Toxic Tort Litigation Blog : Toxic Tort Lawyer & Attorney : Epstein Becker Green Law Firm : Product Liability, Contamination, Pollution

The U.S. Supreme Court’s decision in Burlington Northern Santa Fe Railway Co. v. United States, 129 S. Ct. 1870 (2009), examined two unsettled areas of CERCLA: (1) the proof necessary to establish whether a PRP has “arranged for the disposal or treatment… of hazardous substances…”; and (2) CERCLA apportionment, i.e., whether a PRP is jointly and severally liable for an entire site, or rather only severally liable for a portion of the site. 

In an article on Lexology titled, “Four Years Later: How Has BNSF Changed CERCLA Practice?”, posted on November 20, 2012, Anthony G. Hopp and Colin O’Donovan of Edwards Wildman and Paul S. Kline of Three Rivers Management, Inc., explore the ramifications of the BNSF decision.

In summary, the authors conclude that the Supreme Court’s decision has made it more difficult to establish “arranger” liability by tightening the proof requirements. At the same time, however, most trial courts in the post-BNSF era have failed to embrace that portion of the decision dealing with “divisibility.” This article, which provides an excellent survey of CERCLA jurisprudence, is required reading for lawyers involved in cost recovery litigation. 

The BNSF facts are straightforward. B&B operated an agricultural chemical distribution business that purchased pesticides and other chemicals from Shell Oil Company. Shell’s products arrived in tanker trucks and were transferred to storage facilities. Leaks and spills were apparently “common place” during B&B’s handling and transferring of Shell’s products. B&B eventually became insolvent and the Government sought cleanup costs from Shell as an “arranger” under § 9607(a)(3) of CERCLA. The Ninth Circuit affirmed the trial court’s ruling that Shell was liable as an “arranger.” 

The Supreme Court reversed the Ninth Circuit, holding that a PRP is an arranger only when it takes intentional steps to dispose of a hazardous substance. The Court found that “Shell’s mere knowledge that spills and leaks continued to occur is insufficient grounds for concluding that Shell ‘arranged for… disposal…’.” and that the evidence at trial did not support the inference that Shell intended such spills. In so holding, the Court effectively overruled twenty years of “arranger” jurisprudence, which had created a much more liberal standard for establishing liability.  Therefore, defendants that sell useful products and/or have no role in the actual spill are more likely to find BNSF helpful in avoiding CERCLA liability.

The second half of the BNSF decision was devoted to apportionment. As the authors observe, apportionment is different from allocation in that apportionment deals with whether a defendant is jointly and severally liable for an entire site, or rather only severally liable for a portion of the site. Allocation, by contrast, deals with how courts calculate a defendant’s share of liability after it has been determined that the defendant is, in fact, jointly and severally liable. 

In Yankee Gas Servs. Co. v. UGI Utils., Inc., No. 10-cv-580, 2012 WL 1067644 (D.Conn. March 30, 2012), the district court analogized the distinction between apportioning and allocating costs to several guests splitting a dinner check. “To apportion is to request separate checks, with each party paying only for its own meal. To allocate is to take an unitemized bill and ask everyone to pay what is fair.” 

But does the Yankee Gas court’s analysis blur the line between apportionment and allocation? Yankee Gas suggests that § 107 defendants may be able to reduce their overall exposure by taking certain costs off the table – those which a PRP can demonstrate it did not cause. Following the court’s analogy, if the guests each ordered their own entrees and a few bottles of wine, everyone would pay for their own entrees and equitably split the wine, with those guests who did not drink paying only for their entrées. Yankee Gas, therefore, suggests that there may be some interplay between apportionment and allocation.  

This debate is far from being merely academic. Only by demonstrating divisibility of harm is a cost recovery defendant able to defend against a joint and several liability finding. Many CERCLA courts have acknowledged that the universal starting point for the divisibility of harm analyses in CERCLA cases is §433(A) of the Restatement (Second) of Torts. But post-BNSF, the Restatement (Second) of Torts takes on new significance in the divisibility determination.  Thus, trial courts are empowered to look beyond CERCLA case law to other federal decisions interpreting Section 433(A) to determine what showing is required to establish divisibility. 

