Intervention by non-settling PRPs in CERCLA actions.

• Author: McCartt, Toby A.
• Position: Potentially responsible parties

1. INTRODUCTION A. Rule 24(a)(2), CERCLA Section 1130), and the Interplay Between Them B. Elements Required for intervention 1. Timeliness 2. Significantly Protectable Interest 3. Impairment of interest Absent Intervention 4. Inadequacy of Representation II. INTERVENTION IN CERCLA SETTLEMENTS BETWEEN THE GOVERNMENT AND PRPs A. The Ninth Circuit's Decision in Aerojet General Corporation 1. The Relevant Facts of Aerojet General 2. Policy and Legislative History a. Is the Statute Ambiguous? b. Policy Arguments c. Legislative History 3. Impairment of the PRP's Interests 4. Adequacy of Representation 5. The Significantly Protectable Interest(s) a. PRP's Contribution Interest Not So Contingent as Not to Be Significantly Protectable b. PRP's Contribution Interest Is Statutory and Protected by Law B. Do Non-Settling PRPs Have a Significantly Protectable Interest? 1. The Contribution Interest of a PRP that Has Been Sued Is Significantly Protectable 2. A PRP that Has Incurred Response Costs Does Not Have a Significantly Protectable Interest 3. A PRP that Has Not Incurred Response Costs or Been Sued Has No Significantly Protectable Interest 4. Significantly Protectable Interests: Questions from Conclusions III. CONCLUSION I. INTRODUCTION

   The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), (1) as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), (2) establishes a mechanism for those who remediate sites contaminated by hazardous substances to seek compensation from those who are responsible under CERCLA for the contamination. (3) CERCLA establishes broad categories of potentially responsible parties (PRPs) and provides for assigning liability to those PRPs. (4) The United States Environmental Protection Agency (EPA) is the primary agency in charge of implementing CERCLA for the federal government, (5) but CERCLA also authorizes states, Indian tribes, and even private parties to recover costs expended by them in remediating a site pursuant to CERCLA. (6)

   When the federal government settles with a PRP, it must lodge the proposed settlement, in the form of a consent decree, with the appropriate district court, which then reviews the settlement and, if the settlement is fair, reasonable, and consistent with CERCLA, enters the consent decree. (7) A party that has been sued or has settled its liability under CERCLA may seek contribution from other PRPs. (8) However, a party that settles its liability to the government through a consent decree obtains protection from such claims for contribution. (9) The extinguishment of the non-settling PRP's contribution claim could potentially leave that PRP facing millions of dollars In liability without recourse as to the settling PRPs.

   Often a PRP that is not a party to a settlement between another PRP and the federal government objects to the terms of the settlement. In these situations, the non-settling PRP may seek to Intervene in the litigation filed by the government in which the government and the settling PRPs are seeking entry of a consent decree. (10) Cases such as these have created a rather large body of case law examining when and under what circumstances a non-settling PRP may intervene in such an action. The results have not been consistent. Courts applying the same statutory provisions to similar sets of facts have come to different conclusions. (11)

   This Chapter will examine the relevant statutory provisions and the standards that courts have developed to apply those provisions. It will then engage in a broad survey of the case law to date, focusing especially on the recent decision by the Ninth Circuit Court of Appeals in United States v. Aerojet General Corporation. After surveying the cases, this Chapter will provide some critical analysis of the decisions in those cases and the principles on which those decisions were made. The conclusion that it will reach is that a non-settling PRP's interest in a contribution claim only arises after that PRP has been sued or has settled its liability to the government in a judicially approved consent decree.

   1. Rule 24(a)(2), CERCLA Section 113(i), and the Interplay Between Them Both CERCLA and the Federal Rules of Civil Procedure grant non-parties to litigation a right to intervene in that litigation under certain circumstances. In the Federal Rules of Civil Procedure, that right is found in Rule 24(a)(2). In CERCLA, the right of intervention is found in CERCLA Section 113(i).

