CERCLA Settlements and PRP Intervention Strategies to Protect PRP - - PowerPoint PPT Presentation

presents

CERCLA Settlements and PRP Intervention

Strategies to Protect PRP Interests in Contribution

presents

Strategies to Protect PRP Interests in Contribution and Cost Recovery Process

A Live 90-Minute Teleconference/Webinar with Interactive Q&A

Today's panel features: Albert M. Cohen, Partner, Loeb & Loeb, Los Angeles Linda W. Tape, Partner, Husch Blackwell Sanders LLP, St. Louis, Mo. Gabrielle Sigel Partner Jenner & Block LLP Chicago

A Live 90-Minute Teleconference/Webinar with Interactive Q&A

Gabrielle Sigel, Partner, Jenner & Block LLP, Chicago

Tuesday, July 20, 2010 The conference begins at: The conference begins at: 1 pm Eastern 12 pm Central 11 am Mountain 10 am Pacific 10 am Pacific

You can access the audio portion of the conference on the telephone or by using your computer's speakers. Please refer to the dial in/ log in instructions emailed to registrations.

For CLE purposes, please let us know how many people are listening at your location by y

• closing the notification box
• and typing in the chat box your
• and typing in the chat box your

company name and the number of attendees attendees.

• Then click the blue icon beside the box

to send to send.

For live event only. y

• If the sound quality is not satisfactory
• If the sound quality is not satisfactory

and you are listening via your computer speakers please dial 1-866-873-1442 speakers, please dial 1 866 873 1442 and enter your PIN when prompted. Otherwise, please send us a chat or e- , p mail sound@straffordpub.com immediately so we can address the problem.

• If you dialed in and have any difficulties

during the call, press *0 for assistance.

CERCLA INTERVENTION Albert M. Cohen Loeb & Loeb LLP

310-282-2228 acohen@loeb.com www.loeb.com

LOEB & LOEB Adds Value

Right to Intervene Prior to Aerojet

 Prior to 2009 – many understood the majority view to be that non-settling PRPs

could not intervene S C (C C )  U.S. v. Acorn Eng’g Co. 221 F.R.D. 530 (C.D. Cal. 2004)

– Statute ambiguous – 113(i) seems to allow intervention yet 113(f)(2) precludes non- settling party from bringing contribution claims – Allowing intervention would hinder ability to generate early and efficient settlements rather than prolonged and expensive litigation settlements rather than prolonged and expensive litigation

 One key case held that there is a right to intervene

 U.S. v. Union Elec. Co. 64 F. 3d 1152 (8th Cir. 1995) Recent case also held there is a right to intervene  U.S. v. Albert Inv. Co., Inc., 585 F. 3d 1386 (10th Cir. 2009) ( )

5

U.S. v. Aerojet General Corp.

 Background

 EPA entered into settlement with group of PRPs  EPA entered into settlement with group of PRPs  EPA filed suit and lodged CD  Notice published in Federal Register and non-settling PRPs  Notice published in Federal Register and non settling PRPs

• bjected

 Non-settling PRPs moved to intervene  Court denied motion and approved CD

6

U.S. v. Aerojet cntd

 Key statutory provisions

 Section 113(i) of CERCLA provides: “In any action commenced under this chapter . . . In a court of the United States, any person may intervene as a matter of right when such person claims an interest relating to the subject

• f the action and is so situated that the disposition of the action may, as a

practical matter impair or impede the person’s ability to protect that practical matter, impair or impede the person s ability to protect that interest, unless the President or the State shows that the person’s interest is adequately represented by existing parties.”  F.R.C.P. 24(a)(2) is similar but places the burden of showing whether party’s interests are adequately represented on party seeking to intervene.

7

U.S. v. Aerojet cntd.

 Court adopted intervention standard from Rule 24(a)(2)

 Motion must be timely  Motion must be timely  Applicant must claim “significantly protectable” interest relating to the property or transaction which is the subject of the action  Applicant must be so situated that disposition may impair or impeded its ability to protect that interest  Applicant’s interest must not be adequately represented by the ti i th ti parties in the action

8

U.S. v. Aerojet cntd.

 “Significantly Protectable” Interest

 (1) must assert an interest that is protected under some law;  (2) There must be a relationship between the legally protected interest and the party’s claim the party s claim  Non-settling PRPs clearly have “significantly protectable” interest

– They are PRPs with right of contribution They are PRPs with right of contribution – §113(f)(2) would cut off contribution rights – If cut off, may be liable for balance – “obvious interest” in amount of settlement 9

U.S. v. Aerojet cntd.

