september 2006

PRPs lose a Means to Recover Cleanup Costs Under Federal Superfund Law, but New Jersey State Law Remains a Broad Source of Relief for Such Parties Incurring Cleanup Costs

BACKGROUND

Section 113 of CERCLA – the federal Superfund law – permits a party who is partially or potentially responsible for environmental contamination to bring a federal contribution lawsuit against other responsible parties for their fair share of the cleanup costs.

This important federal law – with its powerful private party cause of action – has been a critical cost-recovery tool of companies that have spent millions of dollars to clean up contaminated properties for which they – and often many others – bear responsibility under the strict liability law.

However, in 2004, the United States Supreme Court held, in Cooper Industries v. Aviall Services, that when such a party cleans up without having been compelled to do so by a government entity through a civil action, or by way of an administrative or judicially approved settlement, a contribution lawsuit under CERCLA Section 113 is not available. The Supreme Court did not address whether another provision of CERCLA, Section 107, might permit such a party to nevertheless sue other parties for contribution.

In August 2006, the U.S. Court of Appeals for the Third Circuit, which covers New Jersey, answered that open question in DuPont v. U.S. In a case setting the precedent for the Circuit, the court held that Section 107 does not permit a responsible party to sue other responsible parties for their share of cleanup costs.

These developments have left many aggrieved parties in a quandary as to how best to seek cleanup cost-recovery. However, New Jersey has its own wide ranging environmental laws, such as the strict liability Spill Compensation and Control Act, which provide aggrieved parties with causes of action against responsible entities. New Jersey law provides powerful remedies in its own right, even for those who would now be barred from federal suits for the reasons set forth above.

WE RECOMMEND

If you have incurred or expect to incur environmental cleanup costs, voluntarily or otherwise, and wish to pursue reimbursement from another party, you should consider the viability and practicality of proceeding in state court in New Jersey, rather than in federal court.

If you have any questions concerning these issues, please contact David B. Farer or Daniel L. Schmutter.