presents presents CERCLA Settlements and PRP Intervention Strategies to Protect PRP Interests in Contribution Strategies to Protect PRP Interests in Contribution and Cost Recovery Process A Live 90-Minute Teleconference/Webinar with Interactive Q&A A Live 90-Minute Teleconference/Webinar with Interactive Q&A Today's panel features: Albert M. Cohen, Partner, Loeb & Loeb, Los Angeles Linda W. Tape, Partner, Husch Blackwell Sanders LLP, St. Louis, Mo. Gabrielle Sigel Partner Jenner & Block LLP Chicago Gabrielle Sigel, Partner, Jenner & Block LLP, Chicago Tuesday, July 20, 2010 The conference begins at: The conference begins at: 1 pm Eastern 12 pm Central 11 am Mountain 10 am Pacific 10 am Pacific You can access the audio portion of the conference on the telephone or by using your computer's speakers. Please refer to the dial in/ log in instructions emailed to registrations.
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CERCLA INTERVENTION Albert M. Cohen Loeb & Loeb LLP 310-282-2228 acohen@loeb.com www.loeb.com LOEB & LOEB Adds Value
Right to Intervene Prior to Aerojet Prior to 2009 – many understood the majority view to be that non-settling PRPs could not intervene U.S. v. Acorn Eng’g Co . 221 F.R.D. 530 (C.D. Cal. 2004) S C (C C ) – Statute ambiguous – 113(i) seems to allow intervention yet 113(f)(2) precludes non- settling party from bringing contribution claims – Allowing intervention would hinder ability to generate early and efficient settlements rather than prolonged and expensive litigation settlements rather than prolonged and expensive litigation One key case held that there is a right to intervene U.S. v. Union Elec. Co . 64 F. 3d 1152 (8 th Cir. 1995) Recent case also held there is a right to intervene U.S. v. Albert Inv. Co., Inc., 585 F. 3d 1386 (10 th Cir. 2009) ( ) 5
U.S. v. Aerojet General Corp. Background EPA entered into settlement with group of PRPs EPA entered into settlement with group of PRPs EPA filed suit and lodged CD Notice published in Federal Register and non-settling PRPs Notice published in Federal Register and non settling PRPs objected Non-settling PRPs moved to intervene Court denied motion and approved CD 6
U.S. v. Aerojet cntd Key statutory provisions Section 113(i) of CERCLA provides: “In any action commenced under this chapter . . . In a court of the United States, any person may intervene as a matter of right when such person claims an interest relating to the subject of the action and is so situated that the disposition of the action may, as a practical matter impair or impede the person’s ability to protect that practical matter, impair or impede the person s ability to protect that interest, unless the President or the State shows that the person’s interest is adequately represented by existing parties.” F.R.C.P. 24(a)(2) is similar but places the burden of showing whether party’s interests are adequately represented on party seeking to intervene. 7
U.S. v. Aerojet cntd . Court adopted intervention standard from Rule 24(a)(2) Motion must be timely Motion must be timely Applicant must claim “significantly protectable” interest relating to the property or transaction which is the subject of the action Applicant must be so situated that disposition may impair or impeded its ability to protect that interest Applicant’s interest must not be adequately represented by the parties in the action ti i th ti 8
U.S. v. Aerojet cntd. “Significantly Protectable” Interest (1) must assert an interest that is protected under some law; (2) There must be a relationship between the legally protected interest and the party’s claim the party s claim Non-settling PRPs clearly have “significantly protectable” interest – They are PRPs with right of contribution They are PRPs with right of contribution – §113(f)(2) would cut off contribution rights – If cut off, may be liable for balance – “obvious interest” in amount of settlement 9
U.S. v. Aerojet cntd. Rejects argument that contribution right is too contingent or speculative 113(f)(1) – contribution right exists for any “liable or potentially liable” person Interest arises “ during or following” actions under §§106 or 107 Interest arises during or following actions under §§106 or 107 (i.e. no finding of liability required) Rejects policy arguments 113(i) is unambiguous 113(i) is unambiguous Policy favors intervention to ensure costs are borne by responsible parties 10
U.S. v. Aerojet cntd. Impairment of interests Clear since contribution right would be cut off Clear since contribution right would be cut off Interests not protected by “other means” – Publication in FR did not protect interests because government and PRP interests aligned and adverse to non settling PRPs and PRP interests aligned and adverse to non-settling PRPs. Adequacy of Representation EPA and PRPs have directly adverse interests and clearly do not represent interests of the non settling PRPs do not represent interests of the non-settling PRPs 11
U.S. v. Aerojet et al. PRPs contribution rights constitute “significantly protectable interests” which would be cutoff by CD. y Therefore, non-settling PRPs have a right to intervene. 12
What rights do intervenors have? Intervenor must have “meaningful and sufficient opportunity to present arguments and submit evidence in opposition” - U.S. v. p g pp Albert Right to file objections – U.S. v. Union Electric District court may deny discovery – U.S. v. Albert District court may deny evidentiary hearing – U.S. v. Albert; U.S. v. Union Electric 13
Implications of Aerojet et al. Clear right of non-settlers to intervene Will affect CD approval process Intervenors have right to present arguments – Additional briefing – Disputes over procedure, discovery etc. – Allowing discovery and hearings will complicate and delay approval Settlers may need to more clearly articulate basis for settlement Courts likely to give CDs more scrutiny Query how to evaluate fairness at early stages where information on volume, toxicity etc. may be inadequate l i i b i d Intervenors will be bound by Court’s determination 14
5 th Amendment Considerations No person shall “be deprived of life, liberty, or property , without due process of law ; nor shall private property be taken for p ; p p p y public use, without just compensation Due process requires that a person be given adequate notice and opportunity to be heard notice and opportunity to be heard. Cannot take property right without just compensation 15
Is the right of contribution under CERCLA, which is a “significantly protectable interest,” hich is a “significantl protectable interest ” a “property right” entitled to protection under the 5 th Amendment? the 5 Amendment? 16
Congressional Concerns re: 5 th Amendment Section 308 of CERCLA provides that “if an administrative settlement under section 9622 . . . has the effect of limiting any person’s contribution from any party to such settlement, and if ’ ib i f h l d if the effect of such limitation would constitute a taking without just compensation in violation of the fifth amendment , . .. such limitation on the right of contribution shall not be treated as limitation on the right of contribution shall not be treated as having any force and effect.” 17
Cases indicating CERCLA contribution right implicates 5 th Amendment General Time Corporation v. Bulk Materials, Inc . 826 F. Supp. 471 (M.D. Ga. 1993) “Case law supports the view that the statutorily created right of contribution is a property interest, which cannot be extinguished without procedural due process of law.” Cites to §308 “Due process requires an opportunity to be heard at a meaningful time and in a meaningful manner.’” time and in a meaningful manner. 18
Cases indicating CERCLA contribution right implicates 5 th Amendment Waste Management v. City of New York 910 F. Supp. 1035 (M.D. Pa. 1995) ( ) “The right to sue a party for contribution or to recover costs incurred may be viewed as a property right. Depriving a party of that right raises a question of whether there has party of that right raises a question of whether there has been a taking of property without just compensation.”) 19
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