GT Alert

Cooper Indus. v. Aviall: The End of CERCLA As We Know It?

January 2005

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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

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.”

Implications

Cooper substantially complicates private cost recovery. Here are some practical steps that can be taken to create, protect or enhance private contribution rights:

• 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 rights.

• 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 of 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

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