 Inasmuch as the Supreme Court has clarified the law with regard to allocation, the Edwards Wildman authors ask why not a single post-BNSF trial court has accepted this defense?  Shortly after the issuance of BNSF, it was widely predicted that "divisibility" would emerge as the new frontier in CERCLA litigation.  However, this has not yet occurred.  As difficult as establishing a “divisibility” defense remains in the courts, the article provides excellent strategies for attempting to establish the defense.

In a stinging decision, the Hon. Lonny R. Suko, a federal district court judge sitting in the Eastern District of Washington, ruled on April 4, 2012, that PRP Teck Cominco Metals, Ltd. failed to prove that contamination at a CERCLA site was divisible and, as a result, will be subject to CERCLA 107 joint and several liability at an upcoming September 2012 bench trial (Pakootas v. Teck Cominco Metals Ltd., E.D. Wash., No. 04-cv-256, 4/4/12).

The Confederated Tribes of the Colville Reservation, and the State of Washington as Plaintiff-Intervenor, filed a CERCLA action against Teck, alleging that the company had discharged slag and other hazardous substances into the Upper Columbia River, a Superfund site (the “UCR Site”) from its lead-zinc smelter across the border in British Columbia.

An earlier Ninth Circuit decision in the case discussed how Teck’s smelter had dumped slag waste into the Columbia River, ten miles north of the border, over several decades of operation, which resulted in pollution downstream in the United States. In 2003, the EPA placed the site on the National Priorities List. Thereafter, EPA issued a unilateral administrative cleanup order, which Teck failed to comply with. Initially, a lawsuit seeking enforcement of the order was brought. The State of Washington intervened in the action and amended its initial complaint to seek future CERCLA response costs and declaratory relief seeking natural resource damages.

A settlement between Teck and EPA followed, pursuant to which EPA withdrew the unilateral administrative cleanup order. Because enforcement of the order was then no longer at issue, there were no longer any pending claims by Plaintiffs Pakootas and Michel. Thus, what is at issue in the upcoming trial are the cost recovery and natural resource damages claims of the Tribes and the State.

Against this procedural backdrop, the motions before Judge Suko were the Tribes’ motion to dismiss Teck’s affirmative defense seeking to apportion liability and the State’s motion for partial summary judgment on Teck’s Divisibility Defense. At the outset, the court provided some helpful definitions of the technical CERCLA terms that would be discussed in the Opinion. For example, the judge explained that divisibility/apportionment is not a defense to liability itself. Rather, it is a judicially created defense to joint and several liability. Although “divisibility” and “apportionment” are terms often used interchangeably, what is potentially divisible is the harm, and if the harm is divisible, what it potentially apportions is liability, assuming a reasonable factual basis for apportionment. 

In opposing the motions, Teck argued that, even assuming it was liable under CERCLA, liability should be several, not joint and several, because the harm at issue is divisible. Pursuant to the Supreme Court’s landmark decision inBurlington Northern and Santa Fe Railway (“BNSF”) case, liability under CERCLA is generally joint and several unless a defendant meets its burden to prove the harm is divisible and capable of apportionment. Under the Restatement (Second) of Torts §433(A), the universal starting point for divisibility of harm analyses is “when two or more persons acting independently cause a distinct or single harm for which there is a reasonable basis for division according to the contribution of each, each is subject to liability only for the portion of the total harm that he has himself caused.” According to the Eighth Circuit’s decision in U.S. v. Hercules, “evidence supporting divisibility must be concrete and specific.”  

At the outset, it appeared that Teck had some probability of defeating the motions on the strength of an impressive array of expert witnesses. One environmental expert, Mark W. Johns, Ph.D., opined that there was no detectable release of hazardous substances from Teck’s barren slag and no evidence that dissolved metals from liquid effluent releases were located at the site. Using three different methodologies to apportion Teck’s liability for the harm at the UCR Site, Dr. Johns argued persuasively that Teck’s share of liability should be nothing or next to nothing 

Unfortunately for Teck, the court concluded that Teck had failed to present sufficient evidence to support its divisibility argument. Critical to the district court’s decision was its analysis of the term “harm.” Teck argued, based upon its reading of the BNSF decision, that the type of harm subject to apportionment was the alleged contamination from the leaching of metals traceable to the leaching of Teck’s slag and effluent. However, the Court ruled this argument missed the mark. The Ninth Circuit’s definition of harm, relied upon by Teck, was “for the purposes of determining divisibility,” not liability in the first instance, according to the district court. The court held that “the harm is the entirety of the contamination in the UCR site and what the Plaintiffs seek are recovery of costs to investigate and cleanup the entirety of that contamination…” The court continued:

"This contamination is not limited to metals which have been released or which threaten to be released from Teck’s slag and/or liquid effluent deposited in the UCR Site. None of Teck’s apportionment theories address the entirety of the contamination. Instead, they begin with the assumption that the only harm at issue is whatever metals were released from Teck’s slag and/or liquid effluent and the same metals which were released from non-Teck sources. This is a fatal flaw. Because Teck has not addressed the relevant harm in the first instance, it has failed to establish as a matter of law that the relevant harm is a single harm divisible in terms of degree".

