as
well as future oversight costs. 733 F.3d at 196−97; see also Bernstein v. Bankert, 702 F.3d 964,
970 (7th Cir. 2012), opinion amended and superseded on rehearing, 733 F.3d 190.
The plaintiffs fully performed their obligations, and the EPA approved their actions in 2000.
702 F.3d at 970. In 2002, the plaintiffs entered into a second, substantially similar
“Administrative Order by Consent” with the EPA to perform hazardous material removal at the
site. Id. at 970−71. The plaintiffs filed a lawsuit in 2008 for cost recovery and declaratory
judgment, as well as state-law claims. Id. at 971. The district court construed the cost recovery
action as a contribution action and dismissed it as barred by the statute of limitations. Id. at
971−72.
On appeal, the plaintiffs argued that their claims were correctly pleaded as cost recovery
actions. The Seventh Circuit agreed with respect to the 2002 AOC, but not the 1999 AOC: first,
it held that the plaintiffs had a time-barred contribution action based on the 1999 AOC because
the AOC resolved at least some of the plaintiffs’ liability upon complete performance in 2000
(the date of the EPA’s approval), thereby triggering the statute of limitations. Id. at 978−81.
Second, regarding the 2002 AOC, the court held that the statute of limitations had not yet begun
to run. Specifically, the court observed that “there can be no meaningful argument” that the
2002 AOC resolved the plaintiffs’ liability because performance was ongoing at the time of
litigation and the EPA expressly conditioned its covenants not to sue or take administrative
action “upon the complete and satisfactory performance by [plaintiffs] of their obligations under
[the AOC].” Id. at 977, 983.
At the defendants’ request, the Bernstein court granted panel rehearing to clarify issues
raised by the EPA as amicus curiae with respect to whether parties may structure an
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administrative settlement with the EPA to immediately resolve liability. 733 F.3d at 196. In its
resulting opinion, the Seventh Circuit explained that a responsible party “may obtain an
immediately effective release from the EPA in a settlement, or it may obtain only a performance-
dependent conditional covenant not to sue with an accompanying disclaimer of any liability.” Id.
“Whether, and when, a given settlement ‘resolves’ a party’s liability to the EPA within the
meaning of 42 U.S.C. § 9613(f)(3)(B) is ultimately a case-specific question dependent on the
terms of the settlement before the court.” Id. The court emphasized that the defendants and the
EPA erred in equating the signing of an AOC with the resolution of liability. Id. at 210.
Applying traditional rules of statutory interpretation, it explained that “liability [is] ‘resolved’
when the issue of liability is decided, in whole or in part, in a manner that carries with it at least
some degree of certainty and finality.” Id. at 212 (emphasis in original). In short, “[t]o meet the
statutory trigger for a contribution action under § 9613(f)(3)(B), the nature, extent, or amount of
a PRP’s liability must be decided, determined, or settled, at least in part, by way of agreement
with the EPA.” Id. (emphasis omitted).
Applying these principles, the Seventh Circuit again held that the 2002 AOC did not
resolve the plaintiffs’ liability for two reasons. First, the court observed that the plaintiffs
refused to consider the AOC to be an admission of liability, citing a provision of the AOC stating
that it “shall not constitute any admission of liability by any (or all) of [the plaintiffs].” Id. at
203−04, 212. Second, “the EPA only conditionally promised to release [the plaintiffs] from
liability” upon complete performance of the AOC and certification of such promise. Id. at 212
(emphasis in original). The court reasoned that this conditionality meant that if resolution of
liability was intended, it “would not occur until performance was complete, which is the first
time at which the covenant would have any effect.” Id. In support of its reading, the court
observed that the EPA “expressly reserved its right to seek legal or equitable relief to enforce the
terms of the Order at any time before those covenants went into effect.” Id. at 212−13 (internal
quotation marks and alterations omitted). In making this observation, the court clarified that, “if
the EPA had included an immediately effective promise not to sue as consideration for entering
into the agreement, the situation would be different.” Id. at 213. But, in Bernstein, that was not
the case. In summary, the Seventh Circuit observed: “The parties to a settlement may choose to
structure their contract so that liability is resolved immediately upon execution of the contract.
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Or, the parties may choose to leave the question of liability open through the inclusion of
reservations of rights, conditional covenants, and express disclaimers of liability. In this case,
the parties clearly chose to do the latter―a choice which the EPA typically has great weight to
influence.” Id. at 213−14 (internal citations omitted).
C.
Like the agreements in ITT and Bernstein, the Sanford and Orlando AOCs do not resolve
plaintiff’s liability because resolution of liability is conditioned on plaintiff’s performance and
does not take immediate effect. In both the Sanford and Orlando AOCs, the EPA broadly
reserved its “right to take any enforcement action pursuant to CERCLA or any other available
legal authority . . . for any violation of law or this Consent Order.” This language resembles that
of the ITT AOC, which reserved the EPA’s “right to take any other legal or equitable action as it
deems appropriate and necessary.” ITT AOC, at 20. It also reflects the AOC in Bernstein, in
which the EPA conditionally “covenant[ed] not to sue [the plaintiffs] for judicial imposition of
damages or civil penalties or to take administrative action against [the plaintiffs] for any failure
to perform actions agreed to in this Order,” and further, “in consideration and upon [the
plaintiffs’] payment of the EPA’s response costs, . . . covenant[ed] not to sue or take
administrative action against [the plaintiffs] under Section 107(a) of CERCLA.” 733 F.3d at
203. In Bernstein, those covenants were expressly “conditioned upon the complete and
satisfactory performance” of the AOC by plaintiffs. Id.
Moreover, to the extent the Sanford and Orlando AOCs expressly address the resolution
of plaintiff’s liability, they provide:
Following satisfaction of the requirements of this Consent Order, [plaintiff] shall
have resolved [its] liability to EPA for the performance of the [remedial
investigation/feasibility study] that is the subject of this Order. [Plaintiff is] not
released from liability, if any, for any actions taken beyond the terms of this Order
regarding removals, other operable units, remedial design/remedial action
(RD/RA), or activities arising pursuant to section 121(c) of CERCLA.
This language goes a step beyond the conditional covenants not to sue and reservation of rights
in ITT and Bernstein to explicitly condition the resolution of liability on performance.
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The dissenting opinion suggests that because the parties included any reference to the
resolution of liability, we should infer that they intended to resolve plaintiff’s liability. That
interpretation, however, ignores the context in which the reference is made. The AOCs do not
provide that plaintiff has “resolved its liability to the EPA as of the effective date of this
agreement,” but rather state, “[f]ollowing satisfaction of the requirements of this Consent Order,
[plaintiff] shall have resolved [its] liability to the EPA . . . .” The phrase is better interpreted as
conditioning the resolution of plaintiff’s liability on plaintiff’s performance. To conflate these
phrases would compromise the meaning of the parties’ chosen language.
