Allocating CERCLA Liability: Divisibility or Section 113

Presenting a live 90-minute webinar with interactive Q&A
Allocating CERCLA Liability: Divisibility
or Section 113 Equitable Contribution
Assessing Harm, Proving Divisibility of Harm Defense Absent
a Bright-Line Test, and Apportioning Costs
WEDNESDAY, AUGUST 5, 2015
1pm Eastern
|
12pm Central | 11am Mountain
|
10am Pacific
Today’s faculty features:
Richard A. Du Bey, Attorney, Short Cressman & Burgess, Seattle, WA
John F. Gullace, Partner, Manko Gold Katcher & Fox, Bala Cynwyd, Pa.
Kathleen M. (Kate) Whitby, Attorney, Spencer Fane, St. Louis, MO
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Allocating CERCLA Liability:
Divisibility or Section 113
Equitable Contribution
August 5, 2015
John F. Gullace, Esq.
Manko, Gold, Katcher & Fox, LLP
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Topics To Be Covered
 CERCLA § 107(a) cost recovery claims v. CERCLA
§ 113(f) contribution claims
 Apportionment or Divisibility v. Allocation
 Burlington Northern & Santa Fe Railway v. U.S.
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Agenda
n
II.
III.
IV.
V.
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VI.
The Basics
A Little History, CERCLA §§ 107 and 113
The Supreme Court Addresses 107 v. 113
Burlington Northern
Recap
Why It Matters
The Basics
What Are the Elements of a Claim under CERCLA?
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Release or threatened release
of a hazardous substance
from a facility into the environment
causing the incurrence of response costs
National Contingency Plan Consistency
The Basics (cont.)
Who Is Liable?
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
Current owners and operators of a facility (CERCLA
§ 107(a)(1))
Prior owners and operators of a facility at the time
of disposal (CERCLA § 107(a)(2))
Arrangers (intent to dispose) (CERCLA § 107(a)(3))
Transporters (CERCLA § 107(a)(4))
A Little History
In 1980, CERCLA contained a cost recovery action
under § 107(a), but no explicit right of contribution.
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A Little History (cont.)
The Courts Began to Interpret § 107(a)
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Joint and Several Liability
Private Right of Action
Divisibility or Apportionment Defense
Contribution Claims Were Uncertain
A Little History (cont.)
Restatement (Second) of Torts § 433A
Apportionment of Harm to Causes (aka
Divisibility Defense)
(1)Damages for harm are to be apportioned among two or
more causes where
(a) there are distinct harms, or
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(b) there is a reasonable basis for determining the
contribution of each cause to a single harm.
(2)
Damages for any other harm cannot be apportioned
among two or more causes.
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A Little History (cont.)
1986 SARA Amendments added an explicit right of
contribution at § 113(f) of CERCLA
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A Little History (cont.)
From 1986 to 2004, the Courts struggled with the
meaning and interplay between CERCLA
§§ 107 and 113, and generally came to agreement
that

§ 107(a) cost recovery claims seeking to impose joint
and several liability could only be brought by

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
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the Government
innocent parties
§ 113(f) claims for contribution could be brought by
everyone else to recover a portion of their response
costs
A Little History (cont.)
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Plaintiff in a contribution action has the burden of proving:
1.That it paid more than its fair share
2.The fair share of the contribution defendant; and
3.The overall size of the pie.
“In resolving contribution claims, the court may allocate
response costs among liable parties using such equitable
factors as the court determines are appropriate.”
(CERCLA § 113(f)(2))
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The Supreme Court, 107 v. 113
Along Comes the Supreme Court:
Cooper Industries v. Aviall Services, 543 U.S. 157
(2004)
U.S. v. Atlantic Research, 551 U.S. 128 (2007)
Burlington Northern & Santa Fe Railway Co. v.
United States, 556 U.S. 599 (2009)
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The Supreme Court, 107 v. 113
(cont.)
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Cooper Industries v. Aviall Services, 543 U.S. 157
(2004)
Section 113(f) claims for contribution can only be
asserted during or following an action brought
under § 106 (a government action) or under
§ 107(a), [or following an administrative or judicially
approved settlement with the government]
Basis for the holding: that’s what the statute says
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The Supreme Court, 107 v. 113
(cont.)
 Any person may seek contribution from any other person
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who is liable or potentially liable under section [107] of
this title, during or following any civil action under section
[106] of this title or under section [107] of this title. Such
claims shall be brought in accordance with this section
and the Federal Rules of Civil Procedure, and shall be
governed by Federal law. In resolving contribution claims,
the court may allocate response costs among liable
parties using such equitable factors as the court
determines are appropriate. Nothing in this subsection
shall diminish the right of any person to bring an action
for contribution in the absence of a civil action under
section [106] of this title or section [107] of this title.
CERCLA § 113(f)(1) (emphasis added)
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The Supreme Court, 107 v. 113
(cont.)
 Since every Court of Appeals had limited § 107(a)
claims to the government or an innocent party, a
private party that voluntarily incurred cleanup
costs had no cause of action under CERCLA after
the Aviall Services decision
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The Supreme Court, 107 v. 113
(cont.)