 Rejects argument that contribution right is too contingent or

speculative  113(f)(1) – contribution right exists for any “liable or potentially liable” person  Interest arises “during or following” actions under §§106 or 107  Interest arises during or following actions under §§106 or 107 (i.e. no finding of liability required)

 Rejects policy arguments

 113(i) is unambiguous  113(i) is unambiguous  Policy favors intervention to ensure costs are borne by responsible parties

10

U.S. v. Aerojet cntd.

 Impairment of interests

 Clear since contribution right would be cut off  Clear since contribution right would be cut off  Interests not protected by “other means”

– Publication in FR did not protect interests because government and PRP interests aligned and adverse to non settling PRPs and PRP interests aligned and adverse to non-settling PRPs.

 Adequacy of Representation

 EPA and PRPs have directly adverse interests and clearly do not represent interests of the non settling PRPs do not represent interests of the non-settling PRPs

11

U.S. v. Aerojet et al.

 PRPs contribution rights constitute “significantly protectable

interests” which would be cutoff by CD. y

 Therefore, non-settling PRPs have a right to intervene.

12

What rights do intervenors have?

 Intervenor must have “meaningful and sufficient opportunity to

present arguments and submit evidence in opposition” - U.S. v. p g pp Albert  Right to file objections – U.S. v. Union Electric  District court may deny discovery – U.S. v. Albert  District court may deny evidentiary hearing – U.S. v. Albert; U.S. v. Union Electric

13

Implications of Aerojet et al.

 Clear right of non-settlers to intervene  Will affect CD approval process

 Intervenors have right to present arguments

– Additional briefing – Disputes over procedure, discovery etc. – Allowing discovery and hearings will complicate and delay approval

 Settlers may need to more clearly articulate basis for settlement

 Courts likely to give CDs more scrutiny

 Query how to evaluate fairness at early stages where information on l i i b i d volume, toxicity etc. may be inadequate

 Intervenors will be bound by Court’s determination

14

5th Amendment Considerations

 No person shall “be deprived of life, liberty, or property, without

due process of law; nor shall private property be taken for p ; p p p y public use, without just compensation  Due process requires that a person be given adequate notice and opportunity to be heard notice and opportunity to be heard.  Cannot take property right without just compensation

15

Is the right of contribution under CERCLA,

hich is a “significantl protectable interest ” which is a “significantly protectable interest,” a “property right” entitled to protection under the 5th Amendment? the 5 Amendment?

16

Congressional Concerns re: 5th Amendment

 Section 308 of CERCLA provides that “if an administrative

settlement under section 9622 . . . has the effect of limiting any ’ ib i f h l d if person’s contribution from any party to such settlement, and if the effect of such limitation would constitute a taking without just compensation in violation of the fifth amendment, . .. such limitation on the right of contribution shall not be treated as limitation on the right of contribution shall not be treated as having any force and effect.”

17

Cases indicating CERCLA contribution right implicates 5th Amendment

 General Time Corporation v. Bulk Materials, Inc. 826 F. Supp. 471

(M.D. Ga. 1993)  “Case law supports the view that the statutorily created right of contribution is a property interest, which cannot be extinguished without procedural due process of law.”  Cites to §308  “Due process requires an opportunity to be heard at a meaningful time and in a meaningful manner.’” time and in a meaningful manner.

18

Cases indicating CERCLA contribution right implicates 5th Amendment

 Waste Management v. City of New York 910 F. Supp. 1035

(M.D. Pa. 1995) ( )  “The right to sue a party for contribution or to recover costs incurred may be viewed as a property right. Depriving a party of that right raises a question of whether there has party of that right raises a question of whether there has been a taking of property without just compensation.”)

19

Cases indicating CERCLA contribution right does not implicate 5th Amendment

 U.S. v. Alcan Aluminum 25 F. 3d 1174 (3rd Cir. 1994)(Contribution right is

contingent and not a legally protectable interest)

 City of Waukegan v. National Gypsum 2009 WL 674347 (N.D. Ill. 2009)

(Contribution right limited and does not implicate due process.) U S M l d S d G l d St C 1994 WL 541069 (D Md

 U.S. v. Maryland Sand Gravel and Stone Co. 1994 WL 541069 (D. Md.