In other words, Teck’s fatal flaw was in failing to account for all of the harm at the UCR Site. Because it did not do so, it would not prove that the harm it caused was divisible and thereby capable of apportionment.

For the CERCLA cost recovery practitioner, Pakootas makes for important reading, not only because of its cautionary holding, but because of its detailed analysis of other CERCLA cases, including BNSF, in which cases all of the harm at the respective sites was accounted for in determining that divisibility was possible. In short, Teck failed to consider the full range of environmental consequences at the UCR Site and, subject to post-trial appeal, may pay a steep price .
 

Guest Blogger SHEILA A. WOOLSON, a member of Epstein Becker & Green in Newark,  focuses her practice on complex litigation matters across a wide array of commercial and environmental  disputes.  In expertly handling the defense of environmental and toxic tort matters across New Jersey, New York and Pennsylvannia, Sheila draws on her training as a former professional  chemist in the pharmaceutical industry.  She represents clients in those types of  products liability and toxic tort claims where her  scientific background is a valuable asset.  In the following discussion, Sheila analyzes the potential CERLCA liability of medical facilities for the disposal of non-medical solid waste and makes practical recommendations concerning how medical facilites can limit their CERCLA exposure.

Health care facilities are among the most heavily regulated facilities in the country. Along with the myriad of laws and regulations pertaining directly to the provision of health care, health care facilities are also subject to federal and state environmental regulations regarding their operations, waste, emissions, and discharges. There are over 40 federal regulations and several different acts that potentially affect health care facilities, including the Resource Conservation and Recovery Act; the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”); the Safe Drinking Water Act; the Emergency Planning and Community Right to Know Act; the Clean Air Act; the Clean Water Act; the Toxic Substances Control Act; and the Federal Insecticide Fungicide and Rodenticide Act. See Profile of the Healthcare Industry, EPA Office of Compliance Sector Notebook Project (Feb. 2005).  Most states have their own regulatory schemes that overlay these federal schemes. In addition to complying with these regulations, health care facilities face the possibility of being named as potentially responsible parties (“PRPs”) in CERCLA litigation arising out of the disposal of non-medical waste in landfills.

Municipal solid waste is essentially the same as waste produced by a household, is picked up by normal municipal collections, and does not contain hazardous substances greater than the waste generated by a single-family household. The Environmental Protection Agency (“EPA”) estimates that hospitals produce approximately 3.4 billion tons of solid waste annually, more than half of which is paper. The waste also includes glass, plastic, metal, and other substances. Often, hospitals contract with haulers to dispose of this solid waste in landfills. 

There are currently over 1,300 sites on the National Priority List of Superfund sites that the EPA is currently investigating or remediating, many of which are landfills. There are even more landfills that are under investigation or remediation by state environmental agencies. If a landfill becomes the subject of an investigation and remediation by the EPA or concomitant state agencies, a health care facility could be named a PRP if it allegedly generated or arranged for the disposal of waste in that landfill.

CERCLA contains an exemption for certain nonprofit organizations. To be eligible, a nonprofit organization must qualify as a 501(c)(3) organization and have no more than 100 paid employees at the location generating the waste. This exemption does not apply if the EPA deems that the solid waste contributed significantly to the cost of the response, or the generator failed to comply with an information request or subpoena or impeded the response at the site.

The federal and state environmental agencies usually begin their investigations by sending out information requests that require the PRPs to provide information and documents relating to their activities at the landfill. This is an opportunity to educate the agency about why an entity should not be considered a PRP or why its contribution is de micromis.

