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Supreme Court to Hear Landmark Superfund Suit

A lot of people weren't happy with the Supreme Court when it decided Cooper Industries Inc. v. Aviall Services Inc. in 2004. In that case, the High Court overturned the precedents of nine circuit courts and ruled that a landowner who voluntarily paid to clean up a polluted site couldn't make other polluters help pay for the cleanup under Sec. 113 of the Superfund law.

Environmental activists blasted the decision because it discouraged companies from voluntarily cleaning up toxic pollution and let some polluters off the hook. Businesses weren't happy because Cooper essentially punished them for anteing up the cash to clean up hazardous waste that someone else produced. And lower courts were annoyed because the decision led to a tidal wave of lawsuits as owners of Superfund sites looked

for alternative ways to offset their cleanup costs.

But now the Supreme Court has a chance to fix the mess that Cooper created. In February it granted cert on the 8th Circuit's decision in Atlantic Research v. U.S.. In that case, the Supreme Court will consider whether owners of polluted sites that undertake voluntary cleanups can recover costs from other polluters under Sec. 107 of the Superfund law.

"After Cooper, we started seeing a lot of litigation about this issue," says Gabrielle Sigel, a partner in the environmental, energy and natural resources practice at Jenner & Block. "The Court's decision will have an impact on most Superfund cleanups currently ongoing in the U.S."

Splitting Hairs

Prior to Cooper, every circuit except the 1st and 11th had interpreted Sec. 113 to allow companies that cleaned up Superfund sites to sue other "potentially responsible parties" (PRPs) for contribution. Sec. 113 gives any PRP--which the law defines as the generators and transporters of the harmful waste and the owners and operators of the site--that is subject to an EPA enforcement action or a lawsuit the right to sue other PRPs for contribution to the cleanup.

In Cooper, the Supreme Court ruled that Sec. 113 only authorizes contribution suits when the property owner undertakes a cleanup as the result of an enforcement action or civil lawsuit. That means that a landowner who voluntarily cleans up a Superfund site is left to pay for the cleanup alone, even if former owners and operators of the property were responsible for contaminating it.

However, Cooper didn't address whether Sec. 107, which makes all PRPs jointly and severally liable for cleanup costs, provides an implied right of action for a PRP to seek contribution to a cleanup from the other polluters.

"Section 107 doesn't call for that same requirement of having been sued," Sigel says.

"Many people are arguing that it authorizes a party that voluntarily cleans up a site to seek contribution from the other parties that are liable under 107."

More than a dozen federal district courts and four circuit courts have dealt with that exact argument in the three years since Cooper--and they've issued a dizzying array of conflicting decisions. The 2nd, 7th and 8th Circuits all have allowed PRPs that initiate voluntary cleanups to sue other polluters under

Sec. 107. The 3rd Circuit is the only federal appellate court that has ruled that 107 does not authorize a right of action.

"The balance is tipping slightly toward being able to bring an action," says Paul Gutermann, a partner at Akin Gump. "There's an established line of cases for an implied right of action."

Cleanup Disincentives

Most experts expect the Supreme Court to follow the reasoning of the 2nd, 7th and 8th Circuits and allow Atlantic Research to sue under Section 107.

They anticipate that outcome primarily because such a ruling would help effectuate the purpose of Superfund--to encourage companies to clean up contaminated sites. Critics of the court's decision in Cooper complained that it frustrated that goal.

"If someone came to me and said, 'should we do this (cleanup)?' I'd say, 'let it sit there until the government comes to get you,'" Gutermann says. "If the court doesn't allow recovery under 107, it will give parties who are considering undertaking to address their properties another reason to wait until someone brings a lawsuit against them."

The court also may allow PRPs to sue under 107 to promote judicial efficiency. Under Cooper, state governments may be forced to initiate proceedings against landowners to force them to start cleanups that they otherwise might have undertaken voluntarily.

Sigel also points out that most landowners undertake "voluntary" cleanups because they fear an imminent federal enforcement action or a civil suit. Therefore, Sigel argues it simply doesn't make sense to make those parties wait to start environmental remediation until someone actually sues them.

"I have clients who want me to bring an order against them so they can get the ability to recover under 113," Sigel says.

At press time, the parties were briefing the court, but it had not yet scheduled oral arguments.

Staff Writer

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