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U.S. v. Atlantic Research, 551 U.S. 128 (2007)
Any party who incurs response costs, has not yet
been sued under §§ 106 or 107(a) of CERCLA, and
otherwise satisfies the elements of § 107(a), may
assert a cost recovery claim under § 107(a)
Basis for the holding: § 107 says claims are
available to recover “costs of response incurred by
any other person.” Any other person means any
other person
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The Supreme Court, 107 v. 113
(cont.)
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§ 107(a) of CERCLA provides that a responsible
party “shall be liable for –
(A)all costs of removal or remedial action
incurred by the United States Government or a
State or an Indian tribe not inconsistent with the
national contingency plan
(B)any other necessary costs of response incurred
by any other person consistent with the national
contingency plan”
CERCLA § 107(a)(4)
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The Supreme Court, 107 v. 113
(cont.)
Burlington Northern & Santa Fe Railway v. United
States, 556 U.S. 599 (2009)
Arranger Liability – Court looked at the dictionary definition
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of “arranged for disposal” to resolve a split in circuits
regarding arranger liability
Divisibility – Court reinstated divisibility defense to a
government § 107(a) claim relying upon
§ 433A of the Restatement (Second) of Torts
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Burlington Northern
Facts of Burlington Northern
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Burlington Northern (cont.)
Brown & Bryant
Superfund Site
Pesticide reformulator and
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distributor
Tanks, lagoons, debris, soil
and groundwater
contaminated by several
pesticides
EPA spends $8 million in
response costs
Ongoing efforts involve GW
pump & treat, supply well
decom. and MNA
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Burlington Northern (cont.)
 B&B originally on 3.8
25
acres (1960) and
leases .9 acres from
railroads in 1975
 B&B ceases
operations – 1989
 Pond, sumps and
Dinoseb spill area are
main release points
 Dinoseb and D-D
(1,2-DCP) are main
GW contaminants
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Burlington Northern (cont.)
Apportionment Facts
Railroad owned 19 percent of the surface area of the
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Site (0.9 acres/4.7 acres)
Railroad leased their parcel to B&B for 45 percent of the
time of operation (13 yrs/29yrs)
Only spills of Nemagon (DBCP) and Dinoseb (not D-D)
substantially contributed to contamination originating on
the Railroad parcel and those two chemicals contributed
two thirds (66 percent) of the total Site contamination
requiring remediation
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Burlington Northern (cont.)
Court’s Calculation of Railroad Liability
19% x 45% x 66% = 6%
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BUT
Allowing for calculation errors of up to
50%
make it
9%
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Burlington Northern (cont.)
 The District Court apportioned the liability sua
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sponte
 The Court of Appeals reversed because the record
did not establish a “reasonable basis” for
apportionment
 The Supreme Court reversed the Court of Appeals
and Reinstated the District Court’s
Apportionment Ruling
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Burlington Northern (cont.)
 The big change by the Supreme Court in Burlington Northern
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is that the meaning of “reasonable” has changed.
 Previously, as a practical matter, the courts interpreted
“reasonable” to mean to a scientific certainty or provable.
After Burlington Northern, “reasonable” seems to mean
“plausible” or “rational.”
 This decision should have been a very strong signal to the
lower courts to allow the defense of apportionment in many
more circumstances.
 The other ramification was that plaintiffs, including the
government, face greater risk from orphan shares.
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Recap
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Recap
If you have incurred response costs on a cleanup
you are conducting, and have not been sued by
anyone, you can bring a § 107(a) cost recovery claim
– joint and several liability
If you have been sued under § 106 or § 107(a), or
settled with the government through an
administrative or judicially approved settlement,
you are limited to a § 113(f) contribution claim –
several liability only
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Recap (cont.)
 Divisibility/Apportionment is a defense to
§ 107(a) joint and several liability
 Equitable Allocation is an equitable allocation of
liability by the court between liable parties, but
the result can vary significantly depending upon
whether its:
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 An allocation
between jointly and severally liable
defendants in a § 107(a) cost recovery action, or
 An allocation involving severally liable parties in a
§ 113 contribution action
Why It Matters
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R
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B
B
B
Why It Matters
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Why It Matters
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Successful Divisibility Defendants
R gets 10%
B gets 30%
Equitable Allocation Among Jointly & Severally
Liable Defendants that asserted cross-claims under
§ 113(f)
R gets 25%
B gets 75%
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Why It Matters
Contribution under § 113(f)
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Why It Matters
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R & B sue G in contribution under § 113(f),
Must show R & B paid more than their fair share
Must show total contributions of all parties
Must show G’s share of that total
The Court can then apply “equitable factors” to allocate
the response costs
Discussing § 113(f), the Supreme Court in Atlantic Research
approvingly quoted the Restatement (Second) of Torts §
886A(2) “No tortfeasor can be required to make contribution
beyond his own equitable share of the liability.”
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Questions?
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John F. Gullace, Esq.
