Issues & Overview Cooper Industries Inc. v. Aviall Services Inc.: Whither (Or Is It Wither) Superfund?

Friday, April 1, 2005 - 00:00

Richard F. Ricci
Lowenstein Sandler
PC

On December 13, 2004, the United States Supreme Court rendered a decision
that threw the world of site remediation under the Comprehensive Environmental
Response Compensation and Liability Act (CERCLA), commonly known as Superfund,
into a tailspin. In Cooper Industries Inc. v. Aviall Services Inc. , the
Supreme Court ruled that a party can bring a contribution action under Section
113(f)(1) of CERCLA only if a civil action has been initiated against it
pursuant to Section 106 or 107 of the statute.

A full understanding of the implications of this decision requires a review
of government enforcement practices pre- Cooper Industries . CERCLA
provides the government with multiple tools to compel the remediation of
contaminated sites. Two of the most commonly employed tools have been the
Unilateral Administrative Order (UAO) and the Administrative Order on Consent
(AOC). The UAO is an administrative order to conduct a cleanup, the
non-compliance with which carries heavy penalties and the risk of treble
damages. The AOC is an order by agreement between the responsible parties and
the government, pursuant to which the responsible parties conduct the cleanup.
Because Superfund sites often implicate multiple responsible parties, pre-
Cooper Industries
, it was common for one or a few responsible parties to
comply with a UAO or enter into an AOC to remediate a site, secure in the
knowledge that they could pursue a contribution action against other responsible
parties pursuant to Section 113 of CERCLA.

Post- Cooper Industries , however, this may no longer be the case. In
its decision, the Supreme Court stated quite clearly that a Section 113
contribution claim could only be brought during or following a civil action
under Section 106 or 107. At least one district court has now held that neither
a UAO, nor an AOC empowers a responsible party to bring a contribution action.
The net effect of these opinions is that a multitude of parties throughout the
country who have either complied with UAOs, or entered into AOCs with the
expectation that they could recover some of their compliance costs by bringing
contribution actions against other responsible parties, have had those
expectations thwarted. Ironically, the weight of the Cooper Industries
decision falls most heavily on those who were cooperating in the remediation
of Superfund sites.

One of the more interesting elements of the Cooper Industries saga is
that the Department of Justice (DOJ), acting as amicus , actually
supported the position that the Supreme Court ultimately adopted. Why, one might
ask, would the DOJ support a position that effectively shoots the volunteers?
The real answer to that question, presumably, must come from at-the-time
Attorney General Ashcroft and Solicitor General Olson (and they aren't talking),
but theories have abounded. Perhaps the simplest theory is that the DOJ
advocated and the Supreme Court adopted a strict construction of the language of
the statute. A more conspiratorial theory relates to the fact that the
Department of Defense is frequently sued in Section 113 contribution actions for
contamination related to its involvement in defense industry manufacturing. This
theory attributes the DOJ's position to a desire to insulate the Department of
Defense from contribution liability. Perhaps the most conspiratorial theory is
that the DOJ's position was driven by a desire to gut the Superfund program. The
logic of this theory is that the construction of the statute that the DOJ
advocated and the Supreme Court adopted will act as a strong disincentive to
voluntary investigations and cleanups. At the same time, federal budget deficits
coupled with Congress' refusal to reinstate the tax that had initially funded
the Superfund program, will severely hamper the government's ability to conduct
cleanups on its own or bring the civil actions which are now a predicate to
contribution actions under Section 113. This combination of events, over time,
could bring the Superfund program to a grinding halt.

The one thing that is clear in the post- Cooper Industries world is
that parties who wish to voluntarily investigate, or remediate Superfund sites
with the expectation of pursuing their contribution rights against
non-cooperating parties, must now adapt their conduct to Cooper Industries
and its progeny.