As to the admission of liability by plaintiff, the Sanford AOC is silent. The Orlando
AOC, however, provides that “participation of [plaintiff] in this Order shall not be considered an
admission of liability.” This provision parallels the non-admission of liability provisions in the
ITT and Bernstein AOCs. See ITT, 506 F.3d at 460 (“participation in this Consent Order does
not constitute an admission of liability”); Bernstein, 733 F.3d at 204 (the plaintiffs’ agreement
“shall not constitute any admission of liability”). In short, there are no material differences
between the AOCs in ITT and Bernstein that warrant a different outcome in this case. We
therefore hold that the Sanford and Orlando AOCs do not resolve plaintiff’s liability for purposes
of CERCLA § 113(f)(3)(B).
Our recent case of Hobart Corp. v. Waste Management of Ohio, Inc., 758 F.3d 757,
reinforces this conclusion. In that case, we considered whether a 2006 Administrative
Settlement and Order on Consent (“ASAOC”) with the EPA constituted an “administrative
settlement” for purposes of CERCLA § 113(f)(3)(B), 42 U.S.C. § 9613(f)(3)(B). Hobart,
758 F.3d at 763. We held that the ASAOC was an administrative settlement, thereby affirming
the district court’s dismissal of the plaintiffs’ contribution action as time-barred. Id. at 768−71.
We based our reasoning on three provisions: first, the ASAOC provided that the parties agreed
that the agreement “constitutes an administrative settlement for purposes of Section 113(f)(3)(B)
of CERCLA . . . pursuant to which the [plaintiffs] have, as of the Effective Date, resolved their
liability to the United States for the Work, and Future Response Costs.” Id. at 768−69; Hobart
ASAOC ¶ 96b. We explained that this provision expressed the parties’ intent to resolve some of
the plaintiffs’ liability because the parties expressly designated the agreement as an
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“administrative settlement,” cited the relevant statutory provision, and made immediately
effective resolution of plaintiffs’ liability. Id. at 769. Second, we cited the title of the
agreement: “Administrative Settlement Agreement and Order on Consent.” Id. We observed
that the title “precisely matched the statutory language in § 113(f)(3)(B) (‘administrative or
judicially approved settlement.’).” Id. Third, we considered the EPA’s broad covenant not to
sue or take administrative action, taken “[i]n consideration of the actions that will be performed
and the payments that will be made by [the plaintiffs] under the terms of this Settlement
Agreement.” Id.; Hobart ASAOC ¶ 82. Reading that provision in concert with the above
paragraphs, we concluded that the parties intended for the ASAOC to resolve the plaintiffs’
liability to the government as of the effective date of the ASAOC. Hobart, 758 F.3d at 769.
In Hobart, we went on to identify four “material differences” between the ASAOC in
Hobart and AOC in the ITT case. Id. at 770. First, the title of the agreement in Hobart included
the phrase “administrative settlement,” while the ITT agreement did not, which we considered
probative of intent. Id. Second, and more substantively, the ASAOC explicitly stated that the
plaintiffs’ liability was resolved while the ITT AOC’s analogous paragraph contained “no
explicit statement that ITT Industries had resolved its liability.” Id. Third, regarding that same
paragraph, the ASAOC contained a reference to the relevant contribution statute, § 113(f)(3)(B),
while the analogous paragraph in the ITT AOC did not. Id. Fourth and finally, the government’s
covenant not to sue was much broader in the ASAOC than the ITT AOC and took effect
immediately, and, at the same time, the government’s reservation of rights and ability to
withdraw from the ASAOC was narrower than the ITT AOC. Id. With respect to the Seventh
Circuit’s Bernstein case, we observed that it was distinguishable from Hobart because resolution
of liability was contingent on performance and was therefore not “definitively settled” upon
signing of the AOC in Bernstein. Id. at 771.
Our analysis in Hobart supports our conclusion that the Sanford and Orlando AOCs do
not resolve plaintiff’s liability and are therefore not administrative settlements. Most compelling
is that the “material differences” between the Hobart ASAOC and the ITT AOC likewise
separate the Sanford and Orlando AOCs from the Hobart ASAOC. With respect to the title of
the agreements, neither the Sanford nor Orlando AOC is titled “administrative
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settlement”―a phrase that is not found anywhere in either AOC. Regarding the resolution of
liability, the instant AOCs expressly condition the resolution of liability on performance of the
contract, as opposed to resolving liability on the contract’s effective date. Specifically, the
AOCs provide: “[F]ollowing satisfaction of the requirements of this Consent Order, [plaintiff]
shall have resolved its liability.” This language is distinguishable from that of the Hobart
ASAOC and is more like the conditional language of the Bernstein agreement, which Hobart
distinguished for failure to “definitively settle[]” the plaintiffs’ liability. 758 F.3d at 771.
Indeed, the language of the instant AOCs goes beyond that of the Bernstein agreement to
expressly condition resolution of liability on performance (as opposed to inferring the
conditional resolution of liability based on the conditions attached to the EPA’s covenant not to
sue and broad reservation of rights). Finally, the Hobart court observed that the government’s
covenant not to sue was broader, and reservation of rights narrower, in the Hobart ASAOC than
the ITT AOC. Here, the Sanford and Orlando AOCs expressly condition the EPA’s covenant not
to sue on “complete and satisfactory performance by [plaintiff] of [its] obligations under this
[AOC],” and broadly reserve the EPA’s rights until “satisfaction of the requirements of this
[AOC].” These “material differences” thus illustrate that the instant AOCs are more like the
AOC in ITT than the ASAOC in Hobart.
D.
Defendant’s arguments to the contrary are unconvincing. It is defendant’s position that
the AOCs resolved at least some of plaintiff’s liability once plaintiff “cut a check” to the EPA for
past response costs. We disagree for two simple reasons. First, defendant’s argument does not
comport with the language of the AOCs, which conditions the resolution of liability on
complete―not partial―performance. The reservation of rights provision, for example, states
that plaintiff “shall have resolved [its] liability to EPA” “following satisfaction of the
requirements of this Consent Order,” not any single requirement. (Emphasis added.) And the
covenants not to sue are “conditioned upon the complete and satisfactory performance [by
plaintiff] of [its] obligations under this Order.” Second, we are doubtful that the tendering of a
check to the EPA distinguishes this case from the aforementioned cases. In every case, the
plaintiffs agreed to reimburse the EPA for past costs incurred. In ITT and Hobart, the parties
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agreed that “[plaintiffs] shall pay” to the EPA certain specified costs upon receiving a bill from
the EPA. ITT AOC, at 15; Hobart ASAOC, ¶ 79. In Bernstein, the AOC included a specific
amount: the plaintiff agreed to pay $112,799.53 within 60 days of the effective date of the AOC.
Bernstein AOC, at 20. There is no reason to believe that the Bernstein plaintiff failed to tender
payment by the deadline or that the ITT plaintiff failed to pay the EPA when it received a bill.
And partial performance seems to have made no difference in Bernstein, in which performance
of the 2002 AOC was ongoing at the time of litigation. Accordingly, even if defendant’s
argument did not contravene the language of the AOCs, we would not conclude that payment of
some costs transformed the AOC into an administrative settlement.
