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July 11, 2014

Residuary Trusts and Cost Recovery Contribution Actions Under Superfund: The Implications of Asarco v. Goodwin

In 2009, Asarco LLC entered into a settlement with the government over its alleged liability under the Comprehensive Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C. §9601 et seq., ("Superfund") for several contaminated mines it owned in Everett, Washington. Following the $50.2 million dollar settlement, Asarco sought to recover some of that amount by seeking contribution from other "potentially responsible parties" or "PRPs", as allowed under Superfund.

Asarco claimed that corporations under the personal control of the late John D. Rockefeller had engaged in activities on the contaminated mine sites that made them and him PRPs. Although these activities allegedly took place between 1892 and 1903, long before the enactment of Superfund, by legislative design, Superfund applies retroactively to activities that took place before its enactment.

Indisputably, if Rockefeller were alive today and was shown to be a PRP for polluting activities that took place before the enactment of Superfund, his assets could be reached to share in the costs of the cleanup via a Superfund contribution action. But, Rockefeller had passed away in 1937.

Undeterred, Asarco brought a Superfund contribution action against the trustees of residuary trusts created by the Will of John D. Rockefeller to benefit his heirs, currently his great-grandchildren. To protect the substantial assets that remain in these trusts, the trustees defended arguing that Superfund cost-recovery actions do not reach distributees and beneficiaries of a decedent's estate. The district court agreed and ruled against Asarco. Asarco subsequently appealed. On June 25, 2014, a decision was handed down from the Second Circuit Court of Appeals which left Asarco with some good news and some bad news, and as usual, left distributees and beneficiaries with some unresolved issues.

As a preliminary matter, the Court rejected Asarco's argument that a "trust fund theory" derived under "federal common law" should be applied. Superfund is silent as to whether liability can be imposed on the estates of PRPs, much less the beneficiaries of such estates, although some courts have held that the liability of a PRP may pass to its successors under certain circumstances. Asarco argued that based on these court decisions, Superfund mandates that a deceased PRP's personal liability is transferred to those who benefit from the PRP's estate. The Court rejected this theory.

Rather, the Court explained that, because Superfund is silent on this issue, the courts must apply the applicable state probate law. The Court then noted that, under New York probate law, the distributees and beneficiaries of an estate are liable for the "debts of a decedent." Simply put, in New York, when a decedent passes away with debts, the distributees and beneficiaries of the estate are responsible for those debts.

The Court seemed to imply that, where the enactment of Superfund precedes the decedent's death, the PRP liability of the decedent would be a debt for which the distributees and beneficiaries of an estate are liable under New York law, although this issue was not squarely before the Court. Accordingly, for any PRP that passes, or has passed away since Superfund was enacted in 1980, his or her distributees and beneficiaries would seem to be burdened by that deceased PRP's Superfund liability. Such distributees and beneficiaries could be subject to Superfund contribution actions by parties that have settled their own Superfund liability and seek recovery of a share of the cleanup costs.

The more difficult question is whether such "debts" exist for those PRPs that passed away before Superfund was enacted. Essentially, the issue is whether the enactment of Superfund somehow retroactively created "debts of a"¦decedent," (based on PRP liability) that were not present at the time of the decedent's death.

That was the relevant issue in the Asarco case: Rockefeller's estate had been passed along to his heirs, in the form of a trust, forty-three years before Superfund was born. Could the residuary trust be subject to Superfund cost-recovery contribution actions based on Rockefeller's alleged personal PRP status? For Asarco to prevail and recover from the beneficiaries and distributees of the trust, the Court would have to find a debt, based on PRP liability attributable to Rockefeller. It may seem extreme that the Court would even consider that Superfund could be interpreted to create a debt upon the estate of a decedent whom passed away before the legislation was enacted, but other courts have indicated that a broad interpretation of the statute is needed to achieve its purposes.

In anticlimactic fashion, the Court asked but did not answer the question, and instead dismissed Asarco's claims because Asarco had waited too long after its settlement with the government to bring the cost-recovery contribution actions. While the Court left the issue open, it did provide a few hints that raise a cause for concern. The Court noted that Asarco had identified some cases that might provide indirect support for its position. The Court chose not to rely on these cases because it was not forced to address the issue. However, if a court is faced with this issue in the future, there is at least one line of reasoning that could support interpreting Superfund and New York probate law in a way that attaches PRP based debts upon the estates of decedents who passed away before Superfund was enacted, and which would burden any accompanying distributes and beneficiaries.

We will continue to monitor developments and cases regarding the applicability of Superfund cost recovery actions to distributees and beneficiaries of residuary trusts, and will issue further legal alerts as any significant developments occur. It nevertheless would be wise to assess the risks to your assets before future decisions on this issue are decided.

We would be happy to help you further understand the potential risks and to devise a plan of action to avoid potential pitfalls that may arise. If you or your estate would like more information on the implications of this case or would like to discuss how it relates to your specific situation, please do not hesitate to contact the author of this Alert and chair of Hiscock & Barclay's Land Use Practice Area and Member of its Environmental Practice Area, Thomas F. Walsh, at (585) 295-4414 or You may also contact the chair of the Trusts & Estates Practice Area, Catherine T. Wettlaufer at (716) 566-1430 or


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