February 6, 2007 The United States Supreme Court will review whether a CERCLA potentially responsible party (“PRP”) may bring a contribution or cost recovery claim under 42 U.S.C. § 9607 when that PRP lacks a contribution claim under 42 U.S.C. § 9613(f)(1). SeeU.S.v. Atlantic Research Corp., 2007 U.S. Lexis 1163 ( Jan. 19, 2007).

Under CERCLA’s broad liability net, the United States Environmental Protection Agency ("EPA") can obtain reimbursement of response costs from or require potentially responsible parties ("PRPs") to conduct response actions to address releases or threatened releases of hazardous substances from a facility. See 42 U.S.C. § 9607(a); 42 U.S.C. § 9601(9)(B).Although CERCLA does not specify the liability standard in government cost recovery cases under Section 107, most courts have accepted the application of strict, joint and several liability for PRPs who cannot prove divisibility of the harm they caused from the total harm.

June 11, 2007 On June 11, 2007, the United States Supreme Court issued its opinion in the case United States v. Atlantic Research Corp., 2007 U.S. Lexis 7718 (“ARCO”). The Court has determined that a CERCLA PRP may assert a cost recovery claim under 42 U.S.C. § 9607(a). This case resolves one of the major issues remaining from Cooper Indus. v. Aviall Servs., 543 U.S. 157 (2004) and now creates a new set of issues to percolate through the federal courts.

While the CERCLA case law is indeed very plaintiff-friendly, the scope of liability is not as limitless as the government would like potential defendants to believe. There are certain types of activity that may contribute to the contamination of a site, but nevertheless do not give rise to CERCLA liability.This piece is the second in a series of three installments focusing on little-known legal defenses to CERCLA allegations that a defendant “arranged for the disposal or treatment” of a hazardous substance at a Superfund site. 42 U.S.C. §9607(a)(3). Part 1 discussed the legal basis for asserting that legitimate recycling transactions are not arrangements for disposal.

liable for cleanup costs, along with the actual polluters. Accordingly, those familiar with the Superfund program in practice understand that a more accurate statement of the statute’s underlying principle is “polluter pays . . . unless the polluter isn’t around anymore, in which case whomever is unlucky enough to own the property (or finds itself in the chain of title) when EPA comes to town pays.”As enacted, CERCLA provided an affirmative defense to defendants who could prove, among other things, that their liability was solely the result of “an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the defendant,” so long as the defendant “exercised due care with respect to the hazardous substances concerned” and took “precautions against the foreseeable actions or omissions of any such third party” and their consequences . . . .” 42 U.S.C. § 9607(b)(3). However, CERCLA’s third-party defense proved to be of little value to “innocent” landowners (i.e., owners of property contaminated entirely before their ownership), because the courts deemed the owner’s deed to the property to be a disqualifying “contractual relationship” with the prior owners in the chain of title who had caused or allowed the site’s contamination to occur.Once the potentially vast CERCLA liability exposure of property owners became clear in the early 1980s, it did not take long for savvy real estate developers and their lenders to realize that investment in sites that were previously used -- or even might have been used -- in a manner that left behind a chemical residue in soil or groundwater carried higher liability and resale risks than investment in property with little or no such history.

Environmental LitigationAction Item: With federal courts moving toward limiting arranger liability under CERCLA, companies that sell new or used products containing hazardous substances should heed the guidance of those courts and take certain precautions to minimize their exposure to liability. The United States Court of Appeals for the Fourth Circuit is the latest federal appellate court to address the element of intent necessary to establish a claim for arranger liability under § 107(a)(3) of the Comprehensive Environmental Response, Compensation & Liability Act (“CERCLA”), 42 U.S.C. § 9607(a)(3). On March 20, 2015, the Fourth Circuit in Consolidation Coal Co. v. Georgia Power Co., No. 13-1603 (4th Cir.), held that an electric utility lacked the requisite intent to dispose of hazardous substances to qualify as an arranger when it sold used, but functional electrical transformers lined with oil containing polychlorinated biphenyls (“PCBs”) at competitive auctions to a purchaser who subsequently repaired, rebuilt, and resold the transformers to third parties for a profit.

