Treatment of CERCLA Claims for Hazardous Waste Cleanup Costs in Bankruptcy

December 2011
ELR 11091
Christopher Dow

In this challenging economic climate, it is not uncommon for some companies who are potentially responsible parties (PRPs) involved in hazardous substances cleanup litigation under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to file for bankruptcy protection. Where government authorities propose to spend millions of dollars to clean up hazardous substances at a site, and where one or more of the PRPs potentially liable for these costs files for bankruptcy protection, the following question necessarily arises: What steps can the remaining solvent PRPs involved in the litigation take to try to ensure that funds of
the insolvent PRP (debtor-PRP) are preserved for cleanup? The answer can depend in part on what CERCLA claims for relief a solvent PRP is asserting, i.e., a CERCLA §107 claim for cleanup costs that the PRP has itself expended to clean up a site, or a CERCLA §113 claim for contribution for any costs that the PRP may have to pay over to another PRP, or the state or federal government, who has incurred costs in cleaning up hazardous substances at a site.

Christopher Dow is an environmental attorney with over 14 years of experience representing public and private-sector clients in a wide range of complex environmental regulatory and litigation matters. He has successfully defended a variety of clients in large, multiparty hazardous waste cleanup cases.

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