Risk Management

How to Get Super Refunds via Superfund

A new decision by the Supreme Court allows corporations that voluntarily clean up toxic waste sites to sue to recoup their expenses from other poll...
Laura DeMarsJune 13, 2007

A multitude of corporations now have the green light to file suit to recoup some of their toxic waste clean-up costs. On Monday the Supreme Court ruled that corporations that voluntarily clean up toxic waste sites have the right to sue other responsible parties, including the federal government, in hopes of mitigating their expense.

During a hearing in April, corporate representatives, lobbyists, and government representatives butted heads over the matter. The case stems from a suit filed in 2002 by Atlantic Research Corp. against the government when it determined that the toxic waste it had voluntarily cleaned up in an industrial park in Arkansas was partly spawned by the government. Atlantic’s reasoning was that the rocket propellant it was using for government-contracted retrofitting was the problem.

At issue were contradictory statutes that required companies to have a clean-up order or settlement with the Environmental Protection Agency before they could be reimbursed from the “Superfund,” which was created in the 1970s to supplement hazardous waste clean-up cost. If companies voluntarily clean up their sites, the EPA doesn’t sue—which means that the companies have no order or settlement.

Reed Rubinstein, a partner at Greenberg Traurig, says the verdict is a real win for corporate polluters since the repercussions of an opposite ruling could have been serious for companies—and CFOs. Under the High Court ruling, corporations have more assurance of being able to resort to voluntary cleanups to strip out their legal costs. “If the court ruled for the government, companies that own or operate contaminated sites would have more significant expenses” he says. “Mitigating those through cost recovery would have been much more difficult.”

Ken Ayers, a managing director for Aon’s Environmental Services Group says, on the other hand, that the ruling now puts companies that may have taken part in toxic waste dumping at risk of being sued by other companies engaged in voluntary pollution mitigation at the site. Thus, he says, it’s a smart policy for companies to join in a voluntary cleanup of a site they’re linked to. “Instead of stonewalling other companies and waiting for them to come back to you for expenses, it’s a good idea to get in on the clean-up and reach a settlement upfront,” Ayers notes.