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Supreme Court Restores Santity To CERCLA

Thank God.  The United States Supreme Court finally cleaned up the debris left from its groundbreaking decision three years ago in Cooper Industries, Inc. v. Aviall Services, Inc.  Now, parties who voluntarily remediate contaminated property may sue other parties for environmental contamination cost recovery under the Comprehensive Environmental Response, Compensation and Liability Act. 

Despite the open question of whether this option was open after the Cooper Industries decision, the now Court ruled under section 107(a) that Potentially Liable Parties can recover these voluntary cleanup costs, even if they are partly responsible for the contamination.

Earlier this month in U.S. v. Atlantic Research Corp., the Court rejected the position that only innocent parties can pursue recovery under CERCLA's joint cost recovery provision, which imposes joint and several liability on all parties.  MIPTC earlier reported on the Eighth Circuit's interpretation of this case, largely upheld by the Supremes in Atlantic Research.

But all is not rosy.  The decision also casts doubt on the value of the USEPA's highly-touted "contribution protection" to PLPs who enter into cash-out settlements.  In a rare unanimous opinion, Justice Thomas declared this "contribution protection" actually offers no protection to parties who "cash-out" CERCLA 107(a) claims with the USEPA.  In contrast, the decision expands a party's remedies when voluntarily cleaning up contaminated property.  Now, you can pursue parties who "cash out" with the USEPA, despite promises from the goverment that those parties were protected.

Ouch.  That's hundreds of thousands of parties, and significant changes to the liability side of many companies' balance sheets.

In other words, if you settle potential liability with the USEPA and don't also settle with all the other responsible parties - a tall order in most contamination cases - you may find yourself paying at least twice, if not more times (depending on the number of Potentially Liable Parties. 

As most everyone knows in the environmental liablity area, CERCLA turns standard tort schemes upside down.  Section 107(a) imposes strict, joint and several liability against PLPs, a hard pill to swallow for most used to our typical scheme of "I'm liable for what damage I cause."   In other words, a party who caused only five percent of the contamination is completely (100%) liable for cleaning up the entire contaminated site. 

Other sections of CERCLA work differently.  Section 113(f)(1), on the other hand, creates what is known as "several" liability, which means that the parties allocate the liability among themselves according to their respective liabilities.  Defendant sued under this section are held responsible for their fair share of the contamination.  

Prior to the Court's clarification in Atlantic Research, you had to choose - either a contribution action under section 113(f)(1) or a section 107(a) claim for joint and several cost recovery.  To some degree, that choice prevented parties responsible for contaminating a site from  receiving compensation for 100% of the cleanup costs.

Cooper Industries turned that world upside down, and severely limited section 113(f)(1) actions only to PLPs who either:  (1) gotten sued under CERCLA section 106 (by the USEPA) or 107; or, (2) entered into a settlement with the USEPA.  That limitation left a wide open group:  PLPs who voluntarily remediated contaminated property without USEPA oversight. 

Now, that question has an answer.  This case, however, continues shifting the supposedly "known" cash-out settlements in prior cases and guarantees confusion for years to come.

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Wednesday, June 27, 2007 at 11:28 Comments Closed (0) |
 
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