1994)(Because right does not exist until recovery action initiated, it is not a property interest)

Q i t f h ldi i A j t Alb t d U i El t i

 Query impact of holdings in Aerojet, Albert, and Union Electric

that right not “speculative” or “too contingent”

20

Party being deprived of a property right must be provided adequate notice

 Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314

(1950)(A t l ti i d h id tit k bl (1950)(Actual notice required where identity known or reasonably ascertainable)

 Tulsa Professional Collection Services Inc v Pope 485 U S 478  Tulsa Professional Collection Services, Inc. v. Pope, 485 U.S. 478,

487-88 (1988) (where state attempted to bar claims against a probate estate under a “nonclaim” statute “due process is directly implicated and actual notice generally is required.)

21

What notice required under CERCLA?

 CERCLA cases have generally held that publication in Federal

Register is sufficient notice  City of Waukegan v. National Gypsum Co. 2009 WL 674347 (N.D. Ill. 2009)(publication in FR sufficient)  U S v Serafini 781 F Supp 336 (M D Pa 1992)(same)  U.S. v. Serafini 781 F. Supp. 336 (M.D. Pa. 1992)(same)

 Are these correct in light of cases holding that actual notice is

required when depriving parties of a property right? required when depriving parties of a property right?

22

Party being deprived of property right must be given appropriate hearing

 U. S. v. Raddatz 447 U.S. 667, 677 (1980) (“The guarantees

• f due process call for a ‘hearing appropriate to the nature of

p g pp p the case.’”)

 Fuentes v. Shevin, 407 U.S. 67, 82 (1983) (citing numerous  Fuentes v. Shevin, 407 U.S. 67, 82 (1983) (citing numerous

cases for the proposition that a hearing must be provided before any deprivation may take place)

23

How is hearing requirement satisfied under CERCLA

 Administrative settlements present particular problems

 §308 expresses particular concerns about administrative settlements  No hearing of any kind  U.S. v. Aerojet held that FR notice and comment procedures are inadequate to address concerns of non-settlers  General Time – no contribution protection where state administrative settlement without notice or opportunity to be heard Are Consent Decree proceedings adequate?

 Are Consent Decree proceedings adequate?

 Nonparties generally not bound by judgments. Martin v. Wilks 490 U.S. 755 (1989)(party seeking to bind another must join that person as a party)  There is no requirement that a party intervene. q p y  But Congress specifically enacted contribution bar?

24

Does cutting off contribution rights constitute a taking

 Congress was clearly concerned about this when it enacted

§308

 Alliance of Descendants of Texas Land Grants v. U.S., 37 F.3d

1478, 1481 (C.A. Fed. 1994) (holding that where a claimant’s legal cause of action was taken, they properly alleged a claim g y p p y g for a taking under the Fifth Amendment, citing Cities Servs. Co.

• v. McGrath, 342 U.S. 330, 335-36 (1952) and Ware v. Hylton, 3

U.S. (3 Dall.) 199, 245 (1796)).

 General Time avoided the issue by finding no contribution

protection

25

What should PRPs do?

 Settling parties:

 Consider providing notice to as many parties as possible to  Consider providing notice to as many parties as possible to avoid lack of notice claims  Consider not opposing intervention  Attempt to limit discovery and right to evidentiary hearing  Consider joining non-settlers  Carefully articulate bases for settlement

26

What should PRPs do?

 Non-settling PRPs

 File objections in FR proceedings  File objections in FR proceedings  Consider whether intervene or not

– If PRP intervenes, then bound by decision – If PRP does not intervene, may be able to assert that contribution bar is not effective – Should only move to intervene where it believes it has a reasonable chance of success

 Need to attempt to get sufficient discovery and hearing to adequately present views q y p  Courts are likely to be reluctant to disapprove of CDs - Need to carefully present arguments why Court should question the settlement

27

the settlement.

Consent Decrees: S d d f R i Standard of Review

Presented by:

Linda W. Tape H h Bl k ll S d LLP Husch Blackwell S anders LLP 314-480-1839 linda.tape@ huschblackwell.com

28

Seminal Case US v Cannons E ng et al U.S. v Cannons E

• ng. et al.,

899 F .2d 79 (1

st Cir. 1990)

f f

• A few facts

– 2 consent decrees settling 47 major PRPs and 12 de minmis parties – Objecting parties – non-settlors who were all de minimis

• Circuit Court Standard of Review of the District

Court decision

– abuse of discretion

29

Standard of Review of C t D Consent Decrees

Reasonable

• Reasonable
• Fair

Proced ral Fairness – Procedural Fairness – Substantive Fairness C i i h h f CERCLA

• Consistent with the purposes of CERCLA

Cannons, at pg. 85

30

Procedural F airness Procedural F airness

– Look to negotiation process to gauge the candor,

• penness and bargaining balance
• penness, and bargaining balance.

