SUPERFUND:

Lawyers still cleaning up over contaminated sites

Superfund has been good for the legal profession.

Entering the fourth decade of the environmental cleanup law's existence, business is still booming for lawyers involved in the mammoth litigation that often occurs.

Many thought that the legal work surrounding the 1980 law, officially known as the Comprehensive Environmental Response, Compensation, and Liability Act, would have diminished by now, but there are still hundreds of sites awaiting remedial work.

And where there is a polluted property, there is usually litigation.

Under the statute, companies that contributed to the contamination of a site are liable for cleanup costs. Where there are multiple parties, all can be required to pay something.

All kinds of legal wrangling ensues, both between government and private parties and between private parties who disagree over how much they should pay.

Gail Suchman, an environmental lawyer at the Stroock law firm in New York, who began her career as a U.S. EPA attorney, recalled that in the 1980s Superfund "tied up every environmental lawyer in the country."

At that time "an incredible amount of money was made by private party lawyers," Suchman said.

Government action later died down, especially after Congress refused in 1995 to renew the chemical and oil fees that kept the Superfund topped up (Greenwire, Dec. 10).

But there may be something of a rebound under the Obama administration, lawyers say, in part thanks to the $600 million Superfund allocation included in last year's American Recovery and Reinvestment Act.

Robert Infelise, an environmental attorney in San Francisco with Cox, Castle & Nicholson, said there is a simple reason there has been so much litigation: The law was badly written in the first place and has never been revisited.

"It's a comment on the extent to which Congress enacted a law and then essentially ignored it," Infelise said.

Evidence that confusion still arises over the law is shown by the fact that the Supreme Court, which has the job of ironing out confusion in the law, continues to take an interest in it.

The most recent occasion was in 2009 when the court ruled on two key issues relating to defendant liability.

Lawyers are still figuring out exactly what it means.

Parsing Supreme Court rulings

In the Supreme Court's 8-1 ruling in Burlington Northern v. United States, concerning a site near Bakersfield, Calif., the court made it easier for defendants to avoid "joint and several liability" -- meaning they are responsible for the entire cleanup cost -- if they can convince a court to instead divide damages among different parties based on each defendant's role in the pollution.

In circumstances in which a company that was to blame for some of the pollution is no longer in business, that means the government is left to foot the rest of the bill.

That is not good news for the Obama administration. One of the reasons litigation is important for the government is the lack of funding for the Superfund program.

William Hyatt, a Newark, N.J.-based partner at K & L Gates said that so far the government is trying to act like nothing happened by continuing to argue for joint and several liability.

"That doesn't surprise me," Hyatt said of the government's position. It is the best leverage the government has, he added.

Lawyers thought Burlington Northern was "likely to be a game changer" but that has not proved to be the case yet, he added.

Theodore Garrett, co-chairman of the environmental practice group at Covington & Burling in Washington, D.C., said he believes there could be the beginnings of a trend indicating that courts will adopt what he called a "rough justice" approach.

This occurs when judges reject the government's call for joint and several liability and instead apportion damages even when evidence as to who did what is not boilerplate.

This is worrying for government lawyers on two counts. First, it is harder to get summary judgment on joint and several liability.

Second, if joint and several liability is open to question, it gives the government less leverage to negotiate a favorable settlement.

Superfund legal experts all agree, though, that it is too early to say how the debate over apportionment will play out in the courts because so far there have been few rulings on that issue in the wake of the Supreme Court decision.

The Supreme Court also ruled on a second point in Burlington Northern: the issue of what constitutes "arranger liability" under the Superfund statute, a term that refers to a private party that either provided the hazardous material or was tasked with arranging for its disposal.

The justices said in Burlington Northern that Shell Oil Co. was not liable for the Bakersfield site because it had merely delivered certain chemicals.

Lower courts are beginning to tackle the issue in other cases, the most prominent being a 5th U.S. Circuit Court of Appeals ruling in September.

The court ruled in Celanese Corp. v. Martin K. Eby Construction that a construction firm was not liable as an arranger after one of its vehicles damaged a methanol pipeline that subsequently leaked.

The appeals court cited Burlington Northern in concluding that the construction company would only be liable "if it took intentional steps or planned to release methanol."

There was no evidence of such intent, the court said.

"The bottom line is that negligence doesn't create arranger liability," Garrett said of the ruling.

'More potential for litigation'

As lawyers continue to mull over the implications of the Supreme Court's intervention, the focus of Superfund litigation continues to evolve.

Experts say litigation is becoming focused on complex mega sites like rivers and mines more than it was before.

Because the stakes are so high, "the risk of litigation is higher," Hyatt said.

Attention is also moving to the "natural resources damages" section of the Superfund law. Separate from the cleanup provisions, this allows certain government departments, state and federal, to claim damages for environmental harm.

In the early years of Superfund, most litigation surrounded cleanups, in part because natural resources damages are expensive to litigate.

Now natural resources damage claims, the "sleeping giant" of the statute, are on the upswing, Hyatt said.

As there have been few cases on that part of the statute, there is "almost no law" when it comes to court precedents to follow, he added.

Garrett agreed that natural resources damages "will be important" with mega sites, but not on smaller sites where damage is most often limited to contamination of groundwater that is not used as drinking water.

There is a perception that the Obama administration is being more aggressive about filing such claims, he added.

For Suchman, the former EPA lawyer, the continued legal activity is partly a result of how broadly the law was written.

Even the Supreme Court's intervention in 2009 has not "cut the legs off" the statute's expansive approach to liability, she said.

Believe it or not, Suchman added, "there's more potential for litigation."

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