[email protected]
484-430-2326
Manko, Gold, Katcher & Fox, LLP
August 5, 2015
Allocating CERCLA Liability:
Divisibility or Section 113
Equitable Contribution
Kathleen M. Whitby
www.spencerfane.com
Post-BNSF Cases
•
For the purists: Burlington Northern & Santa Fe Railway Co.
v. United States, 556 U.S. 599, 129 S.Ct. 1870, 173 L.Ed.2d
812, 568 ERC 1161, 77 USLW 4366 (2009).
•
As of July 21, 2015, Burlington Northern had been cited in
222 opinions (not all CERCLA cases and sometimes more
than once in a continuing case), including 56 federal
appellate and 154 district court opinions, 10 state court
cases, and 2 bankruptcy decisions. The majority of these
involve claims of “arranger” liability, not divisibility defenses.
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Reminders
Divisibility only applies to joint and several liability under
CERCLA Section 107.
“[I]nsofar as the District Court made reference to equitable considerations
favoring apportionment, it erred. Equitable considerations play no role in the
apportionment analysis; rather, apportionment is proper only when the
evidence supports the divisibility of the damages jointly caused by the PRPs.
. . . As the Court of Appeals explained, apportionment looks to whether
defendants may avoid joint and several liability by establishing a fixed
amount of damage for which they are liable, while contribution actions allow
jointly and severally liable PRPs to recover from each other on the basis of
equitable considerations.”
Burlington Northern, 556 U.S. at 615, FN 9.
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Reminders
•
If the claim is by or between co-PRPs, this does not automatically
mean it is restricted to Section 113 contribution. After Atlantic
Research, PRPs may seek cost recovery under Section 107.
•
Conversely, just because a complaint cites to Section 107, it may
not sound in cost recovery. Section 107 establishes the four types
or classes of responsible party liability (owner, operator,
generator/arranger, and transporter with site selection) which can
be pursued under Section 113, as well as the defenses (act of God,
act of War, or act of a third party unrelated by contract) which can
defeat liability under Section 107 and therefore under Section 113.
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Cases: NCR Corp / Appleton Papers -Fox River
• Litigation began in 2008 in the ED of Wisconsin concerning PCB contamination
in five Operable Units of the Fox River.
• NCR produced carbonless copy paper by manufacturing a PCB-containing
emulsion which it sent to Appleton Paper to be applied to the paper. This
operation produced “broke” -- paper scrap and trimmings. Appleton Paper sold
the broke, through third party brokers, to paper recycling companies who used it
in their own papermaking facilities. These processes -- emulsion manufacture,
paper coating, and broke paper recycling -- resulted in the discharge of PCBs
into the Fox River. Cleanup costs are estimated at $700 million plus.
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Cases: NCR Corp / Appleton Papers -Fox River
Appleton Papers Inc. v. George A. Whiting Paper Co., 776 F.Supp.2d 857 (E.D.
Wis. 3/1/2011)
•
Paper recyclers at the top of Fox River (OU-1) sought to impose arranger liability on NCR and
Appleton Papers for OU-1 (upriver of the Appleton plant), and sought contribution for costs paid
downriver (OUs 2 to 5).
•
The district court found questions of fact and denied summary judgment to the recyclers on the
issue of Appleton Papers’ and NCR’s arranger liability for OU-1.
•
Court had ruled in 2009 that NCR/Appleton could not recover equitable contribution from the
recyclers for OUs 2 to 5 because “NCR, and not the companies operating the other plants, had
been aware of the significant risks of PCBs at an early date but had decided ‘to accept the risk of
potential environmental harm in exchange for the financial benefits of continued (and increasing)
sales of carbonless paper.’”
•
Court now ruled that the recyclers can recover 100% contribution from NCR/Appleton for costs
already paid towards OUs 2 to 5.
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Cases: NCR Corp / Appleton Papers -Fox River
Appleton Papers Inc. v. George A. Whiting Paper Co. (E.D. Wis. 7/3/2012)
•
•
District court found Appleton Paper was not an “arranger,” and therefore not liable for
PCB contamination in the River, because there was insufficient proof of intent to
dispose as required by Burlington Northern.
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Characterized broke as both waste and product.
•
Saw no specific intent to dispose – Appleton was “indifferent” to the final destination of the
broke.
•
Broke was sold as a useful product to the defendant recyclers.
•
Bales of paper are not “inherently hazardous.”
•
Analogized to sale of copper for recycling as a similar transaction with no intent to dispose.
Court found NCR itself also was not an “arranger” based on the sale of emulsion to
Appleton Papers for application to carbonless paper – this was the sale of a
manufactured product, not a waste disposal transaction.
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Cases: NCR Corp / Appleton Papers -Fox River
U.S. v. NCR Corp. (ED Wis. 4/27/2012)
•
Followed the finding of no liability for Appleton Paper in the George A. Whiting Paper
Co. 2009 and 2011 decisions.
•
EPA wanted NCR to dredge 660k yds3 of OU-4 sediment in 2012; NCR was willing to
do only 500k yds3 and then stopped work.
•
US sought a preliminary injunction to compel NCR to perform; NCR claimed divisibility
and that only 9% of the PCBs in OU-4 were attributable to it.