Finally, defendant argues that the AOCs are bilateral contracts, characterized by an
exchange of mutual promises to do something in the future and enforceable at the time of the
exchange, as opposed to the time of performance. The dissenting opinion takes this argument
further, arguing that one of our prior cases, RSR Corp. v. Commercial Metals Co., 496 F.3d 552
(6th Cir. 2007), is binding precedent that “precludes [a] distinction between immediate and
conditional effectiveness as a basis for determining whether an agreement has resolved a PRP’s
liability.” The dissent is the first to suggest that RSR Corp. is dispositive.
In RSR Corp., the plaintiff entered into a judicially approved consent decree in which it
agreed to reimburse the EPA for past and future response costs, finance and perform remedial
work at a contaminated site, and undertake additional future response actions. Id. at 554. In
return, the EPA agreed not to sue or take administrative action against the plaintiff that would
impose further liability, and the plaintiff received the right to seek contribution against other
PRPs. Id. More than three years later, the plaintiff filed a contribution action against the
defendant, which moved to dismiss the action as barred by the statute of limitations. Id. At issue
in that case was whether CERCLA’s three-year statute of limitations on contribution actions or
six-year limitations period for cost recovery actions governed the judicial consent decree. Id. at
555−56. After a detailed discussion of CERCLA’s statutory framework, we concluded that
plaintiff’s action was one for contribution governed by a three-year statute of limitations. Id. at
556. Only then did we briefly address RSR’s argument raised in its reply brief that it “could not
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 14
have resolved its liability to the United States in the consent decree before the completion of the
remedial action.” Id. at 558. We observed that,
RSR’s promise of future performance was the very consideration it gave in
exchange for the United States’ covenant not to seek further damages. RSR and
its co-defendants in other words resolved their liability to the United States by
agreeing to assume all liability (vis-à-vis the United States) for future remedial
actions. And even if the covenant regarding future response costs did not take
effect until the remedial action was complete, the statute of limitations for
contribution actions runs from the “entry” of the settlement, 42 U.S.C.
§ 9613(g)(3)(B), not from the date that each provision of that settlement takes
effect.
Id. We thus rejected RSR’s attempt to evade the three-year statute of limitations.
Notably, RSR Corp. did not interpret the various provisions of the consent decree for
purposes of determining whether the parties intended to resolve liability by way of the consent
decree, as did ITT, Hobart, and Bernstein. In fact, it is far from clear from our opinion that RSR
even contested that the parties intended to resolve its liability by way of the consent decree. In
RSR Corp., we assumed, “[i]n view of the apportionment of liability for past and future response
costs among the United States, RSR and its co-defendants [that] the consent decree was a cost-
recovery settlement under § 122(h) as well as a cleanup agreement under § 122(d)(1) [and]
[b]ecause the consent decree established RSR’s liability, its contribution action regarding those
‘costs’ accrued on the date of the consent decree (April 12, 1999) and expired three years later.”
Id. Only after we observed that the consent decree had resolved liability―without engaging the
various provisions of the consent decree―did we reason that “even if the covenant . . . did not
take effect until the remedial action was complete, the statute of limitations for contribution
actions runs from the ‘entry’ of the settlement . . . , not from the date that each provision of that
settlement takes effect.” Id. To be clear, we do not fault the RSR Corp. court for declining to
consider whether the parties intended the consent decree to resolve RSR’s liability, as it appears
that the issue was not squarely before the court. Where that leaves us is this: we have at least
two Sixth Circuit cases, ITT and Hobart, and the Seventh Circuit case of Bernstein, that are more
applicable than RSR Corp. We thus disagree that RSR Corp. forecloses our resolution of this
case.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 15
Since RSR Corp., both the Seventh Circuit in Bernstein and this circuit in Hobart have
distinguished the consent decree in RSR Corp. from the contracts at issue in those cases. In
Bernstein, the Seventh Circuit concluded that RSR Corp. was distinguishable based on “obvious
and dispositive differences in the facts”:
In [RSR Corp.], the consent order contained an immediately effective release from
liability. In this case, it did not. In fact, far from immediately resolving all
liability, our AOC immediately resolved none. So, the consideration in [RSR
Corp.] was an immediate release from liability; the consideration in this case was
a conditional promise to release from liability if and when performance was
completed. Given the nature of the statutory trigger, that distinction clearly
warrants a different result.
Bernstein, 733 F.3d at 213 (citation omitted). Likewise, in Hobart, our court observed that the
ASAOC in that case, like the consent decree in RSR Corp., went into effect on the effective date
of the ASAOC, whereas in Bernstein the plaintiff “had to meet certain prerequisites before the
[AOC] went into effect.” 758 F.3d at 771.
The dissenting opinion maintains that the Bernstein and Hobart courts erred in their
interpretation of the consent decree in RSR Corp. Specifically, the dissent unearths the
underlying 1999 judicial consent decree, not quoted in the RSR Corp. decision, to show that the
consent decree was not immediately effective. As a preliminary matter, it is not clear that the
Bernstein or Hobart court erred. The covenant not to sue provision in the RSR Corp. consent
decree provides:
In consideration of the actions that will be performed and the payments that will
be made by the Settling Defendants under the terms of the Consent Decree . . . the
United States covenants not to sue or to take administrative action against Settling
Defendants . . . . [T]hese covenants not to sue shall take effect upon the receipt
by EPA of the payments required . . . . With respect to future liability, these
covenants not to sue shall take effect upon Certification of Completion of
Remediation Action by EPA.
RSR Corp. Consent Decree, at 79.1 Quoting this provision in part, the Bernstein court probably
erred in characterizing the covenant not to sue as immediately effective, but did not necessarily
err in interpreting the resolution of liability as immediately effective, especially when read in
light of our court’s interpretation of the consent decree in RSR Corp., 496 F.3d at 558.
1
United States v. Shane, 3:89-cv-383 (S.D. Ohio) (record entry 436).
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 16
We observed that RSR and its co-defendants had agreed to resolve liability by agreeing to
assume all liability for future actions, and, “even if the covenant regarding future response costs
did not take effect until the remedial action was complete, the statute of limitations for
contribution actions ran from the date of ‘entry’ of the settlement . . . , not from the date each
provision of the settlement takes effect.” Id. In other words, the Bernstein court reasonably
distinguished between a case in which parties “immediately resolv[ed] liability” based on
promises of future action and “a conditional promise to release from liability if and when
performance was completed.” Bernstein, 733 F.3d at 213. The effect of the former is an
immediately effective release of liability (as of the effective date of the agreement) and the effect
of the latter is no resolution of liability. The same is true for the Hobart court, which relied on
the same distinction.
