Cooper Indus. v. Aviall: The End of CERCLA As We Know It?
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In a stunning reversal of well-accepted industry assumptions about private
party rights under the Federal Superfund law, or CERCLA, the U.S. Supreme
Court has dramatically restricted private parties’ ability to obtain “contribution”
for the cost of a Superfund cleanup. In Cooper Industries, Inc. v. Aviall
Services, Inc., issued on December 13, the Court hewed to a strict construction
of CERCLA’s “clear meaning,” ruling that a party performing a cleanup may
seek CERCLA §113(f)(1) contribution only if it was a defendant in a CERCLA
§§ 106 or 107(a) “civil action,” or if it had previously resolved its liability
to federal or state regulators in “an administrative or judicially approved
settlement.” Therefore, absent a formal agreement with state or federal
regulators that “settles” liability, costs incurred by a private party under
mere threat of enforcement, or in performing a voluntary or Brownfield cleanup,
may no longer be recovered through a CERCLA contribution action.
The Court’s Decision
|"Therefore, absent a formal agreement
with state or federal regulators that “settles” liability, costs
incurred by a private party under mere threat of enforcement, or
in performing a voluntary or Brownfield cleanup, may no longer be
recovered through a CERCLA contribution action."
Aviall Services, Inc. purchased four contaminated aircraft engine maintenance
sites in Texas from Cooper Industries, Inc. Threatened with enforcement
action, Aviall began a cleanup “under state supervision.” It then sued Cooper
for CERCLA §113(f)(1) contribution.
The Court analyzed CERCLA’s plain language, and ruled that Section 113
provided only two express avenues for contribution: Section 113(f)(1), for
claims “during or following” specified civil actions; and Section 113(f)(3)(B),
for claims after an administrative or judicially approved settlement that
“resolves liability to the United States or a State.” According to the Court,
Aviall had never been sued under either Section 106 or Section 107. Consequently,
the Court could neither assert nor maintain a Section 113(f)(1) claim.
Cooper framed, but did not answer, a number of critical questions
concerning the rights to cost recovery available to private parties under
other CERCLA sections. For example, Aviall asked the Court to rule that
even if it did not have a right to pursue contribution, it could directly
recover costs under CERCLA § 107(a)(4)(B). The Court, over the dissent of
two Justices, refused to consider the issue. However, the majority did take
pains to note that the Courts of Appeal in the First, Second, Third, Fourth,
Fifth, Sixth, Tenth, and Eleventh Circuits had held that a private party,
itself a PRP, could not pursue a Section 107(a) action against other PRPs.
The Court also refused to consider whether Aviall could pursue a Section
107 cost recovery action for some form of liability other than joint and
several, or whether Aviall had an implied right to contribution under that
section. Finally, it refused to affirm the dictum of Justice Scalia in the
Key Tronic case suggesting Section 107 provided an independent cost-recovery
vehicle. Instead, the Court issued a very narrow opinion: “We hold only
that §113(f)(1) does not support Aviall’s suit.”
Cooper substantially complicates private cost recovery. Here are
some practical steps that can be taken to create, protect or enhance private
- If a party to a remediation project intends to recover contribution
costs from other parties, then it is critical to enter into an administrative
settlement with the relevant state or federal agency before engaging in
cleanup. “Voluntary” cleanup costs, if not backed by a formal agreement
or decree, are now spent at the PRP’s sole risk in the absence of some
state statute or common law right of recovery. Entering into an agreement
with the regulators that “settles” liability, and fixes obligations, seems
to be the right approach for a person seeking to protect CERCLA contribution
- The citizen suit provisions of both CERCLA (§310) and the Resource
Conservation and Recovery Act (“RCRA”)(§7002) can, under some circumstances,
serve as an effective alternative to cost recovery. The CERCLA citizen
suit provides that any person may commence a civil action for injunctive
relief against any person “who is alleged to be in violation of any [CERCLA]
standard, regulation, condition…[or] requirement…” RCRA’s citizen suit
provision provides for injunctive relief against any person who has contributed
to the “past or present handling, storage, treatment, transportation,
or disposal of any solid or hazardous waste which may present an imminent
and substantial endangerment to health or the environment.” This “injunctive
relief” can include an order requiring a responsible person to undertake
cleanup. Therefore, early litigation, before extensive cleanup costs have
been incurred, might make sense in many cases.
- Amend existing pleadings, and write new pleadings, to assert CERCLA
claims under Section 107, not Section 113, as appropriate.
Cooper has made cost-recovery litigation more expensive and more
complicated. However, parties who seek compensation from others for causing
or contributing to the cost of cleanup retain a powerful arsenal of state
and federal statutory weapons. Properly focused and pled, private cost-recovery
actions remain viable and useful.
This Alert was written by
Peter M. Gillon Co-Chair
Greenberg Traurig’s National Environmental Practice Group, and
Reed D. Rubinstein, a
senior member of Greenberg Traurig’s Environmental Practice Group. They
may be contacted in the Washington, D.C. office at (202) 331-3100.
© 2005 Greenberg Traurig
For more information, please review our Environmental Practice descriptions,
or feel free to contact one of our attorneys.
This GT ALERT is issued for informational purposes only and is not intended
to be construed or used as general legal advice. Greenberg Traurig attorneys provide
practical, result-oriented strategies and solutions tailored to meet our clients’
individual legal needs.