– For Cannon’s, the government negotiations were found to be forthright and in good faith. g g – Non-settlors argued that they were excluded from the settlement because of the government arbitrary cut off between major and minor players between major and minor players. – Court gave a significant amount of discretion to the EPA in determining categories of PRPs. g g

Cannons, at pgs. 86-87

31

Substantive F airness Substantive F airness

• Key: Corrective justice and accountability: a party

y j y p y should bear the cost of the harm for which it is legally responsible.

• Comparative fault a fact question best left to EPA

expertise so long as the agency supplies a p g g y pp plausible explanation.

Cannons, at pg. 87

32

Reasonableness Reasonableness

• Reasonableness is a multi-faceted exercise.
• Three facets considered in Cannons:

– Technical adequacy: probably effectiveness of remedial response. Does settlement satisfactorily compensate the public for – Does settlement satisfactorily compensate the public for the costs of remediation? – Strength of litigation positions. Strength of litigation positions.

Cannons, at pgs. 89-90 33

F idelity to the Statute F idelity to the Statute

• EPA must follow the statute’s overarching principals of

accountability, desirability of an unsullied environment and promptness of remedial responses promptness of remedial responses.

• “Disproportionate liability, which promotes early settlements

and deters litigation for litigation’s sake, is an integral part of g g , g p the statutory plan.”

• CERCLA gives EPA broad discretion regarding settlement

notice and timing notice and timing.

• CERCLA does not require EPA to open all settlements to all

PRPs.

Cannons, at pgs. 90-93.

34

Post Cannons: Is there ever success in ever success in challenging a Consent Decree?

• US v Montrose 50 F.3d 741 (9th Cir. 1995) - the

involved CD was vacated because of insufficient involved CD was vacated because of insufficient information regarding cleanup costs, which information the Court found to be necessary to d t i f i determine fairness.

35

E xample of Motions for E ntry of CD Denied by District Courts by District Courts

US v. Nalco 1996 U.S. Dist. LEXIS 13089 (N.D. Ill. Sept. 4, 1996) Case involved motions for entry of several partial consent decrees.

• CD with the landowner of the Site was approved with no contribution bar.
• Other CDs with various categories of PRPs contained contribution bars. The

Court found these CDs to be unreasonable because the decrees did not take into account the landowner’s voluntarily incurred cleanup costs.

• Court said “baring contribution claims without providing holder of the claims

any compensation is not consistent with the goals of CERCLA”

• Note that today, after the Supreme Court decision in Atlantic Research, the

y p contribution issues in Nalco would likely be different because the landowner arguably would have a direct 107 claim (rather than a contribution claim) against the settlors for costs incurred voluntarily.

36

Motions Denied Cont’d Motions Denied Cont d

U.S. v. Allied Signal, 62 F. Supp.2d 713 (N.D. NY 1999) 1999) The Court rejected a CD between municipal d f d d h d b j defendants and the United States because:

– the payment amount was unreasonably low; – the costs were based on a model when actual conditions and estimates of costs are known; – and the CD did not approximate the proportionate share

• f the settlors liability.

37

Motions Denied Cont’d

Arizona v. Acme Laundry & Dry Cleaning Co., 2009 WL 5170176 (D. Ariz. Dec. 21, 2009) – The Court could not evaluate fairness because there was no preliminary estimate of the total damages. – The landowner needed to receive direct notification of proposed Consent Decree. – The modification provision in the CD needed to note that Court approval is required if a CD modification occurs. – The Court noted that the parties may renew the Motion to Enter the CD when above issues were resolved.

38

Short Case Study US U i E l t i U.S. v. Union E lectric

• 1994 - District Court denies intervention and enters CD. The non-settlors

concerns were an unfair allocation formula and loss of contribution concerns were an unfair allocation formula and loss of contribution

• protection. (863 F. Supp. 1001)
• 1995 - 8th Circuit reverses and remands for the District Court to withdraw its

approval of the CD and to grant the motion for leave to intervene. (64 F.3d 1152) 1152)

• 1996 – District Court grants motion to re-enter the CD after discovery is

allowed but no hearing. (934 F. Supp. 324)

• 1997 – 8th Circuit affirms lower court, but makes clear that the objectionable

allocation formula will not bind non-settlors. (132 F.3d 422)

• Post CD entry – several non-settlors defended a government suit for past

Post CD entry several non settlors defended a government suit for past costs at the site. The District Court found that the non-settlors did not arrange for disposal of a hazardous substance. U.S. v. B&D Electric, 2007 WL 1395468 (E.D. Mo. May 9, 2007)

39

A F ew Thoughts on Challenging C t D Consent Decrees

• Once a Consent Decree is lodged with the Court,

the chances of successfully challenging the decree are limited.