More importantly, even if we assume that the Bernstein and Hobart courts misread the
RSR Corp. consent decree, RSR Corp. does not preclude a distinction between immediate and
conditional effectiveness because our more recent published decision in Hobart adopts and
ratifies this distinction. Regardless of the actual language of the RSR Corp. consent decree, our
court’s 2014 decision draws a bright line between cases in which the resolution of liability is
immediately effective and when the resolution of liability is subject to what the dissent calls a
“condition precedent.” In Hobart, the court distinguished an agreement reading, “The Parties
agree that this Settlement Agreement constitutes an administrative settlement for purposes of
Section 113(f)(3)(B) of CERCLA . . . pursuant to which [the plaintiffs] have, as of the Effective
Date, resolved their liability to the United States for the Work, and Future Response Costs,”
758 F.3d at 769, from the Bernstein AOC, which required the PRP “to meet certain prerequisites
before the administrative order of consent went into effect,” id.; see also Bernstein, 733 F.3d at
212. It then explained that where liability was settled on the effective date, “liability was
definitively settled,” which is “factually distinct” from cases in which there were prerequisites to
settling liability. The dissent recognizes that there is a difference between cases in which
resolution of liability is subject to a “condition precedent,” as opposed to a “condition
subsequent,” but asserts that the distinction “does not represent a rational basis” for resolving
liability. Because our recently published decision in Hobart says this difference is legally
significant, we must disagree with the dissent.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 17
Finally, we acknowledge the dissent’s concerns about the “inconsistency” in our circuit’s
analysis of settlement agreements under CERCLA § 113(f). Some historical background helps
to explain the development of our case law. In 2005, the EPA revised its model AOCs.
See Susan E. Bromm & Bruce S. Gelber, U.S. EPA & U.S. DOJ, Interim Revisions to CERCLA
Removal, RI/FS and RD AOC Models to Clarify Contribution Rights and Protection Under
Section 113(f) (Aug. 3, 2005). Although defendant asks us to consider the EPA’s memorandum
in interpreting the AOCs in this case, our court has already held that the “EPA memorandum is
parol evidence, which can be consulted only in certain limited circumstances [and] [t]his
situation does not fall within one of those narrow exceptions.” Hobart, 758 F.3d at 770−71;
see also Duval Motors Co. v. Rogers, 73 So. 3d 261, 265 (Fla. Dist. Ct. App. 2011) (“As a
general rule, evidence outside the contract language, which is known as parol evidence, may be
considered only when the contract language contains a latent ambiguity.”). We therefore do not
consult the EPA’s memorandum for purposes of interpreting the AOCs, but we do acknowledge,
for historical background, that the EPA made significant changes to its AOCs in 2005.
Among those revisions, the EPA retitled its model “Administrative Order on Consent,” as
“Administrative Settlement Agreement and Order on Consent,” and referred to the document as a
“settlement agreement.” EPA Mem., passim. It also inserted a provision stating that the parties
“agree that this Settlement Agreement constitutes an administrative settlement for purposes of
Section 113(f)(3)(B) of CERCLA, 42 U.S.C. § 9613(f)(3)(B), pursuant to which [specified
PRPs] have, as of the Effective Date, resolved their liability to the United States for the Work,
Past Response Costs, and Future Response Costs.” Id. at 5. In Hobart, a case involving a 2006
ASAOC, our court found this modified language significantly probative of an intent to resolve
the PRP’s liability. 758 F.3d at 768−69. The addition of these modifications thus explains a
departure from our prior cases, separating pre-2005 AOCs that do not provide for resolution of
liability on the effective date from those post-2005 ASAOCs that do. This is not to say that we
will universally conclude that all post-2005 ASAOCs resolve a PRP’s liability, or that all pre-
2005 AOCs do not, but this historical development serves to explain the “inconsistency”
mentioned by the dissent. It also reinforces our conclusion that the pre-2005 AOCs in this case
are more like the 2002 ITT and Bernstein AOCs, and affirms the relevance of provisions
detailing the EPA’s reservation of rights, covenant not to sue, and the plaintiff’s non-admission
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 18
of liability. Ultimately, in light of the guidance available to us in ITT and Bernstein, we cannot
agree with the dissent that the “inconsistency” in our case law justifies the conclusion that the
AOCs resolve plaintiff’s liability. Because we rule in favor of plaintiff on its statute of
limitations argument, we need not reach its remaining claims of error.
III.
For these reasons, we reverse the judgment of the district court and remand for further
proceedings consistent with this opinion.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 19
_________________
DISSENT
_________________
SUHRHEINRICH, Circuit Judge, dissenting. The question before this court is whether
the Sanford and Orlando Administrative Orders by Consent (“Sanford/Orlando AOCs”)
constitute “administrative settlements” within the meaning of CERCLA—that is, whether they
“resolved [plaintiff Progress Energy’s] liability to the United States . . . for some or all of a
response action or for some or all of the costs of such action . . . .” 42 U.S.C. § 9613(f)(3)(B).
Although the Sanford/Orlando AOCs contain several provisions ITT Industries, Inc. v.
BorgWarner, Inc., 506 F.3d 452 (6th Cir. 2007), and Hobart Corp. v. Waste Management of
Ohio, Inc., 758 F.3d 757 (6th Cir. 2014), found indicative of an intent not to resolve liability, I
disagree with the majority’s comparative analysis because it disregards two key similarities
between the AOCs here and the agreements in Hobart and RSR Corp. v. Commercial Metals
Co., 496 F.3d 552 (6th Cir. 2007), agreements this Court found resolved liability.1 These
similarities dictate a different result.
I further dissent because many of the factors identified in this Circuit’s case law to
determine whether an agreement resolves liability are arbitrary and immaterial.
A. The Import of the AOCs’ “Resolved Their Liability” Language and Exchange of
Future Promises for Performance
The majority bases its decision primarily on similarities between the Sanford/Orlando
AOCs and the AOCs in ITT and Bernstein v. Bankert, 733 F.3d 190 (7th Cir. 2012), both of
which the respective ruling courts found not to be administrative settlements. In my opinion,
however, two critical features of the Sanford/Orlando AOCs align them more closely with the
Hobart/RSR Corp. agreements by demonstrating the parties’ intent to enter into an administrative
settlement. First, the Sanford/Orlando AOCs include the phrase “resolved their liability” from
42 U.S.C. § 9613(f)(3)(B), a deliberate reference to the statute authorizing a contribution action
1
Hobart dealt with an administrative settlement, whereas RSR Corp. addressed a judicially approved
settlement. Both administrative settlements and judicially approved settlements must “resolve [a potentially
responsible party (“PRP”)’s] liability to the United States” to entitle the PRP to a contribution action. 42 U.S.C.
§ 9613(f)(3)(B).
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 20
that Hobart found significant. Second, the AOCs express an exchange of promises that RSR
Corp. ruled resolved liability: Progress Energy agreed to reimburse the EPA’s response costs and
perform a remedial investigation and feasibility study (RI/FS) in exchange for the EPA’s
covenant not to sue for the recovery of these costs or the performance of the RI/FS.
1. “Resolved Their Liability” Language
The Orlando/Sanford AOCs provide: “Following satisfaction of the requirements of this
Consent Order, Respondents shall have resolved their liability to EPA for the performance of the
RI/FS that is the subject of this Order.” “[H]ave resolved their liability” mirrors 42 U.S.C.
