9th Circuit Joins Other Circuits Allowing PRP to Challenge CERCLA Settlement

On June 2, 2010, in United States v. Aerojet, the Court of Appeals for the 9th Circuit allowed non-settling PRPs to intervene, by right, to challenge a CERCLA settlement. By this decision, the 9th circuit joined the 10th circuit (See, the December 8th post reporting on U.S. v. Albert Investment) and the 8th circuit (U.S. v. Union Electric, a decision from 1995) in ruling that a non-settling PRP has a right to contribution under CERCLA that satisfies the requirements for intervention under the federal rules. The case involved the U.S. reaching a settlement with a group of PRPs to contribute $8.1 million towards an $87 million cleanup. As usual, the consent decree provided contribution protection to the settling PRPs. As is required, the Department of Justice filed a suit filed to perfect the settlement by a consent decree. After posting the consent decree in the Federal Register, a group of non-settling PRPs filed objections to the settlement. As they were not satisfied that their interests were properly addressed, the non-settling group filed a motion to intervene. The trial court denied the motion which was appealed to the 9th Circuit and reversed. The focus of the 9th Circuit’s decision was whether the settlement would extinguish the non-settling PRP’s contribution rights under Section 113(f)(2) of CERCLA. In evaluating the right to intervene under Federal Rules of Civil Procedure 24(a)(2) and Section 113(i) of CERCLA, the court identified the interest at issue as the PRP’s contribution rights and ensuring that the consent decree “embodies a fair and reasonable allocation of liability.” The court determined that entering the consent decree would cut off the non-settling parties’ contribution rights against those that settled. This, the court held, provided the non-settling parties a protectable interest. In addition, the court noted that settlement may result in the non-settling PRPs becoming responsible for the remaining amount of the cleanup costs. This would bring into question the defined interest of an appropriate allocation of liability. This decision brings the majority view to one that favors intervention. This approach will likely encourage the government to seek global settlements of CERCLA matters, provide encouragement for parties to develop settlements that include all the major parties or groups, and provide greater leverage to certain parties or groups of parties in CERCLA settlement negotiations. DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contact Steven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.

CATEGORIES: Environmental Law

DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum PC (http://www.dbnjlawblog.com) is a full service law firm in New Jersey which provides a broad range of legal services. For additional information about the matters in this bulletin or in the firm’s Employment Practice, please contact Richard P. Flaum, Esq.

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