Voluntary clean-up programs Featured

5:47am EDT March 23, 2005
A recent decision by the U.S. Supreme Court in Cooper Industries Inc. v. Aviall Services Inc. might have significant adverse ramifications for companies that perform voluntary contamination remediations and hope to recover some of those costs from other parties who contributed to the contamination.

The issue in Aviall was "whether a private party who has not been sued under Section 106 or Section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) may, nevertheless, obtain contribution under Section 113(f)(1) from other liable parties." The Supreme Court ruled it cannot.

Aviall purchased several Texas properties from Cooper and later discovered that both it and Cooper had contaminated the properties. Aviall notified the state environmental agency about the contamination. The state agency demanded that Aviall clean up the sites. However, neither the state nor the EPA took enforcement actions to compel a clean-up.

Aviall remediated the sites under state supervision in the state's voluntary program and sued Cooper to recover part of the more than $5 million in costs. Aviall's position was that, pursuant to §113(f)(1) of CERCLA, it, as a potentially responsible party (or PRP), was entitled to seek contribution from Cooper, another PRP for the properties in question.

Under Superfund, any person who owned property when it became contaminated, currently owns contaminated property, sent hazardous substances to a property where they were released or transported hazardous substances to a contaminated property is jointly and severally liable for cleaning up the property.

Because the purchaser of contaminated property could be liable for its clean-up, many former industrial properties sit vacant and underused while development is expanding on clean "green fields" properties.

To encourage clean-up, redevelopment and reuse of environmentally impaired properties, essentially every state has passed or has in place a brownfield, or voluntary clean-up program, to encourage the clean up and reuse of brownfield sites. Superfund was also amended to encourage clean-ups.

The Supreme Court analyzed the language in section 113(f)(1) of Superfund, which PRPs frequently use when suing other PRPs to help cover clean-up costs. But the court held that Section 113(f)(1) could not be relied upon unless the plaintiff who was seeking contribution had been sued pursuant to an Administrative Order by a government agency under CERCLA §106 or sued in a cost recovery action under CERCLA §107.

The court did not evaluate whether Aviall could sue Cooper in a cost recover action under CERCLA §107. However, a number of lower courts have held that a PRP that caused contamination may not bring a §107 cost recovery action. Instead, §107 cost recovery suits may only be brought by innocent parties who have incurred clean-up costs.

The court also did not look at Section 113(f)(3) of Superfund, which allows a contribution action by potentially responsible parties who have signed a Superfund Consent Order or Administrative Order with the United States, EPA or a state that requires a clean-up. Since the purposes of the brownfields and voluntary clean-up programs are to encourage private parties to clean up voluntarily, contribution under §113(f)(3) typically would not be available.

While the decision should not have an impact on other independent rights to contribution that may be available, such as those under state law, it has removed one of the most widely used tools to help spread the costs of clean-up among responsible parties.

It may also have the effect of discouraging voluntary clean-ups supervised by a state environmental agency. If one wishes to share clean up costs with another PRP, the party cleaning up may need to negotiate a consent order to require the clean up, defeating the purpose of a voluntary program.

Carolyn S. Hesse is a partner in the Chicago office of Barnes & Thornburg LLP, and a member of the environmental department. She has counseled and litigated on behalf of clients on environmental and OSHA issues nationwide, including RCRA, the Clean Water Act, the Clean Air Act, TSCA, asbestos abatement, community right-to-know laws and voluntary clean-ups of properties. Reach her at (312) 214-8301 or carolyn.hesse@btlaw.com.