§ 9613(f)(3)(B), which entitles a “person who has resolved its liability to the United States . . . in
an administrative or judicially approved settlement” to a contribution action. This inclusion of
42 U.S.C. § 9613(f)(3)(B)’s language distinguishes the Sanford/Orlando AOCs from the
ITT/Bernstein agreements. As the Hobart court noted, the ITT AOC’s lack of any “explicit
statement that ITT Industries had resolved its liability” distinguished it from the Hobart
Administrative Settlement and Order on Consent (“ASAOC”)’s explicit statement that “the
Respondents have, as of the Effective Date, resolved their liability.” Hobart, 758 F.3d at 770;
Hobart ASAOC, at 31. Therefore, under Hobart, an AOC’s explicit acknowledgement of
resolved liability represents at least one indication of an administrative settlement. Consistent
with this reasoning from Hobart, the district court viewed the Sanford/Orlando AOCs’ explicit
resolution of liability as a key indication that both AOCs were administrative settlements.
The AOCs’ reference to the § 9613(f)(3)(B) language not only separates them from the
ITT/Bernstein agreements but also reflects an intent to enter into an administrative settlement
with all its attendant statutory consequences. Although the language resolving liability in the
Hobart ASAOC differs in verb tense from the language resolving liability in the
Sanford/Orlando AOCs, they share a deliberate reference to the statutory language entitling a
settling potentially responsible party (“PRP”) to a contribution action. According to Hobart,
such a deliberate reference to the statute manifests an intent to form an administrative settlement.
See Hobart, 758 F.3d at 768-69. Both the Hobart court and the majority lend weight to the
Hobart ASAOC’s inclusion of “administrative settlement” in its title as well as its
acknowledgement of itself as “an administrative settlement for purposes of Section 113(f)(3)(B)
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 21
of CERCLA.” See id. at 768-69; Hobart ASOAC, at 31; Maj. Op. at 10-12. These aspects of the
ASAOC are significant not because they satisfy any technical requirement but rather because
they demonstrate the parties’ awareness of the governing statute and an intent to align their
agreement with the statutory framework. See Hobart, 758 F.3d at 768; Maj. Op. at 10-11. The
Sanford/Orlando AOCs may not label themselves “administrative settlements,” but they come
close by mirroring the statutory language that defines an administrative settlement: “Respondents
shall have resolved their liability.” With this conscious use of the statutory language, the parties
deliberately manifested their intent to enter into an administrative settlement.
2. RSR Corp.’s Binding Precedent Regarding the Exchange of Promises for Future
Performance and a Conditional Covenant Not to Sue
The majority acknowledges that the Sanford/Orlando AOCs contain language indicating
Progress Energy “shall have resolved their liability,” but reasons that the language does not in
fact resolve Progress Energy’s liability since the resolution is conditioned upon Progress
Energy’s performance. Maj. Op. at 10. As the opinion further points out, the EPA’s covenants
not to sue in the Sanford/Orlando AOCs take effect only upon Progress Energy’s payment of
past and future response costs and upon issuance of the EPA’s notice of completion verifying
Progress Energy’s performance of the work addressed in the consent order. Maj. Op. at 12. The
analysis contrasts these conditional provisions with the immediately effective resolution of
liability and covenant not to sue in the Hobart ASAOC. Maj. Op. at 12. The problem, however,
is that the earlier-decided RSR Corp. precludes this distinction between immediate and
conditional effectiveness as a basis for determining whether an agreement has resolved a PRP’s
liability. See Darrah v. City of Oak Park, 255 F.3d 301, 309 (6th Cir. 2001) (quoting Salmi v.
Sec’y of Health & Human Servs., 774 F.2d 685, 689 (6th Cir. 1985)) (holding that a three-judge
panel cannot overrule the decision of an earlier panel “‘unless a United States Supreme Court
decision requires modification or this Court sitting en banc overrules the prior decision’”).
In RSR Corp., the plaintiff filed a CERCLA contribution suit more than three years after
entering into a judicially approved consent decree with the United States. RSR Corp., 496 F.3d
at 554. The consent decree required RSR and the other settling defendants to reimburse the
United States for past and future response costs and to perform remedial work on a contaminated
site. Id. The consent decree included the United States’ covenant not to sue or take
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 22
administrative action against RSR and the other settling defendants. Id. Although not quoted in
full in RSR Corp., the RSR agreement’s covenant not to sue states:
[T]he United States covenants not to sue or to take administrative action against
Settling Defendants pursuant to Sections 106 and 107(a) of CERCLA . . . .
Except with respect to future liability, these covenants not to sue shall take effect
upon the receipt by EPA of payments required by Paragraph 49 of Section XVI
(Reimbursement of Response Costs). With respect to future liability, these
covenants not to sue shall take effect upon Certification of Completion of
Remedial Action by EPA.
RSR Consent Decree, at 79.2 The RSR agreement did not contain any provisions explicitly
addressing resolution of RSR’s liability under 42 U.S.C. § 9613(f)(3)(B).
RSR argued that the consent decree was not a judicially approved settlement because
RSR could not have resolved its liability before completing the remedial action that triggered the
EPA’s covenant not to sue for future liability. RSR Corp., 496 F.3d at 558. The court rejected
this argument, finding RSR and the EPA exchanged promises of future performance that created
an enforceable, bilateral contract:
RSR insists that it could not have resolved its liability to the United States in the
consent decree before the completion of the remedial action. But RSR’s promise
of future performance was the very consideration it gave in exchange for the
United States’ covenant not to seek further damages. RSR and its co-defendants
resolved their liability to the United States by agreeing to assume all liability (vis-
à-vis the United States) for future remedial actions. And even if the covenant
regarding future response costs did not take effect until the remedial action was
complete, the statute of limitations for contribution actions runs from the “entry”
of the settlement, 42 U.S.C. § 9613(g)(3)(B), not from the date that each provision
of that settlement takes effect.
2
The RSR Corp. Consent Decree is available on the Southern District of Ohio’s electronic docket. The case
number is 3:89-cv-383, and the consent decree may be found at R.436. Although not on the record in this case,
I would take judicial notice of the RSR Corp. Consent Decree as part of the public record of a different case. See
Scotty’s Contracting & Stone, Inc. v. United States, 326 F.3d 785, 789 & n.1 (2003) (taking judicial notice of a brief
filed with a court of record in a different case to interpret the holding of that case). Although judicial notice is
appropriate only when a fact “is not subject to reasonable dispute,” Fed. R. Evid. 201(b); In re Omnicare, Inc.
Securities Litigation, 769 F.3d 455, 465-66 (6th Cir. 2014), the language of the RSR Corp. Consent Decree is not
subject to reasonable dispute because it is capable of accurate and ready determination from the public docket of the
court of record. See Scotty’s, 236 F.3d at 789 n.1.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 23
Id. (internal citation omitted). Ultimately, the court held the consent decree constituted a
judicially approved settlement that resolved RSR’s liability and triggered the statute of
limitations for its contribution action. Id.
