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Quote of the Day - When you do a good deed, get a receipt in case Heaven is like the IRS. - Unknown
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Third Circuit Turns CERCLA On Its Head; Companies Take Note: Don't Voluntarily Clean Up

E.I. du Pont de Nemours & Co. faced the Third Circuit, appealing a decision that precluded the company from recovering CERCLA contribution from the United States Government under section 107 of CERCLA.  You see, du Pont had admitted that it contaminated real estate, and as a good corporate citizen, voluntarily cleaned up the contamination it caused.

It also cleaned up the contamination caused by the United States Government. 

Like any good corporate citizen, however, it was not happy with paying more than its fair share, so it asked the Government to help pay.  The U.S. told du Pont it would not contribute, so du Pont, a small country in itself, sued to recover its costs.  The Third Circuit took the matter up in light of the Supreme Court's decision in Cooper Industries v. Aviall, which made sense because the Supreme Court prevented a party from recovering contribution costs under CERCLA section 113, but left open the option of recovery under sections 106 or 107.

Trouble is, there are two older cases (New Castle County v. Halliburton NUS Corp. and Matter of Reading Co., 115 F.3d. 1111) in the Third Circuit that prevent contribution recovery for voluntary cleanup under section 107, the section du Pont used to sue the Government.  While du Pont prides itself on a management scheme (called the DuPont Legal Model) to control its attorneys and their costs, it doesn't appear to have worked too well in this case.

What's the moral of this story?  If your company has liability for contamination of real estate and there are others who are also liable and able to pay, then don't voluntarily clean it up.  Wait until the government issues an order.  You'll be able to obtain contribution from others to clean up the property, and assuming you have the right kind of insurance coverage, you'll be able to trigger it, bringing more money to the party.

Does it make sense?  Is this result Congress wanted when it enacted CERCLA?  Why would the Court punish a good corporate citizen?

du Pont must have forgotten this maximNo good deed goes unpunished.

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Sunday, September 24, 2006 at 11:34 Comments Closed (0) |
 
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