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GENERAL SECTION
Supreme Court Limits Contribution
Claims Under Superfund
SUPERFUND LIABILITY – THE WAY IT WAS
Previously, there have been two ways for private parties to recover cleanup costs under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund). One was through a cost recovery action under §107 of the Act and the other was through a contribution action under §113. In most cases, §107 was used by private parties who were not also potentially responsible parties (PRPs – those who have liability for cleanup costs under CERCLA) while PRPs who had incurred response costs sought contribution (cost sharing) from the other PRPs under §113.
NEW DECISION CHANGES THINGS
On December 13, 2004, the U. S. Supreme Court held in Cooper Industries, Inc. v Aviall Services, Inc. that, unless they themselves are subject to an enforcement action under §106 (injunctive relief) or §107 (cost recovery), private parties who undertake private cleanups may not obtain contribution under §113 from other PRPs. Simply put, this means that one PRP cannot voluntarily cleanup a site and then recover costs from other PRPs under §113. Further, although the Supreme Court chose not to address the related issue, it is not clear that they would have standing under §107. (Other courts have previously held that PRPs may not recover costs under §107.)
Thus, it is uncertain under the latest Supreme Court ruling if PRPs who voluntarily clean up a site will be able to recover any of their costs from other PRPs under CERCLA.
IMPLICATIONS FOR DUE DILIGENCE
On its face, this recent decision does not appear to affect the rights of a private party who is not a PRP to recover response costs under CERCLA §107. This may make proper Due Diligence, including “All Appropriate Inquiry” (AAI), an even more critical undertaking in the acquisition of potentially contaminated properties. Without AAI, the current owner of a contaminated party is considered a PRP whose ability to recover any necessary cleanup costs would be limited by the Aviall decision. Further, this decision may reduce the value of potential future cost recovery. Its effect should be considered in assuming the value of future mergers or acquisitions.
OTHER ALTERNATIVES
An alternative to purely voluntary cleanups taken outside of any regulatory program would be to pursue the cleanup under a state voluntary program. Many of these programs, including the Ohio Voluntary Action Program, contain provisions for recovering costs from liable parties. Your legal counsel can help you evaluate these programs as alternatives to CERCLA for recovering costs of remediation.
This Edge is provided for informational purposes only and is not intended as legal advice. For more information on the Aviall decision and how it will affect your ongoing cleanup projects, please consult your legal counsel. For more information on Due Diligence, AAI or on the technical aspects of voluntary cleanups under either CERCLA or the various state voluntary programs, please contact either Dave Strayer or Dan Weed at the Payne Firm by phone (513.489.2255 or 800.229.1443) or email (dcs@paynefirm.com or ddw@paynefirm.com).
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