New Supreme Court Decision Impacts CERCLA Litigation: Cooper Industries, In c. v. Aviall Services, Inc., 543 U.S. ___.

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Murray M. Sinclair & Associates'

Environmental Law Newsletter

Murray Sinclair, Esq.

e-mail: murray.sinclair@verizon.net

January 2005

On December 13, 2004, in Cooper Industries, Inc. v. Aviall Services, Inc., the U.S. Supreme Court rendered a startling landmark decision interpreting the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) in the context of a private CERCLA cost recovery case where one potentially responsible party (“PRP”) sued another PRP for contribution after Aviall, the purchaser/owner operator of four contaminated engine maintenance sites in Texas, discovered that both it and Cooper, the seller/prior owner-operator, had contaminated the properties over a period of years.

After it spent approximately $5 million cleaning up the sites, Aviall brought a CERCLA action against Cooper under sections 113 (f)(1) (contribution) and 107(a) (cost recovery/joint and several liability). Because the Fifth Circuit Court of Appeals, like the 9^th Circuit (in Pinal Creek Group v. Newmont Mining Corp, 118 F.3d 1298), had ruled that one PRP may only sue another PRP for contribution under § 113 (f)(1) of CERCLA and may not seek to impose joint and several liability under § 107(a), Aviall amended its complaint for the purpose of combining the two CERCLA claims into a single joint CERCLA claim, essentially abandoning its cost recovery claim.

After both parties moved for summary judgment, the District Court granted Cooper’s motion, holding that Aviall, having abandoned its § 107 claim, could not obtain relief under §113 because this statute’s language requires that a PRP seeking contribution must have a pending or adjudged § 106 administrative order or § 107(a) cost recovery action filed against it. The Fifth Circuit Court of Appeals reversed, holding that § 113 (f)(1) allows a PRP to obtain contribution from other PRPs regardless of whether the PRP has been sued under § 106 or § 107.

 

The Supreme Court granted certiorari and reversed, holding that § 113 (f)(1) provides for only two express (not implied) avenues for contribution:

1. Under § 113 (f)(1), a PRP may seek contribution during or following any civil action taken against the PRP by the United States or a State under a § 106 administrative order or under § 107(a);

2. Under §113 (f)(3)(B), a PRP may seek contribution after entering into an administrative or judicially approved settlement that resolves the PRP’s liability to the United States or a State.

The Court refused to resolve the issue of whether Aviall had truly waived its § 107 claim

because the issue was technically not before the court. In addition, the Court acknowledged the considerable body of appellate case law across the country which holds that a private party who is a PRP may not pursue a § 107(a) action against other PRPs for joint and several liability. In order to consider whether Aviall could pursue a

§ 107(a) action, the Court stated it would have to decide whether these appellate decisions are correct, another issue which Aviall had not briefed. Further, another unbriefed issue was whether a § 107 cost recovery claim could be pursued for some form of liability other than joint and several.

 

In addition to leaving open the issue of whether Aviall may seek cost recovery under § 107, the Court declined to decide whether Aviall has an implied right to contribution under § 107.

 

The end result of this decision leaves us entirely in the dark as to whether a private party

PRP who incurred response costs voluntarily without being subject to suit under § 106 or § 107 can maintain a CERCLA § 107 cost recovery action against other PRPs. The 9^th Circuit Court of Appeals has ruled that a PRP can only sue other PRPs under § 113. That precedent obviously no longer applies and is overruled by the Aviall decision to the extent the two conflict.

 

The Dissent, authored by Justice Ginsburg, takes issue with the Majority’s deferral of decision on Aviall’s entitlement to recover response costs from Cooper. She observes that prior to the enactment of § 113 (f)(1) in 1986, federal courts correctly held that PRPs could recover under § 107 a proportionate share of their costs in actions for contribution against other PRPs, and notes that the saving clause in § 113 (f) preserves all preexisting state and federal rights of action for contribution, including the § 107 implied right which Ginsburg contends the Court recognized in its decision in Key Tronic Corp v. U.S., 511 U.S. 809 (1994).

 

As applied to ongoing actions commenced before the rendering of Cooper v. Aviall, if you are or represent a Defendant, and the Plaintiff, who has asserted a § 113 against you has neither been sued under § 106 or § 107 by EPA or a state agency nor has entered into an administrative or judicially approved settlement regarding its liability arising from the site contamination, the Plaintiff’s CERCLA claim for contribution is now questionable. However, Plaintiff’s claim under the Resource Conservation and Recovery Act (“RCRA”), if asserted, and other claims under state law theories (breach of contract, nuisance, indemnification and contribution, Health & Safety Code § 25363) will remain intact. If there is no RCRA claim, over which the federal court would have jurisdiction, the federal district court could exercise its discretion and dismiss the action in its entirety if the complaint contains only a defective CERCLA contribution claim and pendent state law claims.

 

What’s next? Plaintiffs in the situation described in the prior paragraph will be scrambling

to amend their CERCLA actions to add § 107 claims, hoping that the court will agree it makes sense, as urged by Justice Ginsburg, to imply a right of contribution under § 107.

 

Counsel for Plaintiffs in new actions will be more likely to forego CERCLA altogether and simply file their actions in state court. Those who file in federal court, to secure federal court jurisdiction, will file actions for injunctive relief under RCRA § 6972, in addition to asserting pendent state law claims, being mindful of the fact that RCRA works prospectively only and does not enable a party to recover past response costs (although, under RCRA, the court may exercise its discretion to award attorneys’ fees to the prevailing party).

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