If the agency cannot be persuaded to drop its claims against a health care facility, the agency will usually agree to negotiate with all the identified PRPs to have them pay for or undertake the cleanup. CERCLA encourages settlement by barring claims for contribution against settling PRPs. Often, early settlement is a more cost-effective option than litigation, although, of course, this depends on the individual circumstances, including the health care facility’s alleged nexus to the site, the amount of the individual contribution sought from the facility, and the cooperation of the PRPs.

When litigation is started, it is often a lengthy process from which it can be difficult for the entity to extract itself. For example, in United States v. El Dorado County, 2006 WL 1281860 (E.D.Ca. 2006), the government began its investigation in 1995 and filed a lawsuit in 2001. Barton Hospital was named as a third-party defendant in a CERCLA cost-recovery case. The hospital had allegedly deposited ash from incinerated solid waste in a landfill. In 2006, the hospital sought summary judgment, alleging that the contaminants driving the remediation—volatile organic compounds (“VOCs”)—had no connection to its ash. The landfill operator opposed the motion, contending that, because the investigation of the site was not yet completed, it was premature to argue that the VOCs were the only contaminants of interest. In particular, the landfill operator contended that the hospital’s incinerated ash contained detectable levels of metals that also may have required remediation. Therefore, the hospital was unable to demonstrate that its waste did not contain hazardous substances or that response costs would not be incurred to address those substances. This litigation continues to be active to some extent, even now.

In addition to the routine disposal of waste, hospitals and other health care facilities also can become embroiled in CERCLA disputes through construction projects and acquisitions. CERCLA provides for an “innocent landowner defense,” which requires the purchaser to have made “all appropriate inquiries” and to have no knowledge and no reason to know of any alleged contamination. If a health care entity cannot qualify for that defense, acquisitions and purchases of facilities can create liability.

In Hidden Lakes Development v. Allina Health System, 2004 WL 2203406 (D. Minn. 2004), Allina Health Partners (“Allina”) acquired a health care facility in Minnesota that had been constructed by its predecessors. The predecessors had undertaken a significant construction project, and they had used the resulting construction and demolition debris to fill a ravine on the property. They also contracted with a third party to allow it to dispose of additional construction and demolition debris in the ravine. Allina later sold part of its property to Hidden Lakes Development, which was aware of the fill at the time of the purchase. Hidden Lakes Development subsequently determined that the debris used to fill the ravine contained hazardous substances, including asbestos. The disposal of contaminated fill by Allina’s predecessors made Allina a “responsible party.”

Allina’s predecessors also sold a portion of the property to another party, Transitional Hospitals Corporation (“THC”). THC sold its portion of the property to Hidden Lakes Development, as well. Allina filed a third-party complaint against THC for contribution. However, unlike Allina, THC had settled with Hidden Lakes Development before the lawsuit was filed, paying the sum of $2 million. Because CERCLA bars claims for contribution/indemnification following a settlement of CERCLA liability, the federal district court granted THC’s motion for summary judgment, stating that THC had paid for its peace.

As these cases demonstrate, the disposal of non-medical solid waste may expose a hospital or other health care facility to potential liability under CERCLA, which may be difficult and/or expensive to resolve. Accordingly, health care facilities may want to review their practices, including the haulers and disposal sites, in order to minimize any risk. Additionally, health care facilities undertaking acquisitions should carefully review the current and historic disposal practices of any targets in order to assess and address any potential CERCLA liability. 

On February 24, 2010, the Second Circuit issued an important CERCLA contribution decision in Niagara Mohawk Power Corp. v. Chevron USA, Inc., 2010 WL 626064. Over the last 100 years, the site at the heart of the decision, the Water Street Site in Troy, New York has, according to the Court, “played host to various industrial activities including a coke plant, a steel manufacturing facility, a manufactured gas plant and a petroleum distribution facility,” all of which uses “led to the release or disposal of toxic substances, many subject to liability under CERCLA.” In its holding, the Second Circuit ruled that a contribution plaintiff need not establish the precise amount of hazardous material discharged or prove with certainty that a PRP defendant discharged the hazardous material to get their CERCLA claims past the summary judgment stage. Has the Second Circuit significantly raised the bar for defendants seeking summary judgment in private cost recovery cases? That is the thesis of Steven G. Jones in an article titled, “Second Circuit Makes Summary Judgment More Difficult to Obtain for Defendants in CERCLA Contribution Actions,” dated March 5, 2010. Jones contends that some CERCLA defendants, faced with a long and complex trial, may be more inclined to resolve their cases in mediation if it is less likely that a CERCLA defendant will be able to obtain dismissal through summary judgment prior to trial. In reversing the federal district court in the North District of New York, the Second Circuit relied on its prior precedent in United States v. Alcan Aluminum Corp., 990 F.2d 711, 721 (2d. Cir. 1993), which decision represented what the court described as a purposeful lowering of the liability to be a PRP and a relaxed CERCLA liability standard. It also cited the Tenth Circuit’s holding in Tosco Corp. v. Koch Indus., Inc., 216 F.3d 886, 892 for the proposition that “CERCLA liability may be inferred from the totality of the circumstances as opposed to direct evidence.” Thus, in my view, Niagara Mohawk is less an expansion of existing CERCLA case law in the Second Circuit as much as it is a rebuke to the trial judge, who arguably did not apply the correct standard in the first instance.   