The contractual exchange in the RSR Corp. consent decree closely resembles the mutual
promises in the Sanford/Orlando AOCs, including the EPA’s conditional covenant not to sue.
Like RSR, Progress Energy made several promises under each AOC: to conduct and implement
an RI/FS for each site, to pay the EPA for past response costs incurred at each site, and to
reimburse the EPA for future response costs incurred in overseeing the RI/FS’s implementation.
In return, the EPA promised in both RSR Corp. and this case not to sue the settling PRP for
recovery of these costs or to compel further work of the sort described in the agreement, but only
once the EPA received the promised funds and certified completion of the agreed-upon work.
RSR Corp., 496 F.3d at 554; RSR Consent Decree, at 79. Because the RSR Corp. court found
that the contingent nature of the EPA’s promise did not preclude the resolution of RSR’s
liability, neither should this panel decide that the conditional nature of the EPA’s promise not to
sue in the Sanford/Orlando AOCs undercuts their status as administrative settlements. Under
RSR Corp.’s logic, Progress Energy’s promise to undertake future stages of the clean-up process
in exchange for the EPA’s conditional covenant not to sue established a binding contract that
immediately resolved Progress Energy’s liability.
The majority rejects this reading of RSR Corp. by implying that the passage addressing
the resolution of liability is non-binding, stating, “it is far from clear from our opinion that RSR
even contested that the parties intended to resolve liability.” Maj. Op. at 14. The opinion, in
fact, directly recognized the issue as disputed: “RSR insists that is could not have resolved its
liability to the United States in the consent decree . . . .” RSR Corp., 496 F.3d at 558.3 Not only
did the court recognize and address this argument, it was necessary to rule on the argument to
decide the case. Had the court accepted RSR’s position that the consent decree did not resolve
its liability, RSR could have avoided the time-bar on its action by either: 1) taking advantage of
the six-year statute of limitations for cost recovery actions in § 9613(g)(2)(B), id. at 556-58, or 2)
calculating the statute of limitations from the date RSR completed the remedial action and
3
Just because this argument was one of several raised by RSR does not mean the issue “was not squarely
before the court” or otherwise inconsequential. Maj. Op. at 14.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 24
allegedly resolved its liability, rather than the earlier date of the consent decree, see id. at 554,
557-58. Under either route, RSR’s action would not have been time-barred. Yet the court held
RSR’s action was time-barred because: 1) RSR did resolve its liability, and 2) it did so by
“agreeing to” enter into the consent decree—not by completing the actions promised in the
consent decree. Id. at 557-58.4
Rather than accepting what RSR Corp. says on its face, the majority follows a misguided
interpretation of RSR Corp. articulated by the Seventh Circuit in Bernstein and by this Court in
the later-decided Hobart. The Bernstein court distinguished the RSR consent decree from the
AOC at issue in that case by mistakenly construing RSR’s covenant not to sue as “immediately
effective.” Bernstein, 733 F.3d at 213. It appears the Bernstein court reached this faulty
conclusion by relying on a partial quote from RSR Corp. RSR Corp. quoted only part of the
consent decree’s covenant not to sue, stating, “the United States agreed ‘not to sue or take
administrative action’ that would impose additional liability on RSR.” RSR Corp., 496 F.3d at
554 (quoting RSR Consent Decree, at 79). The Bernstein court quoted this passage as support
for its position that the RSR consent decree included “an immediately effective promise not to
sue” that, in turn, established “an immediately effective release from liability.” Bernstein,
733 F.3d at 213. The Hobart court adopted Bernstein’s mistaken understanding of the RSR
agreement’s terms and thus of RSR Corp.’s logic. See Hobart, 758 F.3d at 771 (stating that
“[h]ere, as in RSR Corp., which the Seventh Circuit specifically distinguished, the ASAOC went
into effect on the Effective Date”). The majority, despite acknowledging the RSR covenant not
to sue as conditional, continues to treat the RSR consent decree as different from agreements
bearing a similar exchange of promises for future performance, one of them a conditional
4
Even if the majority is correct that RSR Corp.’s statement on resolution of liability via an exchange of
promises is non-binding or otherwise inapplicable, I would still dissent at least in part. RSR Corp. held that “the
statute of limitations runs from the ‘entry of the settlement,’ 42 U.S.C. § 9613(g)(3)(B), not from the date that each
provision of the settlement takes effect.” RSR Corp., 496 at 558. In other words, even if the RSR Corp. court
accepted the argument that RSR did not resolve its liability until it completed performance, it still would have ruled
RSR’s contribution action time-barred because the statute of limitations runs from the date of entry regardless of
when the PRP resolves liability. According to this rule, Progress Energy’s contribution action for costs arising
under the Sanford AOC is time-barred. Progress Energy completed performance (and, thus, under the majority’s
interpretation, resolved liability) under the Sanford AOC in 2009, Appellant Br. 4, but according to the statutory
language and RSR Corp., the statute of limitations would still relate back to the date of the Sanford AOC in 1998.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 25
covenant not to sue, simply because the later-decided Bernstein and Hobart did so. Maj. Op. at
15.5
In fact, as shown above, the RSR covenant not to sue was not immediately effective, but
rather conditioned upon the settling defendants’ payment to the EPA and the EPA’s certification
of completion of the work—just like the covenants not to sue in this case. Yet the RSR Corp.
court did not view this conditional covenant not to sue as a barrier to resolving liability under
42 U.S.C. § 9613(f)(3)(B). To the contrary, the court addressed the argument presented by
Progress Energy—that liability cannot be resolved under a conditional covenant not to sue until
complete performance—and rejected it on the grounds that such an interpretation is inconsistent
with contractual principles and with setting the statute of limitations from the date of entry of a
judicially approved settlement (or, as in this case, from the date of an administrative settlement).
See RSR Corp., 496 F.3d at 558.
Despite this clear statement of law, the majority clings to the distinction between
immediate and conditional effectiveness as a standard for determining the resolution of liability
because “our more recent published decision in Hobart adopts and ratifies this distinction.” Maj.
Op. at 16. This conclusion ignores the rule that a three-judge panel in the Sixth Circuit cannot
overrule the decision of an earlier panel “unless a United States Supreme Court decision requires
modification or this Court sitting en banc overrules the prior decision.” Darrah, 255 F.3d at 309
(citation omitted). Because neither has happened here, this Court is bound by the earlier RSR
Corp. even though it conflicts with a later panel’s reasoning.
The law in our Circuit on whether an agreement “resolves liability” under 42 U.S.C.
§ 9613(f)(3)(B) is so muddled that it is unsurprising this case engendered disagreement among
the panel. I agree with the majority that Hobart draws a distinction between immediate and
conditional covenants not to sue, but I am persuaded this Court’s earlier decision in RSR Corp.