      Rule 24(a)(2) of the Federal Rules of Civil Procedure (Rule 24(a)(2)) provides:

      (a) INTERVENTION OF RIGHT. On timely motion, the court must permit anyone to intervene who: ... (2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest. (12) CERCLA Section 113(i) provides:

      Intervention[.] In any action commenced under this chapter or under the Solid Waste Disposal Act [42 U.S.C. 6901 et seq.] 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 interest, unless the President or the State shows that the person's interest is adequately represented by existing parties. (13) The similarities in the language are unmistakable. The only material differences between the two statutes are the burden of proof as to the adequacy of representation and the lack of an explicit timeliness requirement in CERCLA Section 113(i). This similarity has led courts to apply the same standards in interpreting both Rule 24(a)(2) and CERCLA Section 113(i) as to all but the adequacy of representation element. (14)

   2. Elements Required for Intervention

      Taking the two statutes together, they each require the applicant for intervention to prove four separate elements.

      1. Timeliness

         Under Rule 24(a)(2), the applicant's motion to intervene must be "timely." (15) While CERCLA Section 113(i) does not include the requirement that the application be "timely," courts analyzing the two sections together seem to miss this fact entirely, assuming that CERCLA Section 113(i) imposes a requirement of timely motion to intervene. (16) It would seem, though, that the mechanics of entering a CERCLA consent decree would impose a de facto timeliness requirement even where there is none in the statute. Once the government and the settling PRPs teach a settlement, the government must lodge the settlement with the court for not less than thirty days before the court may enter the settlement as a consent decree. (17) Often, the consent decree is filed concurrently with the complaint initiating the suit. (18) The non-settling PRP would only have the period between the initiation of the suit and the entry of the consent decree in which to file a motion to intervene. Furthermore, even if the consent decree is not lodged with the complaint, the clock to determine timeliness should not begin to run until the consent decree is lodged with the court rather than at the initiation of the litigation. This is because timeliness is to be judged based on when the applicant for intervention became aware, or should have been aware, that its interests were at stake in the litigation. (19)

      2. Significantly Protectable Interest

         Both CERCLA Section 113(i) and Rule 24(a)(2) require that the applicant for intervention have "an interest" relating to the subject of the litigation. (20) The interest required under both statutes has been variously characterized by courts as a "legally protectable interest" (21) or a "legally sufficient interest." (22) The United States Supreme Court used the term "significantly protectable interest" and, in a later case, qualified that the interest must be "legally protectable." (23) Justice O'Connor posited that the "requirement of a 'significantly protectable interest' calls for a direct and concrete interest that is accorded some degree of legal protection." (24) However, the Supreme Court has given little guidance for the lower courts as to how these broad terms should be interpreted. (25) The majority rule that has emerged in the lower courts is that the interest required by Rule 24(a)(2) is one that is direct, substantial or significant, and legally protectable (DSL Rule). (26)

         In what has become a heavily cited case, an en banc panel of the Fifth Circuit in New Orleans Public Service, Inc. v. United Gas Pipeline Co. (NOPSI) (27) defined the interest as being "direct," "substantial," and "legally protectable," not just a mere economic interest, but rather, "one which the substantive law recognizes as belonging to or being owned by the applicant." (28) NOPSI involved a dispute between a power provider and its gas supplier over, inter alia, pricing of gas. (29) The applicant in that case sought intervention as a representative of the class of rate-payers who purchased power from NOPSI. (30) The en banc panel of the Fifth Circuit denied the application for intervention on the above standard, stating that the "purely economic interest" of the applicant was insufficient for intervention. (31) The Ninth Circuit employs a similar standard to the Fifth Circuit, requiring that the interest asserted must be protected under some law and there must be a relationship between that legally protected interest and the plaintiff's claims. (32)

         It must be noted that some courts do not apply such a rigid and formal test of the significantly protectable interest. (33) This Chapter, though, will examine the element of the significantly protectable interest in terms of the "direct, substantial, and legally protectable" definition, as informed by cases like NOPSI. There are several...