Virtually everyone believes that it is good public policy to encourage the recycling of old electronic products, including computers, cathode ray tubes, televisions, printers and portable music devices.  Nearly 20 states have e-waste laws on the books.  However, New York City recently enacted an e-recycling law (over Mayor Bloomberg's veto), the first municipality in the United States to do so, that is so overly aggressive and costly that trade associations for the electronics industry have filed suit to block the law's implementation.  Under the law, if a television manufacturer is apprised, for example, that a homeowner on East 87th Street is desirous of recycling his 15 year old television, the manufacturer is required to make a special trip to pick it up on East 87th Street, regardless of the fact that the cost of this pick-up may be prohibitively expensive and  was never factored into the cost of the television when it was sold for $279.99 at Best Buy in 1994.  Worse, if the television is an "orphan", for whom no manufacturer currently doing business can be identified, there is still an obligation to drive up to East 87th Street and haul it away.  My own Sony Trinitron is more over 15 years old having provided me with flawless service from the day I brought it home from The Wiz in Herald Square.  But I hardly expect Sony to drive to my house to pick it up all these years later!  For goodness sakes!  It's a television set, not a hazardous CERLCA waste!  This law appears to confuse the CERLCA statute, which holds generators of waste responsible for their disposal practices years after the fact, and the sale of a useful product, such as a television.  A worthwhile discussion of the dispute, with some helpful background links, can be found in Meline MacCurdy's article of Aug. 12, 2009 in the Marten Law Group's Environmental News titled, "Electronic Manufacturers Challenge New York City E-Waste Law."

The electronic industry alleges that this program will cost manufacturers over $200,000,000 per year and that, on a per pound basis, the cost of collection alone will be ten times more expensive that the total cost of collection and recycling in California and Maine, two states that have promulgated e-recycling statutes.  Among other arguments, the manufacturers allege that the NYC statute violates the equal protection clause of the Constitution by targeting only certain types of electronic equipment while excluding other electronic equipment containing the same types of potentially harmful substances, and constitutes a regulatory taking and violates the manufacturers' substantive due process rights.    Some e-recycling advocates and environmentalists are concerned that this lawsuit may represent the first step of an attempted roll-back by industry of the e-recycling strides made in other states.  The Electronic TakeBack Coalition, whose motto is "Take it Back, Make it Green, Recycle Responsibly," has issued a call-to-arms on its web-site, "Electronic Industry Attacks Product Stewardship with Lawsuit in New York City". If interested in reviewing the pleadings filed in the lawsuit, the Electronic TakeBack Coalition web-site is a great resource.  Unfortunately, this entire controversy does nothing to advance the cause of e-recycling.  If the New York legislature enacted a state-wide e-recycling measure, which is what is needed here,  NYC could gracefully withdraw from the fray by rescinding its Draconian measure and permit the state legislation to  take effect. 

Innis Arden Country Club is a well-run country club located on beautiful acreage in Old Greenwich, CT. that has operated for over 100 years. Close friends of mine are members--the food is good, the golfers congenial, and laughing children run barefoot across the pool deck in good weather.  Club members had been stunned to learn in 2004 that PCB contamination had been discovered on the golf course property, not far from where an industrial company, Pitney Bowes, had once conducted operations on an adjacent parcel in Stamford.  The country club's environmental consultants determined that Pitney Bowes was the source of the contamination, which Pitney Bowes denied, and that PCBs from the Pitney Bowes property had migrated by way of storm water and surface water runoff to Innis Arden.  What no one could dispute was that the country club had not placed the PCBs on the golf course--it was what CERCLA characterizes as an "innocent landowner". On June 26, 2009, the federal district court in Connecticut dismissed Innis Arden's complaint prior to trial and affirmed a prior sanctions award against the country club. Innis Arden Golf Club v. Pitney Bowes, Inc. et al. Case No. 3:06 cv 1352 (JBA), 2009 U.S. Dist. LEXIS 54135.  Something had gone terribly wrong!  But what?