5
The majority expresses doubt that Bernstein in fact misinterpreted RSR Corp. In its view, Bernstein drew
a reasonable distinction between RSR Corp., where the “parties ‘immediately resolv[ed] liability’ based on promises
of future action,” and Bernstein, where the parties entered into “‘a conditional promise to release from liability if
and when performance was completed.’” Maj. Op. at 16. This analysis rests on the proverbial distinction without a
difference. It stretches logic to treat mutual promises of future performance as dispositive in one case (RSR Corp.)
but ignore them in another (Bernstein) because of a conditional promise of released liability that was actually
present in both cases.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 26
bars that line of reasoning. Therefore, because the Sanford/Orlando AOCs explicitly state that
Progress Energy “shall have resolved their liability to the EPA” and include a bilateral exchange
of promises for future performance, I would affirm the district court’s holding that the
Sanford/Orlando AOCs resolved Progress Energy’s liability and triggered the statute of
limitations for its contribution action.
B. Our Case Law’s Contradictory Stance on Provisions in CERCLA Settlement
Agreements
Although I believe the Sanford/Orlando AOCs are administrative settlements because of
their key similarities with the Hobart and RSR Corp. agreements, the majority applied several
factors consistently with this Circuit’s case law in determining the Sanford/Orlando AOCs did
not resolve Progress Energy’s liability. Specifically, the majority analysis points to three
similarities between the ITT/Bernstein AOCs and the Sanford/Orlando AOCs: 1) a broad
reservation of rights by the EPA, 2) non-admission of liability by the settling PRP, and 3) a
conditional covenant not to sue by the EPA. Both ITT and Hobart recognized these terms as
signs of an intent not to resolve liability, warranting reliance on them in this case.6 But I
question whether these terms are actually relevant to resolving liability under 42 U.S.C.
§ 9613(f)(3)(B). Moreover, the presence of these same terms in the Hobart ASAOC and the RSR
Corp. consent decree reveals a contradiction in this Circuit’s comparative approach and suggests
these terms may be immaterial for purposes of defining an administrative settlement.
1. Reservation of Rights
Analogizing the Sanford/Orlando AOCs to the ITT/Bernstein AOCs based on the EPA’s
broad reservation of rights falls squarely within this Court’s analytical approach. The ITT court
highlighted the ITT AOC’s broad reservation of rights in holding that the AOC did not resolve
liability. ITT, 506 F.3d at 459. The Hobart court, too, described the EPA’s reservation of rights
in the Hobart ASAOC as “much narrower” than in the ITT AOC’s to support a distinction
between the two agreements. Hobart, 758 F.3d at 770.
6
I maintain that both Hobart’s and the majority’s treatment of the conditional covenant not to sue as a sign
of unresolved liability contravenes the earlier-decided, binding RSR Corp. But even assuming the majority’s view of
the conditional covenant not to sue did not misinterpret RSR Corp., I believe that this Circuit’s distinction between
Hobart’s immediately effective covenant not to sue versus conditional covenants not to sue is not aligned with the
statutory language and has not been consistently applied.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 27
It is unclear, however, why a broad reservation of rights by the EPA impacts resolution of
a PRP’s liability. The reservation of rights in the Sanford/Orlando, ITT, and Bernstein
agreements clarifies the EPA’s ability to take legal action in matters not covered by the
agreement and to ensure the PRP’s satisfactory implementation of the clean-up addressed in the
agreement. The reservation of rights does not allow the EPA to take legal action to compel
Progress Energy or other PRPs to undertake actions they already performed pursuant to the
settlement agreement. Because the performance contemplated by the Sanford/Orlando AOCs
does not encompass all possible steps of clean-up under CERCLA, the AOCs leave the EPA with
authority to order parts of clean-up not addressed by agreement. But this reserved authority
should not affect the agreement’s status as an administrative settlement because 42 U.S.C.
§ 9613(f)(3)(B) requires only a resolution of liability for “some” of a response action. Therefore,
this factor should not lead us to hold the AOCs in this case are not administrative settlements.
Moreover, relying on a reservation of rights to find unresolved liability is in tension with
the outcome in Hobart. Although not addressed in Hobart’s published opinion and thus not
binding on this Court, it is noteworthy that the Hobart ASAOC7 contained a reservation of rights
parallel to that in the ITT, Bernstein, and Sanford/Orlando AOCs. The Hobart ASAOC states,
almost identically to the ITT AOC, see Maj. Op. at 9, that “nothing herein shall prevent U.S.
EPA . . . from taking other legal or equitable action as it deems appropriate or necessary.”
Hobart ASAOC, at 28. Given this provision, it is puzzling why the Hobart court described the
ASAOC’s reservation of rights as “much narrower” than the ITT AOC’s. Hobart, 758 F.3d at
770. Perhaps the parties did not bring the ASAOC’s broad reservation of rights to the court’s
attention, or perhaps the court found the provision unimportant in light of the ASAOC’s other
terms indicating a resolution of liability, including those the EPA added to its model AOCs in
2005 (although if the latter scenario was the case, as the majority suggests, the Hobart court did
not say so). Regardless of the reason, Hobart’s disregard of the ASAOC’s broad reservation of
rights exposes an inconsistency in our case law’s analysis of settlement agreements under 42
U.S.C. § 9613(f)(3)(B). The presence of a reservation of rights provision in the Hobart ASAOC
7
As with the RSR Corp. Consent Decree, I would take judicial notice of the Hobart ASAOC as part of the
public record in a different case that is not reasonably subject to dispute. See Scotty’s, 326 F.3d at 789 & n.1.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 28
should at least give this Court pause about the wisdom of continuing to treat such a provision as
indicative of unresolved liability.
2. Non-Admission of Liability
Both ITT and Bernstein emphasized a non-admission of liability by the PRP as a reason
the respective AOCs did not resolve liability. Bernstein, 733 F.3d at 212; ITT, 506 F.3d at 460.
Reliance on the Orlando8 AOC’s similar non-admission of liability to conclude the AOC is not
an administrative settlement thus rests on firm precedential ground.
It is questionable, however, that a refusal to admit liability denotes unresolved liability.
Admitting liability is not the same as resolving liability. Compare Admission, Black’s Law
Dictionary (10th ed. 2014), available at WestlawNext (“a statement in which someone admits
that something is true or that he or she has done something wrong”), with Resolve, Black’s Law
Dictionary (10th ed. 2014), available at WestlawNext (“to find an acceptable or even
satisfactory way of dealing with (a problem or difficulty)”). A person can agree to undertake
actions to resolve a claim against it without admitting to the factual or legal truth purportedly
underlying that claim. Settlement agreements in other contexts frequently include such non-
admission clauses. See 2 Defense of Equal Employment Claims § 14:8 (2015), available at
WestlawNext (observing the “common” use of non-admission clauses by employers settling
employment discrimination claims). CERCLA itself implicitly recognizes this distinction
between admission and resolution of liability in the section governing settlement agreements by
providing, “the participation by any party in the process under this section shall not be
considered an admission of liability for any purpose.” 42 U.S.C. § 9622(d)(1)(B). Although
case law in our Circuit provides a firm basis for treating a non-admission of liability as a sign of
unresolved liability, there is no logical connection between admitting and resolving liability.
