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Recovery of Superfund Litigation Costs Disallowed

Winter 1995

The United States Supreme Court has made it more difficult for potentially responsible parties (PRPs) who voluntarily settle Superfund claims to pursue non-settling parties by ruling that attorney fees incurred in bringing a cost recovery action are not recoverable. Several Circuit Courts of Appeals had previously allowed the recovery of attorney fees in cost recovery actions.

Under the federal Superfund law, PRPs are strictly, jointly, and severally liable for the costs of cleaning up contamination. In essence, under this liability scheme, the regulatory agency could look to one single PRP or a small group of PRPs to pay for the entire cost of cleaning up a landfill site even if a multitude of PRPs contributed waste to the site. Under these circumstances, the PRP(s) who funded the cleanup have a right to sue the non-participating PRPs for their fair share of the cleanup costs in a cost recovery action. In light of the fact that attorney fees incurred in bringing the action cannot be recovered, participating PRPs will have to carefully consider whether to bring a cost recovery action as the transaction costs may outweigh the potential benefit.

It is important to note that the Supreme Court also ruled that costs (including attorney fees) incurred in the course of indentifying additional PRPs could be recovered since these types of efforts served to ensure that the cleanup would actually be accomplished. Companies who are identified as PRPs by a regulatory agency should consider focusing their efforts upon the identification of additional PRPs at an early stage of the cleanup process as a potentially cost-effective means to defray the cleanup-related expenses the company may ultimately incur.

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