Court Says Offer to Pay for Liability Waiver Does Not Satisfy Notification Requirement

May 8, 2009
Client Alert Newsletter May 2009

In the continuing saga of Aviall Services Inc. v. Cooper Industries LLC, the U.S. District Court for the Northern District of Texas addressed a party's compliance with the public notice and comment obligations under the National Contingency Plan ("NCP") in connection with a cost recovery action brought pursuant to the Comprehensive Environmental Responsibility, Compensation, and Liability Act ("CERCLA"). Aviall sued Cooper under CERCLA Section 107(a) to recover remedial investigation and response costs that Aviall had incurred in connection with the cleanup of two sites previously owned by Cooper—the Love Field and the Carter Field. Cooper moved for summary judgment arguing that Aviall failed to comply with the notice and comment requirements of the NCP and therefore its claims were precluded. The Court granted Cooper's motion as to Love Field and denied it as to Carter Field.

The Court agreed with Cooper that Aviall's failure to notify a dozen downgradient neighbors until after completing its remedial investigation undercut the NCP requirements pertaining to Love Field, notwithstanding Aviall's representation that it had advised the property owners that it would take steps to relieve them of personal liability for any contamination. The Court dismissed Aviall's attempt to recover remedial investigation costs based on whether Aviall substantially complied with NCP's requirement that "parties who might foreseeably be affected by the private party's decisions must be given a meaningful opportunity to participate in them." Cooper and Aviall disagreed about which landowners were "foreseeably affected" and therefore entitled to the notice that could provide a meaningful opportunity to participate. Finding that the 12 downgradient property owners were foreseeably affected by contamination migrating from Love Field, but were not timely notified by Aviall to allow them to meaningfully participate in the remedial investigation, the Court rejected Aviall’s defense that public participation is unnecessary during the remedial investigation phase if subsequent opportunity for participation is provided. Unless the opportunity to participate in the remedial investigation is meaningful, there is not substantial compliance with the NCP's requirement for public participation. In turn, because the legislature saw fit "to limit CERCLA's remedy to costs that are consistent with the NCP," Aviall was not entitled to recover those remedial investigation costs associated with Love Field from Cooper, warranting the entry of summary judgment in Cooper's favor.

On the other hand, the Court denied Cooper's motion for summary judgment as to Aviall's response costs incurred for clean up of Carter Field, where the contamination was mostly confined within the site's boundaries. Cooper again argued that neighboring landowners were foreseeably affected by contamination on Carter Field, in this instance based on the risk of environmental contamination and resulting stigma damages from the threat of its migration. Aviall countered that the stigma theory was too attenuated to render the landowners neighboring Carter Field to be considered foreseeably affected. The Court disagreed with Aviall, observing that downgradient property owners threatened with migrating contamination potentially could be foreseeably affected, but also remarked that whether those property owners were foreseeably affected was a decision in the province of the finder of fact, and thus not appropriate for determination on summary judgment. Accordingly, the Court denied Cooper's motion as to response costs associated with Carter Field.