Therefore, a non-admission of liability should not be relied upon to find the Orlando AOC is not
an administrative settlement.
Moreover, using a non-admission of liability to hold the Orlando AOC is not an
administrative settlement cuts against the results in RSR Corp. and Hobart. Although not
8
The majority excludes the Sanford AOC from this comparison because the Sanford AOC is silent as to
admission of liability by Progress Energy.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 29
discussed in either published opinion, the agreements in both those cases contained a non-
admission of liability, Hobart ASAOC, at 1; RSR Consent Decree, at 3, yet both agreements
resolved liability. Whatever the reason for the court’s silence (possibly because the parties failed
to bring the term to the court’s attention or because the court considered it immaterial), the
omission demonstrates an uneven application of this factor to settlement agreements brought
before this Court. This inconsistency should lead the Court to reexamine the use of this factor in
determining whether agreements are administrative settlements.
3. Conditional Covenant Not to Sue
Reliance on the Sanford/Orlando AOCs’ conditional covenant not to sue to show
unresolved liability accurately follows Hobart, which distinguished the ASAOC at issue in that
case with the ITT AOC by noting “the covenant not to sue took effect immediately in this case,”
whereas the ITT AOC “requir[ed] payment first.” Hobart, 758 F.3d at 770. As explained earlier,
this Circuit’s distinction between Hobart’s immediately effective covenant not to sue and a
conditional covenant not to sue like in the Sanford/Orlando AOCs misinterprets RSR Corp. But
even if it did not, the distinction is problematic because the Hobart ASAOC places its own
condition on its covenant not to sue. The Hobart ASAOC provides, “This covenant not to sue
shall take effect upon the Effective Date and is conditioned upon the complete and satisfactory
performance by Respondents of all obligations under this Settlement Agreement.” Hobart
ASAOC, at 28 (emphasis added). The published opinion in Hobart does not acknowledge this
conditional language, and therefore this Court cannot infer any binding rule of law from
Hobart’s silence on this matter. But the omission reveals a lack of substantive analysis of
conditional covenants not to sue and whether they differ from an immediately effective yet still
conditional covenant not to sue for purposes of resolving liability under 42 U.S.C.
§ 9613(f)(3)(B). This discussion hardly matters because of the ruling in RSR Corp. that even
fully conditional covenants not to sue may resolve liability. But because a differing
interpretation of RSR Corp. and the conditional covenant not to sue prevailed in this case, it is
worth considering whether an immediately effective but still conditional covenant not to sue is
substantively different from a fully conditional one.
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 30
A condition is a contractual concept that “triggers or negates a duty to render a promised
performance.” Condition, Black’s Law Dictionary (10th ed. 2014), available at WestlawNext.
A condition is precedent where an obligation does not take effect until the condition occurs.
Condition, Black’s Law Dictionary (10th ed. 2014), available at WestlawNext. In the CERCLA
settlement context, where a PRP’s obligations are a condition precedent to the EPA’s covenant
not to sue, the EPA has “the right to sue up until the point when the PRP completed its
obligations.” NCR Corp. v. George A. Whiting Paper, 768 F.3d 682, 691 (7th Cir. 2014). In
contrast, a condition is subsequent where an obligation takes effect immediately but is
discharged upon the happening of the condition. Condition, Black’s Law Dictionary (10th ed.
2014), available at WestlawNext. In terms of an EPA covenant not to sue subject to a condition
subsequent, “the defendants are presently vested with the protections of the statute, subject to
later divestment if they fail to carry out their part of the agreement with the EPA.” Dravo Corp.
v. Zuber, 13 F.3d 1222, 1226 (8th Cir. 1994). The covenant not to sue in the Sanford/Orlando
AOCs appears subject to a condition precedent, whereas the covenant not to sue in the Hobart
ASAOC appears subject to a condition subsequent. The main difference between these two
covenants not to sue is the EPA’s theoretical ability under the Sanford/Orlando AOCs to sue
while the Progress Energy’s contractual performance is ongoing.9
That being said, it is doubtful whether the two types of conditions actually differ in terms
of “resolving liability” under 42 U.S.C. § 9613(f)(3)(B). The permanent effectiveness of both
covenants not to sue depends upon the PRP’s complete and satisfactory performance. Therefore,
both covenants not to sue remain uncertain because of the contingency of complete
performance.10 The PRP under the condition subsequent is susceptible to renewed legal action
9
Even this difference, however, wanes in importance under the limitation of the contractual duty of good
faith and fair dealing, which a party violates by interfering with or failing to cooperate in the other party’s
performance. Restatement (Second) of Contracts § 205. As long as a PRP is making reasonable and good faith
steps towards complete performance, the EPA bringing suit in the middle of performance would likely be a
deliberate interference with the PRP’s ability to fulfill the condition precedent (i.e. its complete performance). In
such a scenario, the EPA could not rely on the failed condition precedent to avoid its contractual obligation not to
sue. See 7A Am. Jur. 2d Contracts § 687.
10
Even if the EPA’s covenant not to sue contained no condition at all, the EPA could still sue a PRP for
breach of contract if the PRP failed to perform its obligations under the settlement agreement. The damages in such
an action would theoretically not be significantly different from an action brought directly under CERCLA. Thus,
even a unconditional covenant not to sue arguably resolves liability to the same extent as a fully conditional
No. 14-4126 Florida Power Corp. v. FirstEnergy Corp. Page 31
in the event of incomplete or dissatisfactory performance just as the PRP under the condition
precedent is susceptible. Our case law’s implicit distinction between the two is therefore
confusing for parties entering into a settlement agreement under CERCLA. In addition, it
appears to overlook the statutory purpose of a three-year statute of limitations for contribution
actions arising out of settlement agreements: “to ensure that the responsible parties get to the
bargaining—and clean-up—table sooner rather than later.” RSR Corp., 496 F.3d at 559.
Delaying the start of the limitations period for settlement agreements with a condition precedent,
but not for agreements with a condition subsequent, is incongruous with the statutory purpose to
expedite clean-up and litigation. To the extent our case law draws a line for purposes of
classifying administrative settlements between immediately effective, conditional covenants not
to sue versus fully conditional covenants not to sue, this distinction does not represent a rational
basis for deciding which settlement agreements give rise to a contribution action under 42 U.S.C.
§ 9613(f)(3)(B). Therefore, such a factor should not be used determine whether the
Sanford/Orlando AOCs resolved Progress Energy’s liability.
Conclusion
I would affirm the decision of the district court because the Sanford/Orlando AOCs
resemble the agreements in RSR Corp. and Hobart in demonstrating the parties’ intent to enter
into an administrative settlement, thereby triggering the three-year statute of limitations for
Progress Energy’s contribution action.
covenant not to sue, since both terms still allow the EPA to sue (for different causes of action) in the event of non-
performance.