Pitney Bowes retained Hunton and Williams, a law firm with a strong reputation in environmental litigation to defend the case.  In a July 2009 Client Alert, the law firm attributed Innis Arden's dismissal to its consultant having destroyed the key evidence that allegedly linked the PCB's at the country club to their client.  Without being able to perform tests on the actual soil samples the consultant had taken, Pitney Bowes would be unable to refute the consultant's claim that the PCB's on the golf course were identical to PCB's identified on the Pitney Bowes' site, it alleged.  As the Alert points out, the Court's spoliation ruling is a strong reminder of the obligations of parties and their experts to impose a litigation hold and to ensure that tangible evidence, such as as a soil sample taken to the lab for testing, is preserved.  Central to the court's ruling was that the soil sampling in question had been undertaken in preparation for litigation.  As the Magistrate Judge had earlier ruled "......counsel was actively involved in the investigation and analysis of the samples in preparation for legal action......"  Sanctions were awarded even though the Court concluded that Innis Arden had not intended to destroy evidence or to disadvantage Pitney Bowes.  In the Bow Tie Law Blog, the author opines that Innis Arden's "toxic mess" was created in part by deposition testimony that made it clear to the Court that plaintiff had taken no steps to prevent the destruction of electronic and tangible evidence as early as 2005, by which time it was clear that plaintiff recognized the importance of that evidence in its future litigation. 

By the time  the spoliation sanctions issue came before Judge Atherton on a motion for reconsideration, Innis Arden was in even deeper trouble.  The Magistrate Judge had also awarded sanctions against Innis Arden for discovery abuses--the most egregious that the Magistrate Judge had seen during over twenty years on the federal bench.  Worse, Judge Atherton concluded after hearing Daubert motions that Innis Arden's trial experts were not sufficiently reliable to be permitted to testify at trial.  On the basis of that ruling, she granted summary judgment to the defendants and dismissed the plaintiff's complaint.  At the end of the day, the Court did not have to reconsider the Magistrate Judge's spoliation ruling because the issue was now moot!  Still the "innocent landowner", Innis Arden's complaint has been dismissed and may yet have to pay the defendants' sanctions for discovery abuses.   

On June 22, 2009, after an six-week bench trial in the U.S. District Court for the District of New Jersey, we achieved a resounding victory for our client, Reichhold Inc., in an environmental cost recovery litigation. Reichhold v. USMRC et al, 2009 U.S. Dist. LEXIS 52471. The case addressed claims relating to the cleanup of a contaminated chemical plant site formerly owned by Reichhold in Carteret, New Jersey along the Arthur Kill. The case was brought pursuant to the federal CERCLA and New Jersey Spill Act statutes, as well as a 1994 settlement agreement between the parties.

Defendant United States Metals Refining Co. ("USMRC"), which owned the site prior to Reichhold, had argued that the settlement agreement prohibited Reichhold from bringing the claims in the instant lawsuit. The Court rejected USMRC's argument and held that, because virtually all of Reichhold's claims constituted "New Environmental Obligations" under the settlement agreement, they were actionable. The Court also dismissed every defense to liability raised by the defendant, including the defense that Reichhold's claims were time-barred.

In its Final Judgment, the Court awarded Reichhold $1,209,719 for investigation and cleanup costs that Reichhold had incurred while addressing metals contamination caused by USMRC's industrial operations. The Court also entered a declaratory judgment requiring USMRC to pay certain of Reichhold's future cleanup costs.

Our success at trial was attributable, in part, to our being able to discredit the expert testimony of USMRC's experts. In conjunction with an aerial photogrammetrist, USMRC's environmental engineering expert used historical aerial photographs of the site taken over a 60-year period to develop computer-generated surface contour maps that purported to depict Reichhold's excavation and fill activities at the site over time. Because of these topographical maps, USMRC's experts argued that Reichhold had caused extensive metals contamination at the site in the 1960's and 1970's by using contaminated fill in low lying areas of the property. On the basis of the cross-examination of defendants' experts by me and my partner, Sheila A. Woolson, the Court rejected the experts' testimony and held that the conclusions based on the photogrammetry performed were unconvincing. Consequently, the Court placed no reliance on the cut and fill evidence presented. In contrast, the Court accepted the testimony of Reichhold's witnesses that Reichhold had not disposed of any metals containing contamination at the site.

