Hot-Button Superfund Litigation Trends: Orders on Consent, Arranger Liability

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Increased litigation is expected on four hot-button superfund issues, one of which is likely to end up in the U.S. Supreme Court, experienced environmental litigators predicted June 26.

Administrative orders on consent, arranger liability, bona fide purchasers and parent company liability will keep litigators busy for years, Robert Fox, of Manko, Gold, Katcher & Fox in Bala Cynwyd, Pa., predicted.

Fox and Justin Savage, of Hogan Lovells in Washington, D.C., said the trends are driven by the vagaries of the superfund law, the fact-specific inquiries it requires and the potentially huge cost of cleaning up hazardous waste sites.

“Now it's billions of dollars and people are going to litigate that,” Fox said.

Fox and Savage spoke at the American Law Institute's conference on environmental litigation in Washington.

Administrative Consent Orders Top List

Fox and Savage predicted administrative orders on consent (AOC)—a staple of state and federal environmental settlements—may be the single biggest litigation issue ahead.

Savage, who formerly litigated environmental cases at the U.S. Department of Justice, said “boilerplate” settlement language in AOCs often is drafted years before intervening case law and that muddles later judicial interpretations.

“No one was thinking about these decisions” when the standard settlement terms were drafted, Savage said.

For example, vexing issues (and conflicting decisions) arise over what starts the clock for filing Section 107 cost recovery and Section 113 contribution actions following a settlement under the Comprehensive Environmental Response, Compensation, and Liability Act, he said.

Fox said differing language in the agreements drives judicial interpretations—and changing that language isn't easy.

“States and the federal government have their model consent agreements, and they don't like to change them,” Fox said.

“This will likely go back to the Supreme Court, which is going to want to clarify this issue,” he said.

Cost recovery claims, unlike contribution actions, allow for joint and several liability with a more generous statute of limitations. Parties that enter into settlements with the government generally are limited to contribution claims.

Fact-Based Inquiries Fuel Cases

Fox and Savage agreed that questions of arranger liability, as well as parent company and successor liability, also provide fodder for future litigation.

The same holds true for CERCLA's bona fide prospective purchaser defense (42 U.S.C. §9607(r)(1)), which Fox said was “going to be litigated for years and years,” driven both by the eight-part inquiry it commands and the uncertain cleanup costs a buyer faces if the defense fails.

“I don't think we're going to see any reduction in superfund litigation,” Fox said. “Every few years, the Supreme Court issues a new opinion that resets the landscape.”

“There were 41 CERCLA appellate decisions from January 2014 up to now,” Savage added. “Predictions that CERCLA liability would be settled were wrong.”