• Successful challenges to date have focused on the

government’s failure to present information regarding the settlors fair share and how it was regarding the settlors fair share and how it was calculated.

40

A F ew Thoughts on Settlement N ti ti Negotiations

• Negotiations with the government regarding a consent decree

g g g g can take a very long time.

• If settling past costs, PRPs will want to take a close look at

g p , EPA/DOJ cost documents. They often have significant mistakes.

• After the Supreme Court’s decision in U.S. v. Atlantic Research

Corp., 127 S.Ct. 2331 (2007), even if your client settles and receives contribution protection, if any other PRP incurs response costs it may have a direct §107 claim and thus your response costs, it may have a direct §107 claim and thus your client may not be protected from further litigation regarding the site.

41

Settlement Incentives Settlement Incentives

• Avoid Joint and Several Liability

J y

• Contribution Protection
• Covenant not to Sue
• Mixed Funding
• Orphan Share Funding
• For agreements requiring work, control over

work A id EPA d t ki k it lf d th

• Avoid EPA undertaking work itself and then

seeking cost recovery, or issuing a UAO

42

CE RCL A Se ttle me nt T re nds: PRP Inte rve ntion PRP Inte rve ntion E PA’s Use of E nvironme nta l T rusts E PA s Use of E nvironme nta l T rusts in Ba nkruptc y

July 20, 2010

Gabrielle Sigel Gabrielle Sigel

43

CE RCL A Se ttle me nt T re nds: PRP Inte rve ntion

Environmental Trusts in Bankruptcy

• A. When are Trusts Used
• B. EPA’s Bankruptcy Strategy
• C. One Solution for EPA and Debtors

D Examples of Environmental Trusts Emerging from

• D. Examples of Environmental Trusts Emerging from

Bankruptcy E PRP Rights – Bankruptcy Context

• E. PRP Rights – Bankruptcy Context

44

Whe n a re E nvironme nta l T rusts Use d?

• Company with legacy or current environmental liabilities files for bankruptcy
• Company may have option to dissolve (Chapter 7) or reorganize (Chapter 11).

C ’ b k t t b d d ith CERCLA li biliti t

• Company’s pre-bankruptcy assets are burdened with CERCLA liabilities at
• wned sites and non-owned sites.
• Chapter 7 Corporate Liquidation
• Trustee takes control of all assets.
• Assets distributed to creditors following the priority schedule.
• Payment made pro rata within each class of claim.
• Chapter 11 Corporate Reorganization
• Debtor remains in possession of all assets.

Debtor prepares plan of reorganization including plan to pay percentage of

• Debtor prepares plan of reorganization, including plan to pay percentage of

debts.

• Plan must be accepted by creditors and approved by court.

Pre petition claims are discharged

45

• Pre-petition claims are discharged.

E PA’s Ba nkruptc y Stra te g y

Guidance on EPA Participation in Bankruptcy Cases (1997) (Office of Site Remediation Enforcement)

• Secured Claims – CERCLA lien; judgment lien (Consent Decree)
• Administrative expense – Response costs incurred by EPA after

b k t fili bankruptcy filing

• General unsecured claims – Reimbursement of past and future

response costs

• Abandonment – Cannot contravene public health or safety
• Automatic stay typically does not apply to injunctions
• Cleanup orders and continuing release typically are not discharged

(See Apex Oil)

• Department of Justice takes the lead as counsel

46

• Department of Justice takes the lead as counsel

E PA’s Ba nkruptc y Stra te g y (c ont.)

