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Another Circuit Allows Non-Settling PRPs to Intervene in CERCLA Consent Decree Action

By Genevieve Essig and Gabrielle Sigel 

On June 2, 2010, the U.S. Court of Appeals for the Ninth Circuit held that a non-settling PRP's right to contribution under CERCLA was a legally sufficient interest to justify intervention to challenge a proposed consent decree between the federal government and the settling PRPs, joining ranks with the Eighth and Tenth Circuits, the only other U.S. appellate courts to address the issue. The case is U.S. v. Aerojet Gen. Corp., No. 08-55996 (9th Cir. Jun. 2, 2010).

Aerojet concerns the remediation of contaminated groundwater at a Superfund site involving nearly seventy PRPs and a total cleanup cost of $87 million. EPA proposed a consent decree providing 10 settling PRPs with immunity from contribution claims in return for payment of a fixed sum. A group of non-settling PRPs, who were not parties to the consent decree action but were defendants in other actions brought by local water providers involved in performing the cleanup, moved to intervene as of right after the close of the public comment period EPA provided for the consent decree. Most had submitted comments objecting to the consent decree. The district court denied intervention, but the court of appeals reversed, holding that the non-settling PRPs have a right under Fed. R. Civ. P. 24(a)(2) and CERCLA § 113(i) "to protect their interests in contribution and in the fairness of the proposed consent decree." Aerojet, No. 08-55996, slip. op. at 19.

Focusing on the Rule 24(a)(2) criteria for intervention as a right, the court concluded: "We join the Eighth and Tenth Circuits in holding that non-settling PRPs have a significant protectable interest in litigation between the government and would-be settling PRPs." Id. at 13. The court reasoned that, because approval of the proposed consent decree would entirely extinguish the non-settling PRPs' contribution rights against the settling PRPs under § 113(f)(1), the proposed consent decree would "therefore directly affect [the PRPs'] interest in maintaining their right to contribution." Id. In addition, the court noted, "because non-settling PRPs may be held liable for the entire amount of response costs minus the amount paid in a settlement," the non-settling PRPs "have an obvious interest in the amount of any judicially-approved settlement." Id. The court disagreed with the argument that § 113(f)(1) creates only a contingent or speculative interest, and was not swayed by policy or statutory interpretation arguments that allowing intervention would work against CERCLA's scheme to encourage early settlement.

This decision came fairly soon after the 10th Circuit's decision in U.S. v. Albert Inv. Co., No. 08-6267 (10th Cir. Nov. 10, 2009), which concerned the cleanup of the Double Eagle Superfund Site in Oklahoma City. The 9th Circuit's decision in Aerojet repeatedly echoed the conclusions of the 10th Circuit in its Albert decision. For example, the 10th Circuit, as did the 9th Circuit, summarily dismissed the assertion that a non-settling PRP's contribution right is too speculative and contingent, holding that the statutory right to contribution is a "substantive right that currently exists." Albert, No. 08-6267, slip. op. at 22. Both courts also agreed that a public comment period is not a substitute for federal court intervention. The 8th Circuit decision was U.S. v. Union Elec. Co., 64 F.3d 1152 (8th Cir. 1995).

These holdings contrast with what until recently had been considered the majority view, as a number of district courts, including courts in California, Michigan, Arizona, and Ohio, had rejected non-settling PRPs' requests to intervene in CERCLA consent decree actions. The announcement of this Aerojet decision confirms a definite shift in favor of the position of those district courts which have permitted intervention, including courts in New York, New Jersey, New Hampshire, and West Virginia.