•
District court said yes to US injunction, and no to NCR:
•
Mass of PCBs does not dictate cost of cleanup.
•
Harm is dependent on placement of PCBs – surficial or under layers of sediment.
•
“Independent factors” – currents, wind, time – affect the distribution of PCBs and so create
an indivisibility of harm.
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Cases: NCR Corp / Appleton Papers -Fox River
U.S. v. NCR Corp., 688 F.3d 833 (7th Cir. 8/3/2012)
•
Expedited appeal of the April 27, 2012 district court’s denial of divisibility
to NCR for OU-4. Agreed with the district court that the harm is not
capable of apportionment and sustained the US preliminary injunction.
•
Because EPA used a 1 ppm standard for River sediment cleanup, any discharges
upstream would require cleanup downstream in OU-4.
•
Cleanup costs alone do not equal environmental harm, but costs can approximate
harm.
•
Observes that in Burlington Northern, “the parties agreed that apportionment was
theoretically possible.” 556 US at 608.
•
Burden to show divisibility was on NCR. Case remanded to the district court for trial.
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Cases: NCR Corp / Appleton Papers -Fox River
U.S. v. NCR Corp., 960 F.Supp.2d 793 (ED Wis. 5/1/2013)
•
•
District court’s judgment after 11 day bench trial on OU-4 divisibility defense and US
demand for permanent injunction against NCR and six other defendants. The court
concludes that NCR and the upstream recyclers failed to prove that the harm was
divisible downstream.
•
“[E]ven though it is undeniable that Burlington Northern loosened the rules governing how
a given harm might be apportioned, it did not address the key issue here, which is whether
the harm is theoretically divisible in the first place.” 960 F.Supp.2d at 804.
•
Answer is no, after fact-intensive examination of expert testimony and River fate and
transport modeling, the harm is not divisible.
The US receives a permanent injunction requiring all defendants to perform the work
required by the 2007 UAO, with some defendants’ liability limited to certain OUs and no
injunction for response costs.
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Cases: NCR Corp / Appleton Papers -Fox River
United States v. P. H. Glatfelter Co., 768 F.3d 662 (7th Cir. 9/24/14)
•
Appeal of the U.S. v. NCR Corp. 4/30/13 district court order. The 7th Circuit rejects the district court’s
“binary” approach to contamination and remediation costs, under which PCBs below 1 ppm cause
no harm and have no costs, and above 1 ppm cause both harm and costs. Instead, the 7th Circuit
finds that:
“the harm would be theoretically capable of apportionment if NCR could show the extent to which
it contributed to PCB concentrations in OU4. And if NCR cleared that hurdle, we think a
reasonable basis for apportionment could be found in the remediation costs necessitated by each
party.” 768 F.3d at 678.
•
The Court reverses the district court’s denial of NCR’s divisibility defense and remands for further
proceedings; vacates the US’ permanent injunction because such injunctive relief was neither
congruous with nor necessary to enforcement of a UAO; and finds that nothing in CERCLA limits a
defendant’s liability to costs associated with its own release.
•
The "One Site Rule" arises: So long as the release causes the incurrence of some response costs,
a defendant “may be held liable for all response costs within the Site.” 768 F.3d at 675.
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Cases: NCR Corp / Appleton Papers -Fox River
NCR Corp. v. George A. Whiting Paper Co., 768 F.3d 682 (7th Cir. 9/24/14)
•
Appeal of the Appleton Papers Inc. v. George A. Whiting Paper Co. 3/11/2011 and 7/3/2012
district court decisions.
•
NCR’s prior settlements and the UAO enforcement action against NCR makes CERCLA §
107(a) cost recovery unavailable. NCR’s only right to sue is under § 113(f).
•
Appvion (f/k/a Appleton Papers) can sue the other PRPs under § 107(a) because the district
court determined it is not a PRP and yet it paid response costs before that determination.
This right extends only to costs Appvion paid under CERCLA, and not to costs it paid under
its indemnity agreement with NCR.
•
The district court abused its discretion in pre-selecting knowledge of the environmental
dangers of PCBs as the determinative equitable factor for allocation, and then allowing
discovery only as to that factor. The 7th Circuit vacates and remands the decisions denying
contribution rights to NCR and imposing the recyclers’ response costs on NCR.
•
Finally, the 7th Circuit affirmed NCR’s lack of arranger status and no liability for OU-1.
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Cases: NCR Corp / Appleton Papers -Fox River
Appvion Inc. and NCR Corp. v. P. H. Glatfelter Co. (E.D. Wisc. 3/3/15)
•
On remand and in response to a motion by P.H. Glatfelter, the district court enters
an order granting reconsideration of its 2011 ruling that NCR was not liable for
OU-1 response costs.
•
The district court relies on the 7th Circuit’s 9/24/14 decision holding that P.H.
Glatfelter was liable for OU-4 because it released PCBs at OU-1, and finds that
NCR also is liable at OU-1, despite the fact that the NCR plants were located in
OU-2, downstream of OU-1, and that water does not flow upstream.
