Ninth Circuit Holds that Non-Settling Potentially Responsible Parties Under CERCLA May Intervene as a Matter of Right

Author:Mr Mark Schneider and Jessica T. Hamilton
Profession:Perkins Coie LLP
 
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The U.S. Court of Appeals for the Ninth Circuit ruled last week that potentially responsible parties ("PRPs") in Superfund cases that are not settling with the government may intervene in a consent decree approval proceeding. In United States v. Aerojet General Corp., No. 08-55996, 2010 WL 2179169 (9th Cir. June 2, 2010), the court reasoned that because the consent decree provided immunity to those settling PRPs from contribution claims, non-settling PRPs have a "significantly protectable interest" under CERCLA to ensure that a consent decree contains a fair and reasonable allocation of costs and liability. In making this ruling, the Ninth Circuit joined the Eighth and Tenth Circuits in this approach. This ruling has significant implications for PRPs that are not part of settlement discussions with the Environmental Protection Agency ("EPA"), because they will be able to weigh in on the fairness of a consent decree that may impact their contribution rights.

Background

In 1979, the EPA discovered groundwater contamination in the San Gabriel Basin, a groundwater reservoir in Los Angeles County. The site was designated as a federal Superfund site and listed on the National Priorities List in 1984. Initially, the EPA determined that the groundwater contained volatile organic compound ("VOC") contamination that required containment and remediation. EPA sent Notice of Liability Letters to PRPs throughout the 1990s. In 2000, the EPA issued an Interim Record of Decision ("IROD") that contained a 30-year remedial plan to clean VOCs from the groundwater. The estimated cost at the time was around $14 million, plus an additional $14 million for the state and federal governments' costs.

In 2005, the EPA issued an Explanation of Significant Differences updating the IROD to address perchlorate contamination, which had been detected since the issuance of the IROD in levels exceeding drinking water standards. By 2007, the estimated costs to clean up the site had increased dramatically. The costs to respond to VOCs alone had increased from $14 million to $26 million. An additional $46 million was estimated for perchlorate remediation. The governments' costs also increased by $1 million. The total cost of cleanup at the site had grown from $28 million to $87 million.

In October 2007, the EPA reached a proposed settlement with certain parties that would shield them from contribution claims by the non-settling parties in exchange for a payment of approximately $8.1 million,...

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