Let Me In: District Court Allows Non-Settling Parties to Intervene in CERCLA Consent Decree

Introduction

Breaking with the majority view, a federal district court in New Hampshire recently allowed two non-settling potentially responsible parties (“PRPs”) to intervene in proceedings to approve a CERCLA consent decree between the government and over 100 settling PRPs in United States v. ExxonMobil Corp.[1] By allowing intervention, the court enabled the intervenors to pursue contribution claims against the numerous PRPs that had sought contribution protection through the consent decree process. The majority of cases have viewed potential contribution claims against settling PRPs as too speculative to qualify as a protectable interest supporting intervention.[2] But the decision does have support in the Eighth Circuit and at least two other district courts.[3] The rationale that the majority and minority have drawn in reaching these two very different results has much to do with how they resolve the inherent tension in CERCLA Section 113 between language favoring settlement and language allowing for intervention.

Intervention Under CERCLA

CERCLA Section 113(f)(2) provides that PRPs who settle with the government in an administrative or a judicially approved settlement receive “contribution protection” as a means of encouraging settlement. This protection allows settling PRPs to insulate themselves from future contribution actions relating to the matters addressed in the settlement.[4] Non-settling PRPs continue to face exposure to cost-recovery or contribution actions by settling parties,[5] in addition to potential joint and several liability for past and future costs of cleanup.[6]

Non-settling PRPs have often sought to intervene in the approval of a consent decree in order to retain their ability to seek contribution from the settling parties and to ensure that settling parties absorb a fair share of the cleanup costs.

Section 113(i) of CERCLA provides “any person” with the right to intervene in “any action commenced” under CERCLA.[7] However, intervention is contingent on meeting the four-part test that normally governs intervention under Federal Rule of Civil Procedure (“FRCP”) 24(a)(2):[8] 1) a timely motion; 2) an interest relating to the action; 3) impairment of the party’s ability to protect its interest; and 4) a showing that the existing parties to the action do not adequately represent the party’s interest.[9] Where non-settling PRPs have attempted to intervene in approval of consent decrees under CERCLA, courts have focused on whether the party adequately asserts a protectable interest and whether denying intervention will impede that interest.

The Court’s Decision

In Exxon Mobil,the plaintiff sought to recover response costs expended to remediate contamination at the Beede Waste Oil Superfund Site in Plaistow, New Hampshire (“Site”). Prior to filing suit, EPA ranked the PRPs at the Site according to the activities that had resulted in contamination at the Site.

In January 2007, plaintiffs sued Brodie Mountain Ski Area, Inc. (“Brodie”), whom EPA designated as the second highest contributing PRP, along with other highly-ranked PRPs. Four months later, the plaintiffs lodged a consent decree with the district court for approval. Under the proposed consent decree, EPA was settling with a number of PRPs that it had ranked as de minimus (“Settling PRPs”).

Brodie and J.W. Kelly’s Enterprises Inc., also a non-settling PRP (collectively the “Intervenors”), sought to intervene in proceedings for approval of the consent decree. The Intervenors asserted that they had a right to participation under FRCP 24(a)(2) and CERCLA Section 113(i), claiming that they had a legally-protected interest in seeking contribution from the Settling PRPs, and that their interest would be adversely impacted by entry of the consent decree. The court allowed intervention on the basis that the consent decree might impact the Intervenors’ protectable interest to pursue claims for contribution from the Settling PRPs.

Relying on the majority of opinions that had addressed the issue, EPA and the Settling PRPs argued that allowing the intervention would frustrate CERCLA’s goal of expediting settlement.[10] The court rejected this argument, relying instead on the minority position represented in the Eighth Circuit Court of Appeal’s decision in United States v. Union Electric Co.[11]

The district court focused on the fact that Section 113(f)(1) creates a contribution interest that is “directly related to the subject matter of the litigation … and arises from the liability or potential liability of persons as a result of that litigation.”[12] The court did not view the right to seek contribution as “wholly remote and speculative” solely because it was “contingent upon the outcome of the litigation.”[13] Instead, the court considered the Intervenors as having a protectable interest, “precisely because ‘the threat of cutting off contribution rights of non-settling PRPs creates a direct and immediate interest on the part of non-settling PRPs in the [Consent Decree] litigation.’”[14] The court also found that the consent decree might cut off the Intervenors’ abilities to “recoup excessive allocation of liability by way of contribution claims” from parties that EPA might have erroneously designated as de minimus PRPs,[15] and that none of the existing parties to the settlement adequately represented the Intervenors’ interests.[16]

Emphasizing the limited reach of its holding, the court cautioned that the Intervenors faced “a high hurdle in objecting to the proposed Consent Decree.”[17] The court emphasized that its holding merely afforded the Intervenors with “a seat at the table, and an opportunity to speak its piece,” but did not grant them with “veto power over the final settlement.”[18]

Decision Stands at Odds with the Majority Rule on Intervention

A majority of courts have held that non-settling PRPs may not intervene in consent decrees between the government and settling PRPs. These decisions have rejected intervention based on the finding that a non-settling PRP’s contribution interest is too “speculative” or “contingent” to satisfy the protectable interest criterion for intervention under both FRCP 24(a)(2) and Section 113(i) of CERCLA. For example, in State of Arizona v. Motorola, the court held that the non-settling PRPs lacked “a substantial and legally protectable interest,” and that their contingent contribution right was “[a]t best ... a remote economic interest that is insufficient to support intervention.”[19]

These decisions have also rejected motions to intervene based on the impact that intervention would have on the settlement scheme in CERCLA. Drawing on principles of statutory construction, these courts have found conflict between a PRP’s right to intervene under Section 113(i) and the contribution protection Section 113(f)(2) affords to settling PRPs.[20] Relying on legislative history, courts have ordinarily resolved this tension in favor of “those who live in close proximity to hazardous waste sites”[21]—not non-settling PRPs who seek to “undermine the consent decree and protect their contribution interests.”[22]

In contrast, the ExxonMobil court eschewed any consideration of CERCLA’s underlying policy. While this approach reflects the minority view,[23] the ExxonMobil decision was based on similar reasoning from Union Electric,[24] where the Eighth Circuit Court of Appeals criticized the majority of courts for relying on legislative history and policy concerns, which it viewed as “inappropriate for courts to consider in determining whether to allow intervention as of right under either [FRCP 24(a)] or the CERCLA provision.”[25] The Circuit Court had little difficulty finding that a prospective intervenor had a significant, legally protectable interest to reduce its financial liability and preserve contribution claims against all PRPs.[26]

Conclusion

While taking the minority approach, the court’s decision in ExxonMobil tracks the Eighth Circuit’s decision in Union Electric and a few district courts that have followed the logic of that decision. The law on this issue remains unclear, which may well encourage some parties to seek to intervene in CERCLA consent decree proceedings.

For more information on CERCLA or this case, please contact Meline MacCurdy or any member of Marten Law Group’s Waste Cleanup Practice Group.