•
The 7th Circuit’s decision created a “one site rule” theory of the case which
disregards operable units. Premise of the district court's decision is “what’s good
for the goose is good for the gander.” Slip op. at 3.
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Cases: NCR Corp / Appleton Papers -Fox River
U.S. v. NCR Corp. (ED Wis. 5/15/2015) (grants NCR’s divisibility defense)
•
Because the 7th Circuit has redefined the harm at the Fox River Site as the “release’s toxicity or
danger to health and the environment,” the two-prong divisibility question has become “to what
extent did NCR contribute to the contamination, or toxicity, in OU4.” If NCR shows such
contributions, then “a reasonable basis for apportionment could be found in the remediation costs
necessitated by each party.” Slip op. at 3-4.
•
NCR met that test by providing “a simple volumetric approach to divisibility” through expert testimony
about how much of each party’s releases stayed in OU-4, along with evidentiary support regarding
what causes PCBs to embed in the river bottom. Note that the court specifically rejected a
volumetric calculation based solely on each PRPs’ release of PCBs. Slip op. at 6 and FN 2.
•
Because the “harm” in OU-4 is the concentration of PCBs and NCR’s discharges produced the same
average PCB concentrations in OU-4 as every other PRP, the other PRPs’ expert testimony that no
more than 43% of the PCBs in OU-4 came from NCR was sufficient to establish NCR’s contribution
and theoretical divisibility.
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Cases: NCR Corp / Appleton Papers -Fox River
U.S. v. NCR Corp. (ED Wis. 5/15/2015) (cont’d)
•
The district court then decided that NCR also had offered a reasonable basis for apportionment of
remediation costs. The expert testimony was that costs followed harm, and that NCR was
responsible for 20-40% of the harm and so should be liable for 20-40% of the cleanup costs.
•
The US objected to this costs-follow-harm approach, arguing that each PRPs’ responsibility had to
be calculated separately for each subsection of the River. The court disagreed, stating that
reasonableness, not precision, is the requirement under Burlington Northern, and that “rough
proxies” for the amount of harm or damage are sufficient. Slip op. at 15-16. The court also
observed that with NCR’s share of harm established, “It requires no stretch of science or logic to
conclude that NCR would also be responsible for a similar amount of the cleanup costs.” Slip op. at
16.
•
Based on an expert’s calculation that NCR was responsible for 28% of the overall OU-4 cleanup
costs and that this figure was “reasonably accurate,” the court set NCR’s shares as: OU-4 at 28%;
joint and several liability for OUs 2, 3 and 5 (NCR did not argued divisibility at these OUs); and a
zero share at OU-1 because NCR discharged no PCBs into that upstream OU.
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Other Divisibility Cases
•
Pakootas v. Teck Cominco Metals, Ltd., US DC, E.D. of Washington
See Part III of Webinar.
•
PCS Nitrogen Inc. v. Ashley II of Charleston LLC, 714 F.3d 161 (4th Cir.,
04/4/2013)
Divisibility apportionment disallowed on three separate theories:
•
Time at the site
•
“Innocent” current owner
•
Geography
But when apportionment fails, equitable allocation is still available.
For a more detailed analysis, see http://www.spencerfane.com/The-Fourth-CircuitsAshley-II-Decision--Property-Redevelopers-and-Superfund--Liability-Defenses-0415-2013/
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Sampling of Arranger Cases
•
Team Enterprises LLC v. Western Inv. Real Estate Trust, 647 F.3d
901, 909 (9th Cir., 2011) (no intent to dispose by drycleaning
equipment manufacturer)
“At most, the design indicates that Street was indifferent to the possibility that
Team would pour PCE down the drain. This is insufficient.”
•
U.S. v. General Electric Co., 670 F.3d 377 (1st Cir. 2012) (GE liable
for PCBs sold as a paint ingredient despite claim of lack of intent to
dispose)
Material was labeled and stored as “scrap” or “waste,” sometimes given
away and sometimes sent to landfill, and was often contaminated with other
chemicals.
55
www.spencerfane.com
Sampling of Arranger Cases
•
Consolidation Coal Co. v. Georgia Power Co., 781 F.3d 129 (4th Cir.
3/20/2015) (Ward Transformer site)
No direct evidence of intent to dispose, and no circumstantial evidence based on: (1) intent for
reuse; (2) value of material sold; (3) usefulness of the materials in the condition sold; (4) physical
state at the time of transfer; and (5) knowledge of potential to spill, despite documents indicating
that transformers were “scrapped” or “disposed,” and evidence that some transformers were
drained of oil, non-functional, exposed to moisture, and sold in lots for low prices.
•
Vine Street LLC v. Borg Warner Corp., 776 F.3d 312 (5th Cir. 1/14/2015)
(drycleaning equipment manufacturer)
“[T]he purpose of the transaction between Norge and College Cleaners was to sell PERC and dry
cleaning equipment, two unused, useful products. Both Norge and College Cleaners intended that
the water separators would recycle the expensive PERC for future uses.”