struction waste. Simply referencing those materials was argued to be insufficient to meet CERCLA’s definition of hazardous substance since not all such materials involved “hazardous substances.”Banfield responded that the Limited Subsurface Investigation identified CERCLA hazardous substances such as arsenic, lead, and others. This was noted to include the fact that asbestos was detected in three of 17 waste bulk building material samples. Such substances were deemed to be hazardous substances under CERCLA. The reference to these materials was deemed sufficient to survive a Motion to Dismiss.Portsmouth and PHA also argued that their involvement in urban renewal of the city was insufficient to support a finding that they committed any acts required for liability under CERCLA. They contended that urban renewal of the city was insufficient to support a finding that Portsmouth and/or PHA “contracted, agreed, or arranged” for disposal of hazardous substances (i.e., arranger liability). See 42 U.S.C. § 9607(a)(3).The Court agreed that the references to the Copeland registration form was meager proof that the urban renewal activities constituted contracting, agreeing, or arranging for the disposal of hazardous substances involving construction materials. It noted that CERCLA liability attaches if an entity enters:. . . into a transaction for the sole purpose of discarding a used and no longer useful hazardous substance.Banfield was stated to have not directly alleged that Portsmouth or PHA disposed of building and construction material on the property. However, the Court stated that Banfield does allege that building and construction waste from the urban renewal (waste that contained hazardous substances) was dumped on the property.Therefore, the Court held it was not unreasonable:. . . to infer, based on that allegation, that the waste was dumped in accordance with an agreement between Portsmouth/PHA (or its contractors and the Copelands . . .Consequently, Banfield was held to have sufficientl

threats of releases of PFOA and/or PFOS at sites pursuant to CERCLA §104(e), 42 U.S.C. §9604(e).The distinction between CERCLA hazardous substances and all else, including pollutants or contaminants, is important because CERCLA liability is triggered by the existence of a “hazardous substance” at a site, nothing else. See42 U.S.C. §9607(a)(1)-(4); Colorado v. United States, 867 F. Supp. 948, 951 (D. Colo. 1994); Jastram v. Phillips Petroleum Co., 844 F. Supp. 1139, 1141 (E.D. La. 1994); United States v. United Nuclear Corp., 814 F. Supp. 1552, 1557 (D.N.M. 1992); Eagle-Picher Indus. v. United States, 759 F.2d 922, 932 (D.C. Cir. 1985).Though once a hazardous substance is present, potentially responsible parties (PRPs) are liable for “all costs of removal or remedial action” incurred by the U.S. government, states, and Indian tribes not inconsistent with the national contingency plan (NCP) and “any other necessary costs of response” incurred by any other person consistent with the NCP. 42 U.S.C. §9607(a)(4)(A)-(B). Removal and remedial actions are meant to be directed at hazardous substances. See id. §§9601(23), (24); Colorado, 867 F. Supp. at 951-52 (explaining that “[t]he definitions clearly focus on actions taken in relation to hazardous substances”). However, their statutory definitions suggest that they may, in limited circumstances, include actions targeted at “associated” materials, including pollutants or contaminants, too. See id. at 952.For example, “removal” is defined to include “such actions as may be necessary taken in the event of the threat ofreleaseofhazardous substancesinto theenvironment.” 42 U.S.C. §9601(23) (emphasis added). It is also defined to include “other actions as may be necessary to prevent, minimize, or mitigate damage to the public health or welfare or to theenvironment” from a release or threat of release of a hazardous substance. Id. (emphasis added). Moreover, “remedial action” is defined to include the “cleanup of released hazardous substances and associa

CERCLA imposes strict liability on “[a]ny person who by contract, agreement, or otherwise arranged for disposal . . . of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances.” 42 U.S.C. § 9607(a)(3). The Court noted that “arrange” is not defined under CERCLA, but following the reasoning of the Supreme Court’s decision in Burlington Northern, the Court noted that “arrange” implies some intention to dispose of hazardous substances and state of mind is critical.

There are certain types of activity that may contribute to the contamination of a site, but nevertheless do not give rise to CERCLA liability.This piece is the third in a series of three installments focusing on little-known legal defenses to CERCLA allegations that a defendant “arranged for the disposal or treatment” of a hazardous substance at a site. 42 U.S.C. §9607(a)(3). Part 1 discussed the legal basis for asserting that legitimate recycling transactions are not arrangements for disposal.