Over the last several months, federal and state environmental regulatory agencies have devoted substantial regulatory attention to New Jersey waterways and rivers in the northwestern portion of the state that have been contaminated with metals, declaring some of them to be federal Superfund sites. In light of these events, the judicial determination that the metals contamination on the southern edge of the property was solely due to our adversaries’ prior disposal activity was timely. The Opinion is perhaps the first trial court decision to apply the apportionment principles articulated in the Supreme Court's May 2009 decision in Burlington Northern.   

Larry Schnapf recently started a blog on CommonGround concerning developments in environmental law.  Larry has been a thoughtful commentator on developments in this field for over 20 years. I look for Larry to continue providing wise counsel on thorny environmental issues.  We recently discussed the potential reach of the Supreme Court's decision in Burlington Northern, which evaluated what is necessary to establish "arranger" liability under CERCLA.  In my view, the discussion of "arranger" liability is relevant only to CERCLA 107(a)(3) claims; it has no bearing on a PRP's liability under CERCLA 107(a)(2).  In other words, a product manufacturer cannot escape CERCLA liability for contamination to the manufacturer's former property by arguing that the relelases did not constitute "intentional steps" to dispose of a hazardous substance.  The PRP's conduct in causing a release under (a)(1) or (a)(2)--whether intentional or merely negligent--is entirely irrelevant--always has been, always will be.  In contrast, in cases involving the sale of a product to a customer's location, intent will now figure into any (a)(3) analysis.  Has the Supreme Court carved out what is basically a "product exception" to CERCLA liability? 

 Nothing in §107(a)(4)(B) references “voluntary” cleanups, and nothing in that section restricts its application to “voluntary” cleanups or actors. Sections 107(a) and 113(f) of CERCLA allow private parties to recover expenses associated with cleaning up contaminated sites. Similarly, nothing in Atlantic Research and its progeny restricts the application of cost recovery actions under CERCLA §107(a)(4)(B) to “voluntary” cleanups.  If that is the case, what is the basis for the contention that only PRPs that perform cleanups voluntarily are entitled to pursue §107 cost recovery claims?

Section 107(a) defines four categories of PRPs and makes them liable for, among other things, “(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” and “(B) any other necessary costs of response incurred by any other person consistent with [such] plan,” §§107(a)(4)(A)-(B). This is the language on which the Supreme Court relied in its decision in Atlantic Research.Similarly,  Atlantic Research is best understood in the context of the development of the law of recovery of CERCLA response costs. Historically, some courts interpreted §107(a)(4)(B) as providing a cause of action for a private party to recover voluntarily incurred response costs and to seek contribution after having been sued. However, after the enactment of §113(f), which authorizes one PRP to sue another for contribution, many courts held §113(f) to be the exclusive remedy for PRPs. In Cooper Industries, Inc.,  the Supreme Court demonstrated the limitations of §113, and held that a private party could seek contribution under §113(f) only after being sued under §§106 or 107(a).  In Atlantic Research, the Supreme Court held that §107(a)(4)(B)’s plain language allows a PRP to recover costs from other PRPs, providing a cost recovery remedy to PRPs that had not been sued under §§106 or 107(a).