56
www.spencerfane.com
Sampling of Arranger Cases
•
W.R. Grace & Co. v. Zotos Int'l, Inc. slip op. at 60 (W.D. N.Y. 9/26/2013)
Liability for disposal of returned hair care products established because “At every step preceding
actual disposal, Zotos owned and was responsible for returned product, set policies governing
returns, and made all decisions relative to the ultimate fate of returned goods. These facts are more
than sufficient indicia of Zotos's intent.”
•
US v. Wilmer slip op. at 11 (D. Colo. 3/7/2013)
Pro se defendant sold trailer with containers of print shop liquids, and court denied US summary
judgment. “It is unclear whether, at the time of Weiss's sale to Wilmer, the print shop liquids were
useful hazardous materials or instead merely hazardous waste. If the print shop liquids were useful
hazardous materials, Burlington Northern would require the Government to prove that Weiss had
the specific intent to dispose of them. 556 U.S. at 610. However, if the Government proves that the
print shop liquids were hazardous wastes, whether it would be required to further establish that
Weiss had the specific intent to dispose of them remains an open question.”
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www.spencerfane.com
Take-Away Points
•
Manufacturer equipment cases (i.e., drycleaning equipment) or
“good” product sales, even with knowledge of ancillary disposal –
“intent to dispose” controls and courts find no liability.
•
Traditional CERCLA cases (waste drums, leaking transformers)
decided as always – no divisibility of harm.
•
In-betweeners are where litigation over divisibility will continue –
i.e., materials not inherently waste-like (paper) or transaction not
clearly involving waste disposal (property redevelopment), but with
harm severe or costs not easily attributed to volume, time or
geography.
•
If you can, bring your case in the 7th Circuit.
58
www.spencerfane.com
Questions?
Kate Whitby
Spencer Fane
[email protected]
314-863-7733
59
www.spencerfane.com
Strafford
ALLOCATING CERCLA LIABILITY: Divisibility or
Section 113 Equitable Contribution
Assessing Harm, Proving Divisibility of Harm Defense
Absent a Bright Line Test, and Apportioning Costs
Live CLE Webinar
Wednesday, August 5, 2015
1:00 p.m. – 2:30 p.m. EST
IV.
Best Practices
A. Circumstances Lending Themselves to a Divisibility Defense
B. Presenting a Divisibility Defense
C. Divisibility and the Permit Defense
Presented by:
Richard Du Bey
Short Cressman & Burgess PLLC
999 Third Avenue, Suite 3000
Seattle, Washington
(206) 682-3333
IV. Best Practices
A. How not to Present a Divisibility Defense
Pakootas v. Teck Cominco Metals, Inc. Ltd.
No. CV-04-256-LRS (U.S. District Court, Eastern District of Washington)
• Nature of the Litigation: CERCLA Site in Northeast
Washington; Claims: CERCLA citizen suit, cost recovery, NRDA,
and NRD
• Three Parties: Plaintiffs the Confederated Tribes of the
Colville Reservation and the State of Washington; Defendant
Teck Metals, Ltd.
• Key Issue Adjudicated by Motion:
Rule 56 Dismissal of Teck’s Divisibility / Apportionment
Affirmative Defense
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Setting: The Upper Columbia River
• Lake Roosevelt created by Grand Coulee Dam in
1942
• Colville Reservation west of Lake Roosevelt
• Spokane Reservation east of Lake Roosevelt
• From the Grand Coulee Dam to the U.S./Canada
border is 150 miles
• Teck Metals, Ltd. operates the world’s largest leadzinc smelter 10 miles upstream from border at
Trail, British Columbia
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Upper Columbia
River Site
Teck Smelter
Canada
United States
Columbia River
63
Teck’s Trail Smelter (Historical)
64
Teck’s Trail Smelter (Current)
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Teck’s Hazardous Substance
Disposal Practices
• Teck discarded hazardous substances in the form of
“slag” and effluent directly into the Columbia River
• Teck ultimately stipulated to disposal between 1930
to 1995 of:
– 9,970,000 tons of slag; and
– Effluent containing lead, zinc, cadmium, arsenic,
copper, mercury, thallium, and other hazardous
substances
• Both slag and effluent were transported downstream
and released in the United States
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Teck’s Slag
Slag collected at Black Sand
Beach, two miles downstream
of US-Canada border
Scanning electronic
microscope (SEM) image
of slag just downstream of
US-Canada border
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Timeline
• 1999 Confederated Tribes of the Colville
Reservation petitioned U.S. Environmental
Protection Agency for a CERCLA Preliminary
Assessment
• 2001 EPA conducted sampling/analysis of
sources of hazardous substances
• 2003 EPA issued a Unilateral Administrative
Order to Teck, a Canadian corporation
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Early Litigation
• Teck rejects the 2003 EPA Order and asserts that EPA
does not have jurisdiction. EPA does not enforce its
outstanding Order.
• In 2004 two members of the Confederated Tribes of
the Colville Reservation (Tribe) filed a CERCLA citizen
suit against Teck seeking to enforce the Order issued
by EPA.
• In 2005 the Tribe and the State of Washington join
the litigation as co-plaintiffs.
