By Kenneth A. Ehrlich Following President Carter’s 1980 signing into law of the federal Superfund law, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), many parties facing environmental contamination problems have taken advantage of the law’s relatively expansive net of liable parties, simple proof standard, and joint and several liability scheme. The United States Supreme Court recently issued an important decision that radically changes conventional wisdom in the use of CERCLA to obtain damages for property contamination. The decision also significantly reduces the incentive to file contamination claims in federal court. The Cooper Decision In Cooper Industries, Inc. v. Aviall Services, Inc., Case No. 02-1192, 543 U.S. ____ (2004), the Court ruled that private parties who voluntarily incur response costs to clean up contamination cannot seek contribution from other potentially responsible parties under CERCLA section 113(f)(1) unless: (1) the US EPA or a state has taken action against it (relatively rare) or (2) the party seeking contribution has entered into a CERCLA administrative settlement with a governmental agency. Virtually all courts had previously held that such parties had the affirmative right to bring contribution claims under this provision without either a US EPA action or an administrative settlement. However, the Court left open the question of whether such parties could recover their costs from other potentially responsible parties under another provision of CERCLA, Section 107, that provides for joint and several liability. Most federal courts, including those serving the western United States, have already limited potential claimants under CERCLA Section 107 to only “innocent” parties (not responsible for the contamination and who, after considerable due diligence, could not have known of the contamination). Therefore, the decision could create considerable litigation under CERCLA Section 107 and force claimants to seek remedies outside of CERCLA. Practical Implications According to the Court's ruling, a party can only seek contribution under CERCLA Section 113(f) after:
Currently, most private party contamination claims do not directly involve the USEPA or entail administrative settlements. To the contrary, prior to the Cooper decision, most federal private environmental cost recovery action arose from private parties filing suit under CERCLA Section 107 and/or 113 after incurring significant costs in investigating or remediating soil and/or groundwater contamination pursuant to state agency directives issued under state law. Some opportunistic plaintiffs would even file CERCLA suits upon discovery of contamination, before any agency issues a directive and before incurring significant costs. The Cooper decision, coupled with other decisions limiting CERCLA Section 107 claimants to “innocent” parties, effectively prevents these tactics. After Cooper, parties must change strategies. First, parties should consider whether CERCLA Section 107 could apply (depends on the parties’ “environmental innocence”). Second, if significant future costs are anticipated, parties should consider seeking injunctive relief under the Resource Conservation and Recovery Act. Third, state common law claims such as trespass, nuisance, negligence, and waste remain viable alternatives and can provide relatively expansive damages. Fourth, aggrieved parties should also consider if any contracts, such as leases or purchase and sale agreements, provide any relief. Finally, in circumstances of substantial contamination that could involve many parties and at least millions of dollars in clean up costs, the affected parties may even consider voluntarily triggering the USEPA administrative process to preserve a CERCLA Section 113 remedy. The case will dramatically limit remedies available to plaintiffs under the federal Superfund law and have other general impacts on federal environmental cost recovery litigation . Change remains the only constant in this developing area of environmental law.
For more information on the changes in CERCLA and related issues, please contact Kenneth A. Ehrlich, Esq. at (310) 785-5395, KAE@JMBM.com |
