Congress Stays Out of Aviall Debate, Leaving the Courts to Resolve Uncertainties Created by Landmark Superfund Ruling
The United States Senate has tried but failed thus far to come up with a legislative fix to the uncertainties created for Superfund cleanups nationwide following the Supreme Court’s decision in Cooper Industries, Inc. v. Aviall Services, 125 S. Ct. 577 (2004) (“Aviall”). Meanwhile, the fallout from the landmark decision continues to play out in court cases and administrative actions nationally, with no near-term end in sight.
In Aviall, the Supreme Court held that private parties could not seek contribution for voluntarily incurred cleanup costs under CERCLA section 113(f)(1) unless they had a pending “civil action” filed against them under section 106 or 107. Many believe that the Aviall threatens voluntary cleanups, particularly those where industry would otherwise move forward with remediation absent EPA action. Critics of the decision have also been concerned that the ruling may limit industry contribution suits against the Defense Department (“DOD”) and other federal agencies.
Last year, Sen. James Jeffords (I-VT) and others, reportedly including Environment & Public Works Committee Chairman James Inhofe (R-OK), sought to attach an amendment to the highway funding bill that would have invalidated the Supreme Court’s 2004 ruling in Aviall.
A story appearing in Inside EPA quoted Alison Taylor, who serves as minority counsel for Jeffords on the environment panel, as reporting that Jeffords had prepared the amendment for the highway bill. No amendment was, however, included in the legislation. The same story cited a House Democratic source as saying that the legislative fix for Aviall failed largely over concerns that the Senate was seeking to add the amendment to the bill at the 11th hour when no hearings had been held on the issue. There were concerns about the provision because you need “some modicum of information before making a major policy decision,” the source says. See “Failed Senate Aviall Amendment Suggests Long Haul for Industry Fix,” Inside EPA (February 22, 2006),
Neither the House nor the Senate has held hearings on the Aviall ruling. No legislative proposal has ever been officially introduced in either house of Congress. In addition, the EPA, which raised strong concerns about the ruling’s impact on Superfund cleanups, has never prepared legislation on the issue. It appears likely, in fact, that the federal government will oppose any legislative fix because the ruling currently protects DOD and other federal agencies from cleanup cost recovery claims by private parties.
Another fact making a legislative fix unlikely is a settlement by Oklahoma-based perchlorate manufacturer Kerr McGee of its superfund liability in a pending lawsuit. Following the settlement, addressing the Aviall decision became a much lower priority for Oklahoma’s U.S. Senator Inhofe (R-OK), who chaired the conference committee for the highway bill. It was the Kerr-McGee case which was purported to be the basis for his previous efforts to use that legislation as a vehicle for the Aviall amendment. Id.
In the absence of a solution to Aviall at the Congressional level, the response is left to the courts. District court decisions allowing contribution actions to go forward in the year following Aviall have followed one of two approaches: (1) allowing parties to pursue §113 claims based on administrative settlements; or (2) either implying or finding a direct cause of action under CERCLA § 107.
In the Ninth Circuit, the second approach faces the difficulty of overcoming the previous Ninth Circuit decision in Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298 (9th Cir. 1997). Pinal Creek states that private potentially responsible parties (PRPs) under CERCLA may not pursue a § 107(a) action against other PRPs for cost recovery; however, the Pinal Creek decision contains language making it clear that the fact that a § 113 contribution remedy was available to such parties figured heavily in the rationale of that decision.
In the now nearly 15 months that have passed since publication of the Aviall decision, federal district courts which have had to address the issue have split on whether an implied right of action under § 107 will allow contribution claims to go forward. In the Ninth Circuit, some courts have denied such claims, relying on the Ninth Circuit’s earlier decision in Pinal Creek. Others have allowed the claims to go forward.
Decisions by district courts within the Ninth Circuit that allowing claims to go forward under § 107 include Aggio v. Aggio, 2005 WL 2277037 (N.D. Cal. Sept. 19, 2005) (holding PRP has implied right of action to contribution under section 107, certified for appeal); Ferguson v. Arcata Redwood Co., LLC, 2005 WL 1869445 (N.D. Cal. Aug. 5, 2005) (holding PRP could maintain a contribution action under section 107 (implied right)); Koutrous v. Goss-Jewett Co. of No. Cal., Inc., 2005 WL 1417152 (E.D. Cal. June 16, 2005) (holding PRP may maintain a claim for contribution under § 107 without meeting § 113(f) requirements based on Ninth Circuit precedent recognizing an implied right of contribution in § 107); and Adobe Lumber Inc. v. Taecker, 2005 WL 1367065 (E.D. Cal. May 24, 2005) (holding a PRP had an implied right of contribution under section 107). Both the Koutrous and Aggio decisions have been certified for appeal to the Ninth Circuit. The Koutrous and Aggio decisions were reported on in this same newsletter when they came down. See “CERCLA: Latest Decision Interpreting Cooper Industries” and “Superfund: District Courts in California Chip Away at Aviall Ruling.”
By contrast, the following decisions have rejected PRP’s arguments that a right exists under § 107 or is implied under § 107: City of Rialto v. United States Dep’t of Defense, No. 04-00079 (C.D. Cal. Aug. 16, 2005) (holding PRPs cannot bring action for contribution under section 107); and Goodrich Corp. v, Emhart Indus., Inc., No. 04-0759 (C.D. Cal. May 5, 2005) (“adhering to pre-Aviall Ninth Circuit precedent which forbids an implied right to contribution” per Viacom court). (This case was consolidated with City of Rialto).
The Second Circuit has issued an opinion allowing the claims to go forward, and while the Second Circuit maintained that it was not overruling its prior decision in Bedford Affiliates, it certainly modified the result of that case. See Consolidated Edison of New York v. UGI Utilities, Inc., 423 F.3d 90 (2nd Cir., Sept. 9, 2005). This case was also reported in this newsletter when it came down. See “Second Circuit Short Circuits Cooper Industries.” With three pending appeals and a split in the approaches of the district courts below, the Ninth Circuit is now squarely presented with deciding whether or not it will follow the Second Circuit and allow contributions claims despite the ruling in Aviall.
With Congress and EPA sitting on the sidelines, our readers should watch closely how Aviall plays out in various circuit courts. Increasingly, it looks as though the uncertainty created by the Aviall decision will be with us for some time, until it is taken up again by the Supreme Court.
Please contact Steve Jones for additional information.