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Bifurcation
In 2008 and 2009, the Parties bifurcate the
seven causes of action:
First Trial
Subsequent Trial(s)
1. Civil penalties on UAO
(Dismissed in 2009)
3. CERCLA Cost Recovery
(Scheduled for Dec. 2015)
2. Declaratory Relief for
CERCLA Cost Recovery
4. Declaratory Relief for
Natural Resource Damage
Assessment (NRDA) Costs
3. CERCLA Cost Recovery
5. Recovery of NRDA Costs
6. Declaratory Relief for
Natural Resource Damages
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7. NRD
DIVISIBILITY/ APPORTIONMENT
Teck Asserts the Affirmative Defense of
Apportionment
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Teck Proceeds with Apportionment
Defense while RI/FS Ongoing
• Six testifying experts supporting
apportionment defense
• Numerous consulting experts
• Tens of thousands of pages of expert
reports and supporting materials
• Teck’s assumption: Burlington Northern &
Sante Fe Ry v. United States, 129 S. Ct.
1870 (2009), had changed divisibility /
apportionment law
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Teck’s Apportionment Approach
• Apportionment Paradigm
• “The harm in this case is the extent of sediment
contamination by hazardous substances released at the Site. .
. . [T]his single harm is divisible based on the relative
contribution of metals released at the Site by different
sources and can reasonably be apportioned using scientific
methods.”
• Teck expert, January 14, 2011 report
• Key assumptions
1. Harm limited to only one medium: sediment. (Top 5 cm)
2. Only seven substances at issue, the “metals”: arsenic,
cadmium, copper, lead, mercury, and zinc. Plus, antimony.
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Tort Law – Foundation for CERCLA
Apportionment Principles
• Section 433A of the Restatement (Second) of Torts
“Damages for harm are to be apportioned among two or more
causes where (a) there are distinct harms, or (b) there is a
reasonable basis for determining the contribution of each cause
to a single harm.” (Cited in United States v. Chem-Dyne Corp.,
572 F. Supp. 802 (D.C. Ohio 1983)).
• Two categories of harms under Restatement:
(1) Distinct harms or single harms for which there is a
reasonable basis for division according to the contribution of
each (divisibility available);
(2) Single and indivisible harm (no divisibility available).
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Plaintiffs File Summary Judgment Motion to
Dismiss Teck’s Affirmative Defense of
Apportionment
• Failure to account for full extent of harm
• Limited to sediment
• Subset of hazardous substances
• No evaluation of release from metals contributed
to Site
• Did not address commingling
• Failure to provide reasonable basis for apportionment
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April 4, 2012 District Court Grants Tribe’s Motion;
Teck’s Apportionment Defense Dismissed
Harm
76
Dismissal of Apportionment Defense, cont’d
No evidence of
proportionality
No evaluation of
synergistic effects
Distinction
between liability
and nature of
liability
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Dismissal of Apportionment Defense, cont’d
Harm
Not met Burden of
Proof
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Teck Stipulates to the Elements of CERCLA
Liability and Chooses to Go to Trial on Personal
Jurisdiction
A.
B.
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Facility – CERCLA hazardous substances are found in the
reaches of Columbia River from international border to
Grand Coulee Dam.
Covered Person
1. Discharges
a. “Between 1930 and 1995, Teck discharged at least
9.97 million tons of slag directly into the
Columbia River via outfalls at its Trail Smelter.”
b. “Teck discharged effluent via outfalls at the Trail
Smelter directly into the Columbia River. This
discharged effluent contained lead, zinc, cadmium,
arsenic, copper, mercury, thallium and other metals, as
well as a variety of other chemical compounds.”
Teck Stipulates (Cont.)
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2. Transported to UCR
a. “At least 8.7 of the at least 9.97 million tons of slag
discharged by Teck from its Trail Smelter has been
transported by the Columbia River downstream of
the international border into Washington, and some
portion of that slag has come to be located at the
UCR site.”
b.“Nearly all of Teck’s effluent that was discharged
by its outfall at the Trail Smelter has been
transported by the Columbia River downstream of
the international border into Washington, and at
least some portion of it has come to be located at
the UCR site.”
Teck Stipulates (Cont.)
3. Teck hazardous substances released to environment in
UCR
a. “Teck slag that has come to be located in the UCR site
has leached and continues to leach hazardous
substances . . .
b. “Hazardous substances in Teck’s effluent . . . has
subsequently leached or otherwise moved by
desorbtion or other geochemical and/or
biogeochemical processing to and within the waters
and sediments found at the UCR site.”
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At Summary Bench Trial
Judge Suko Rules And Finds Teck
Liable Under CERCLA
• Findings of Fact and Conclusions of Law
favorable to Plaintiffs the Tribes and State.
• Rule 54(b) Judgment issued, then vacated.
• Timeline for next phases of litigation:
Response cost trial set for December, 2015.
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B. Presenting a Divisibility Defense
I.
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Legal Determination - A Party is entitled to assert a CERCLA
divisibility defense, as a matter of law, where the Party can
prove by a preponderance of the evidence that there is a
reasonable basis for demonstrating that the total harm to the
Superfund Site (Site) is divisible.