Post-Bankruptcy Injunction May Not Be Discharged U.S. v. Apex Oil Co., Inc., 579 F.3d 734 (7th Cir. 2009) p , , ( )

• Post-bankruptcy RCRA clean-up injunction, based on pre-bankruptcy

releases, not discharged by the party’s Chapter 11 reorganization

• Apex’s pre-bankruptcy predecessor allegedly released significant

Apex s pre bankruptcy predecessor allegedly released significant quantities of oil, leading to currently ongoing contamination and vapor intrusion

• Apex had entered bankruptcy in 1986; after its reorganization, it no

l d d fi i i d l h d h i longer conducted refining operations and no longer had the capacity to remediate without hiring a third party

• Simply because Apex will be required to spend money to conduct the

clean up does not make EPA’s claim one for monetary relief clean-up does not make EPA s claim one for monetary relief

47

E PA’s Ba nkruptc y Stra te g y (c ont.) Some Issues for EPA:

1) Plan of reorganization that attempts to impair future environmental claims on property owned by debtor 2) S lli t f d l f EPA l i 2) Selling property free and clear of EPA claims

Some issues for Debtors:

1) How can reorganized company survive legacy environmental concerns 2) How to satisfy EPA while creating sufficient assets to survive as reorganized entity

48

One Solution for E PA a nd De btors

If, e.g.,

• Debtor intends to pay claims at significant discount and

abandon property abandon property.

• Debtor can re-organize and be a viable company that can

continue paying for some environmental claims if others are discharged discharged. Then, e.g.,

• EPA may release claims against reorganized company.

EPA may release claims against reorganized company.

• Provide contribution protection to reorganized company.
• Establish a trust which owns impacted property and other

t h l i t di t it assets whose sole purpose is to remediate sites.

• Environmental trust can be structured to address all or some

legacy claims and sites.

49

E xa mple s of E nvironme nta l T rusts E me rg ing from Ba nkruptc y

• American Smelting & Refining Company (Asarco) –

$1.79 billion leading to reorganization in December $ g g

• 2009. Payments were to EPA, custodial trusts, and

states for more than 80 sites in 19 states. E l Pit h EPA i d $8 7 illi d

• Eagle Pitcher – EPA received $8.7 million and

$13.6 million to a custodial trust. Phillips Services In lieu of abandonment sites

• Phillips Services – In lieu of abandonment, sites

transferred to custodial trust and $6 million in cleanup.

• Kaiser Aluminum – site transferred to custodial trust

with cleanup funding.

50

F ruit of the L

• om E

xa mple Fruit of the Loom – Sites owned in Michigan, New Jersey and Tennessee One of the sites is Velsicol Chemical site in St. Louis, Michigan

• 52-acre chemical plant
• residential and other nearby properties
• residential and other nearby properties
• Pine River contaminated sediments and fish
• COCs include PBB, DDT, HBB, chlorobenze
• Pre-CERCLA judgments; NPL listing

51

F ruit of the L

• om E

xa mple (c ont.) Legal status of St. Louis facility:

• 1986 – Velsicol a subsidiary of FTL became separate

1986 Velsicol, a subsidiary of FTL, became separate company, but transferred title to site to NWI.

• 1999 – FTL files for bankruptcy.
• 2002 – bankruptcy settlement creating two trusts, releasing

Velsicol, FTL, and NWI from claims by EPA and third parties Trustee get rights to insurance policies

• parties. Trustee get rights to insurance policies.
• AIG/AISLIC denied coverage and filed suit. EPA

intervened.

• January 2008, AIG agrees to pay $42.5 million.

52

F ruit of the L

• om E

xa mple (c ont.) Bankruptcy Settlement:

• Successor Trust to FTL and NWI to implement

Successor Trust to FTL and NWI to implement Environmental Settlement Agreement whose job is recovering and distributing assets to fund Custodial Trust Trust

• Trust received certain Velsicol preferred shares and

insurance litigation rights g g

• Custodial Trust conducts O&M
• Trusts receive release and liability shield and if
• Trusts receive release and liability shield, and if

necessary, money in trust can be transferred to EPA

53

F ruit of the L

• om E

xa mple (c ont.)

City of St. Louis v. Velsicol Chemical Co. (E.D. Mich.

• Mar. 25, 2010)
• City sued Velsicol and trustees of successor and

custodial trusts W t t h i it d t t f

• Wants to change priority and strategy of

remedial actions U S intervenes on its own behalf

• U.S. intervenes on its own behalf
• Case removed to federal court based on

bankruptcy and federal officer jurisdiction bankruptcy and federal officer jurisdiction

• Third-party rights limited?

54

PRP Rig hts – Ba nkruptc y Conte xt What rights do PRPs have in bankruptcy context?

• PRP filed a claim in bankruptcy
• Status of claim

Status of claim

• PRPs’ rights to intervene in settlement agreement

with EPA with EPA

• PRPs’ rights to intervene in Consent Decree

resolving bankruptcy litigation resolving bankruptcy litigation

55

Questions? Comments? Th k ! Thank you! Gabrielle Sigel

GSigel@jenner com GSigel@jenner.com

Jenner & Block LLP

56