A recent decision of the U.S. Supreme Court will have broad-ranging impacts on how parties assess and manage environmental liabilities. In Aviall v. Cooper Industries, the Court has dramatically narrowed the ability of private parties to recover environmental costs through contribution lawsuits. Specifically, following Aviall, owners or operators of contaminated properties will not be able to sue other responsible parties under the major federal environmental statute (CERCLA) unless they are first sued by or settle with a government environmental agency.

The Aviall decision undercuts two decades of federal environmental caselaw that formerly granted private parties a blanket right to recover response costs from other responsible parties regardless of the government’s level of involvement. This decision has implications for management of environmental liabilities related to the ownership and operation of impacted properties, including purchase or financing of impacted property, performing environmental cleanups, and the sale of corporate assets. Aviall also casts doubt on the advisability of performing "brownfield" cleanups under State-run voluntary cleanup programs. Although brownfield programs can provide meaningful tax benefits and other incentives for developers of impacted properties, they lack the coercive element (government lawsuit or settlement) that is necessary to bring a contribution action against other responsible parties following Aviall. This restriction may seriously limit the value and increase the risk of brownfield investments.