The Atlantic Research decision uses the term “voluntary” at times, but does not define the term or use it literally.  After all, only parties that do not have liability under CERCLA or other regulatory schemes truly engage in “voluntary” response actions. Rather, in Atlantic Research and its progeny the term “voluntary” is simply used to draw a contrast with private parties who have been sued under CERCLA §§106 or 107(a) and, therefore, pursuant to Cooper Industries, qualify to seek contribution from other liable parties under CERCLA §113.  Despite the Court’s use of the terms “voluntary” and “involuntary” to distinguish between payments recoverable under §107(a) and those recoverable under §113(f), the operative principle appears to be that §107(a) is available to recover payments only in cases where §113(f) is not. This is what a federal district trial court concluded recently in Appleton Papers Inc. v. George A. Whiting Paper Co., No. 08-C-16, 2008 WL 3891304 (E.D.Wis. Aug. 20, 2008).  In E.I. Dupont de Nemours & Co. v. United States, 508 F.3d 126 (3d Cir. 2007), the Third Circuit distinguished between “those who voluntarily admitted their responsibility” and those who have “in fact been held responsible (via adjudication or settlement with the EPA)” in discussing who may bring an action under CERCLA §107(f). Id at 133. Therefore, a PRP who conducts a dialog with a regulatory agency concerning how best to clean up a site does not make the PRP who admits liability and accepts responsibility any less a volunteer under CERCLA and applicable case law. In Champion Laboratories, Inc. v. Metex Corp., No. 02-5284, 2008 WL 1808309 (D.N.J. Apr. 21, 2008), the Hon. William H. Walls held that a plaintiff undergoing an ISRA  cleanup in New Jersey could pursue a CERCLA §107 claim.. The New Jersey district court clearly  did not find the pendency of an ISRA cleanup any impediment to plaintiff’s pursuit of a CERCLA §107 claim. The whole point of the Atlantic Research decision is that PRPs may, without regard to their own disposal activity, avail themselves of CERCLA §107.

Nothing in CERCLA §107(a)(4)(B) or any decision post-Atlantic Research conditions a party’s eligibility to bring a cost recovery action under CERCLA §107(a)(4)(B) on that party’s response action having been purely voluntary. Any other interpretation of "voluntariness" under CERCLA, if adopted, would have the anomalous result of barring the doors of the courthouse to CERCLA plaintiffs who cannot bring a CERCLA §113 claim (having not been the prior subject of a §106 or §107 claim by the United States), but whose cleanup may not have been “voluntary” in the strictest sense. It was clearly not the intention of Atlantic Research to limit access to the courthouse to only a restricted sub-class of CERCLA §107 plaintiffs.

In its precedent breaking decision in United States v. Atlantic Research Corporation, decided in June 2007,  the United States Supreme Court held that the plain language of CERCLA  §107(a)(4)(B) authorizes any private party, including PRPs, to commence an environmental cost recovery action.  The Supreme Court added as dictum that it  "assume[d] without deciding"  that §107(a) provided these PRP plaintiffs with the right to pursue a claim for joint and several liability.   CERCLA  §107 is a strict liability scheme that permits a plaintiff to seek joint and several liability without the burden of proving causation.  Prior to Atlantic Research, only the United States or an "innocent landowner" could wield §107's heavy club.  In the wake of Atlantic Research, any PRP (i.e. polluter) can bring a §107 claim against other PRPs to recover costs.  The only exception is that PRPs who have been defendants in actions brought against them by the United States pursuant to CERCLA  §106 or  §107 must pursue their recovery pursuant to §113, which only permits the recovery of costs on a pro rata basis via contribution.  To those unlucky plaintiffs, §107 is not available. 

Are we at the dawn of a new era of private cost recovery litigation?  In traditional §113 actions, the PRP plaintiff has the burden of demonstrating that neither plaintiff nor third parties bear any percentage allocation of responsibility for the cleanup costs at issue.  If this burden now passes from the plaintiff to defendants, defendants may be disinclined to run the risk of being held jointly and severally liable for all of a site's cleanup costs in the event that their proof falls short.  This risk factor should make defendants more willing to come to the bargaining table earlier.  The same risk consideration should motivate corporate PRP plaintiffs to file §107 suits rather than to let grass grow under their feet.

In weighing possible unfairness to §107 defendants, the Supreme Court noted that  a defendant PRP in  a §107 suit could blunt any inequitable distribution of costs by filing a §113(f) counter-claim.  Thus, once CERCLA liability is established, defendants may avoid joint and several liability by establishing that they caused only a divisible portion of harm. Of course, this course of action is easier said than done and requires a significant commitment of legal manpower to see through to the end.  One court recognized that by providing a RPP with an opportunity to pursue joint and several liability against other PRPs, §107 further encourages a PRP to quickly and voluntarily cleanup a site in the hopes that it might recover its response costs from other PRPs. Raytheon Aircraft Company v. United States, 532 F.Supp. 2d 1306, 1310 (holding that the Court’s decision to permit plaintiff-PRP to pursue joint and several liability under §107(a) found support in Atlantic Research).  In my judgment, the environmental bar should expect that a large number of cost recovery cases will be filed over the next 12 months.