SteveK December 8th, 2009

On November 10, 2009 the Court of Appeals for the the10^th Circuit permitted Union Pacific Railroad (UPR) to intervene in the CERCLA action for the purpose of challenging a pending settlement between 44 other PRPs and the U.S. 

 In U.S. v. Albert Investment Company, et. al. the 10^th Circuit Court weighed in on a dispute among courts in various jurisdictions as to whether protection of the right of contribution under Section 113 is an interest that is legally sufficient to permit intervention as of right. The Court held that it is and reversed a decision of the District Court denying UPR’s motion to intervene.

 The U.S. had negotiated a settlement with the 44 PRPs for the Double Eagle Lubricants Superfund Site in Oklahoma City. The 12-acre site was owned by UPR as a result of its acquisition of the Missouri Pacific Railroad Company. The U.S. filed suit against the 44 PRPs to effectuate the settlement by entry of a Consent Decree that provided the PRP group protection from suit. UPR, which had been sued separately, moved to intervene in the suit against the 44 since the Consent Decree would provide immunity from the contribution claims of UPR. The Court reasoned that when Section 113(f) is read as a whole that it is clear that a contribution right exists until it is eliminated by a settlement. The Court concluded that a delay in the proceedings to address UPR’s challenge would do no more than delay the allocation of costs among all the PRPs (including UPR) since the remediation was complete. Further, the Court held that the statutory right to contribution is worthy of protection. Finally, the Court held that UPR’s failure to agree to settlement does not diminish its right to intervene. The Court noted that the trial court might still decide against UPR and extinguish its contribution right; however, that does not make them any less interested or impair its interest in the disposition of the case. The Court also held that UPR’s right to comment on the settlement during the notice-and-comment period required for lodging of a Consent Decree was insufficient to protect UPR’s statutory rights because, in part, only a decision by a court on the claims of the intervenor would be subject to appellate review.

 This decision has potentially significant implications with regard to settlement of CERCLA matters. The government would have to be wary of bringing a separate suit against secondary PRPs  in anticipation of a quick settlement, expecting to be able to carve out other PRPs.

DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC ( www.dbnjlaw.com ) 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 Department.

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