EPA Revises Model Administrative Orders on Consent to Address Supreme Court Decision
Print PDFAugust 30, 2005
On August 3, the U.S. Environmental Protection Agency (EPA) Office of Site Remediation Enforcement and the U.S. Department of Justice published a memorandum detailing immediate interim revisions to three EPA model Administrative Orders on Consent (AOCs). The revisions to the AOCs are intended to clarify and reinforce EPA’s position on a private party’s right to contribution and settlement protection under the Comprehensive Environmental Response, Compensation, and Liability Act § 113(f), if a party has agreed to perform remedial activities under an EPA AOC. EPA’s position on this matter had been called into question by the U.S. Supreme Court’s recent decision in Cooper Industries Inc. v. Aviall Services Inc.
Cooper Industries Inc. v. Aviall Services Inc.
In December 2004, the Supreme Court ruled that a person may not seek contribution under § 113(f)(1) of CERCLA unless a civil action has been commenced against that person under either § 106 or § 107 of the Act. Because entry into an agreed administrative order with federal or state governments is not considered a “civil action” under § 106 or § 107, a potentially responsible party (PRP) who has voluntarily worked to clean up a site under an AOC would be unable to file an action for contribution from other responsible parties under § 113(f)(1) of CERCLA.
The Supreme Court noted that a PRP who has “resolved its liability” to the United States in a settlement agreement has the ability to seek contribution under § 113(f)(3)(B) of CERCLA, another section of the Act that also authorizes contribution actions. However, many PRPs had expressed concerns that EPA’s model AOCs did not clearly state that a settling PRP had “resolved its liability” to the United States for purposes of § 113(f)(3)(B).
EPA Issues a Response to the Court’s Ruling
In response to the Supreme Court’s ruling in Aviall, the EPA and DOJ issued the Memorandum to reiterate that “EPA and DOJ’s intent and position has been, and continues to be, that EPA’s AOCs resolve a settling PRP’s liability within the meaning of CERCLA § 113(f)(3)(B).” The specific revisions identify the model AOCs as “administrative settlements,” and thus clarify a party’s right to contribution and settlement protection under CERCLA § 113(f). The following model orders will contain the interim revisions: (1) the Revised Model Administrative Order on Consent for Removal Actions; (2) the Revised Model Administrative Order on Consent for Remedial Investigation/Feasibility Study; and (3) the Model Administrative Order on Consent for Remedial Design. The model language used in the interim revised AOCs is considered a guidance for EPA’s employees, and is not a rulemaking. The revisions to the AOCs are classified by EPA as “interim revisions” as the agency expects to continue to review the model agreements and developing law and issue further changes to the model AOCs as necessary.
EPA intends that revised AOCs will constitute federal “settlement agreements” that satisfy the requirements of CERCLA § 113(f)(3)(B). Thus, a responsible party who agrees to perform remedial activities under a revised model AOC, as described in the Memorandum, will be entitled to contribution, as well as contribution protection, from PRPs that do not participate in the settlement.
Implications
The EPA’s position on the resolution of a settling PRP’s liability within the meaning of CERCLA §113(f)(3)(B), as stated in the Memorandum and interim revisions to future AOCs, will benefit the regulated community by clarifying contribution rights that were put in question in the wake of the Aviall decision. It should be noted, however, that the Memorandum does not similarly affect state administrative agreed orders for environmental cleanups.
Although the interim revisions are prospective, Van Ness Feldman is working with clients who are currently conducting remedial actions under AOCs with the EPA, to obtain revisions to these existing AOCs in accordance with the Memorandum. Because the revisions are reasonably discrete and sanctioned by EPA OSRE and DOJ, EPA Regions may acquiesce to amend existing AOCs to include the revisions suggested for the model AOCs. This would allow signatory parties to existing AOCs the opportunity to clarify and confirm the intent of EPA regarding contribution rights and settlement protections rendered uncertain after Aviall.