(a) What is the total harm?
(1) Remedial harm
• All hazardous substances
• In all environmental media
• Investigation and clean up costs
(2) NRDA harm
• Pre-assessment Screen (PAS)
• Injury Assessment
• Damage Assessment
• Cost of Restoration
B. Presenting a Divisibility Defense (cont.)
(b) What is the reasonable basis for proving that the
harm is divisible?
Questions for the Court – as a matter of law
1. Is there sufficient evidence to prove, as a matter of law, that
the harm to the Site is capable of being divided?
a. Complete Harm. What is the full extent of all of the harm
to the Site from all sources, all contaminants of concern
(COCs) and all impacted media. (E.g. measured as clean up
costs and/or natural resource damages).
b. Synergistic/cumulative harm. What are the synergistic
and/or cumulative impacts between your release and other
releases at the site?
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B. Presenting a Divisibility Defense (cont.)
c.
Quantity of Release Harm. Proof of the amount of a party’s
release, as compared to the total release, will not be
adequate. The question is the harm that arises from the
release (e.g. the remedial costs driven by the COC or the
ecological damage caused by the COC).
Questions for the Court – as a matter of fact
1. Distinct Harms. Can the Party prove that there are distinct
harms to the site that originate from different sources and
there is a no synergistic or cumulative adverse impact from the
sources of the distinct harms. (E.g. impacts limited to distinct
geographic areas; distinct media or a distinct COC.)
2. Proof of Relative Contribution to the Harm. The party meets its
burden of proof by demonstrating the party’s relative
contribution to the total harm at the site.
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C. CERCLA “Permitted Discharge” Liability
Exemption
42 U.S.C. § 9607(j) provides relief exception to potential
liability for those discharges made in compliance with a
valid federal permit.
I.
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Defendant’s burden is to establish that its discharges are
eligible by showing:
a.) possession of a valid permit;
b.) that discharges of named contaminants were made in
compliance with the permit; and
c.) proof of divisibility: what is the total release and how much
of that total comes within the scope of the permit.
[See Idaho v. The Bunker Hill Co., 635 F. Supp. 665 (D. Idaho 1986); see also
In re Acushnet River & New Bedford Harbor: Proceedings re Alleged PCB
Pollution, 722 F. Supp. 893 (D. Mass. 1989)].
C. “Permitted Discharge” Liability Exemption
II. The analysis under 42 U.S.C. § 9607(j) is analogous to the
analysis performed when a defendant attempts to establish
CERCLA divisibility and apportionment. The doctrine of
divisibility requires that the defendant prove what the total
harm is and further prove what portion of the total harm is
responsible for. The permitted discharge exemption requires a
showing that the permitted harm is divisible from nonpermitted harm and a further determination which quantifies
the amount of harm on a contaminant by contaminant basis
arising from the permitted releases.
III. CERCLA’s strict liability standard puts the burden of proof on
the defendant to show its eligibility for exemption of liability
under 42 U.S.C. § 9607(j). This is a fact-intensive process that
relies on permit documents, monitoring reports, and other
records showing historical releases and permit compliance.
87
[See Lincoln Properties, Ltd. v. Higgins, 1993 U.S. Dist. LEXIS 1251 (E.D. Ca. 1993); see
also In re Acushnet River, 722 F. Supp. 893].
C. CERCLA “Permitted Discharge” Liability
Exemption (cont.)
IV. To benefit from the permit defense exemption, a defendant
has to show that it is possible to separate the harm caused by
its permitted releases from the total harm. Eg., where two
hazardous materials are released, one covered by a permit and
the other unpermitted, is it possible to divide the clean-up
costs due to separate mediums or remediation technologies?
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V.
Permitted Stormwater Outfall Bucket Model
TOTAL DISCHARGE
From Outfall
Potential Liability subject to
Permit exemption
Potential Liability not subject
to exemption
Total harm includes:
89
•
•
•
•
•
•
Other Source Releases
Permitted Discharges
Unpermitted Discharges
Total
Harm
Pre-Permit Discharges
Outfall Sediment Footprint
All discharges prior to permit date
Discharges allowed under the valid permit
All discharges not in compliance with the express terms of the permit.
Other source releases from the outfall
Other source releases that come to be located within the sediment footprint
Contaminants of concern (COC) at Site that are not permitted discharges
C. CERCLA “Permitted Discharge” Liability
Exemption (cont.)
VI. Limitations
a) If the clean-up costs tied to the permitted release cannot
be separated from costs arising from unpermitted releases
the exemption will not apply.
b) Where the exemption does apply, costs that cannot be
recovered under CERCLA may be recoverable under other
State or Federal law, including common law. (Note: Some
courts have held that CERCLA may preempt application of
State remedies where it expressly prevents recovery for a
specific type of harm, but this is still an open question. See
PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610, 618 (7th Cir. 1998)(“CERCLA's
savings clause must not be used to gut provisions of CERCLA.”))
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Thank You
Richard Du Bey
Short Cressman & Burgess PLLC
999 Third Avenue, Suite 3000
Seattle, Washington
(206) 682-3333
[email protected]
91