TOXIC AND HAZARDOUS SUBSTANCES LITIGATION
June 2015
IN THIS ISSUE
Jim Shelson of Phelps Dunbar LLP, incoming chair of the IADC’s Toxic and Hazardous Substances Litigation Committee,
discusses the impact of a recent opinion from a Wisconsin federal court regarding how potentially responsible parties
under CERCLA can assert the divisibility defense to avoid joint and several liability for response costs.
Increased Viability of Divisibility Defense Under CERCLA
ABOUT THE AUTHOR
Jim Shelson is a partner in the Jackson, Mississippi office of Phelps Dunbar LLP. He is the
practice group coordinator of the litigation group in the Jackson office. His practice
focuses on toxic torts, business torts, and products liability. He can be reached at
[email protected].
ABOUT THE COMMITTEE
Member participation is the focus and objective of the Toxic and Hazardous Substances Litigation
Committee, whether through a monthly newsletter, committee Web page, e-mail inquiries and contacts
regarding tactics, experts and the business of the committee, semi-annual committee meetings to discuss
issues and business, Journal articles and other scholarship, our outreach program to welcome new
members and members waiting to get involved, or networking and CLE presentations significant to the
experienced trial lawyer defending toxic tort and related cases. Learn more about the Committee at
www.iadclaw.org.
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Vice-Chair of Newsletters
Sedgwick LLP
[email protected]
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June 2015
The
Comprehensive
Environmental
Response, Compensation, and Liability Act
(CERCLA), 42 U.S.C. §§ 9601-9675, imposes
strict liability for response costs, but it does
not mandate joint and several liability in
every case. In order to avoid joint and
several liability, a CERCLA defendant must
prove that a reasonable basis for
apportionment exists.
A recent opinion from a federal district court
in Wisconsin shows how potentially
responsible parties (PRPs) under CERCLA can
assert the divisibility defense to avoid joint
and several liability for response costs. This
article discusses the development of the
divisibility defense by analyzing three cases
– Burlington Northern & Santa Fe Ry. Co. v.
United States, 556 U.S. 599 (2009), United
States v. P.H. Glatfelter Co., 768 F.3d 662
(7th Cir. 2014), and United States v. NCR
Corp., __ F.Supp.3d __, 2015 WL 2350063
(E.D. Wis. May 15, 2015).
B & B’s operations resulted in significant
contamination of soil and ground water. In
1989, B & B became insolvent and ceased all
operations. The EPA undertook cleanup
efforts at the site, and alleged that the
Railroads and Shell were PRPs under
CERCLA. Id. at 605.
CERCLA imposes strict liability for
environmental contamination upon four
broad classes of PRPs: (i) the current owner
or operator of a vessel or facility, (ii) the
owner or operator of a facility at the time
that the hazardous substances was disposed
of, (iii) any person who arranged for disposal
of a hazardous substance at a facility owned
or operated by another person or entity, and
(iv) any person who transports any
hazardous substances to disposal or
treatment facilities from which there is a
release or a threatened release (which
causes the incurrence of response costs) of a
hazardous substance. Id. at 609, citing 42
U.S.C. § 9607(a).
Burlington Northern
In 1960, Brown & Bryant (B & B) began
operating a chemical distribution business in
Arvin, California. B & B purchased pesticides
and other chemicals from suppliers such as
Shell Oil Company (Shell). In 1975, B & B
expanded its operations onto a .9 acre parcel
of land owned by Burlington Northern and
Santa Fe Railway Company and Union Pacific
Railroad Company (Railroads). B & B leased
the .9 acre parcel from the Railroads.
Burlington Northern, 556 U.S. at 602-03.
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It was undisputed that the Railroads were
PRPs because they owned the land leased by
B & B at the time of the contamination and
continued to own it when the case was
decided. Id. at 609. One of the issues before
the Supreme Court was whether the
Railroads were jointly and severally liable for
the full costs of the government’s cleanup
efforts. Id. at 613.
The Supreme Court began its analysis by
noting that although CERCLA imposes strict
liability, it does not mandate joint and
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June 2015
several liability in every case. Id. (citations
omitted). Congress intended that the scope
of liability for CERCLA cleanup costs be
determined by the common law. Id. at 613
(citation omitted). The starting point for the
divisibility of harm analyses in CERCLA cases
is § 433A of the Restatement (Second) of
Torts. Id. at 614 (citations omitted).
When two or more persons cause a single
and indivisible harm, each is jointly and
severally liable for the entire harm. Id. at
614-15. In order to avoid joint and several
liability, a CERCLA defendant must prove
that a reasonable basis for apportionment
exists. Id. at 614.
The district court and the court of appeals
agreed that the harm created by the
contamination at the Arvin facility, although
singular, was theoretically capable of
apportionment. “The question then is
whether the record provided a reasonable
basis for the District Court’s conclusions that
the Railroads were liable for only 9% of the
harm caused by contamination at the Arvin
facility.” Id. at 615.
The district court calculated the Railroads’
liability based on three figures. First, the
parcel that B & B leased from the Railroads
constituted only 19% on the Arvin facility.
Second, the Railroads leased their parcel to
B & B for only 13 years, which was only 45%
of the time B & B operated the Arvin facility.
Third, “the volume of hazardous-substancereleasing activities on the B & B property was
at least 10 times greater than the releases
that occurred on the Railroad parcel,
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and…only two chemicals…substantially
contributed to the contamination that had
originated on the Railroad parcel and…those
two chemicals had contributed to two-thirds
of the overall site contamination requiring
remediation.” Id. at 616.
The district court “then multiplied .19 by .45
by .66 (two-thirds) and rounded up to
determine that the Railroads were
responsible for approximately 6% of the
remediation costs. ‘Allowing for calculation
errors up to 50%,’ the court concluded that
the Railroads could be held responsible for
9% of the total CERCLA response cost for the
Arvin site.” Id. at 616-17. The Supreme
Court found that the facts contained in the
record reasonably supported the district
court’s apportionment of liability, and so the
Railroads were not jointly and severally
liable for all response costs. Id. at 617-19.
P.H. Glatfelter Co.
Several paper mills, including NCR and
Glatfelter,
discharged
wastewater
containing polychlorinated biphenyls (PCBs)
into the Lower Fox River in Wisconsin. Since
1998, the site has been the subject of
remedial efforts conducted under CERCLA.
The EPA and the Wisconsin Department of
Natural Resources developed a remedial
plan for the site. Under the plan, the site
was divided into five geographic sections or
“operable units” (OU1 through OU5). P.H.
Glatfelter Co., 768 F.3d at 665.
NCR and Glatfelter are PRPs under CERCLA
because they or their predecessors formerly
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owned or operated paper mills that
discharged PCB-contaminated wastewater
into the river. Id. at 666. NCR led the
remedial efforts in OU2 and OU3, and
conducted a significant amount of the
cleanup effort in OU4. Id. at 667.
Because it did not believe it was responsible
for all the cleanup costs, NCR sued the other
PRPs for contribution. The district court
rejected NCR’s divisibility defense, and
found NCR jointly and severally liable for the
response costs. An appeal to the Seventh
Circuit ensued regarding liability for the
response costs for remediating the
contamination in OU4. Id. at 668.
The Seventh Circuit noted that “[t]he sparse
record before us in a prior appeal indicated
that the contamination (and consequently
the harm) in the Lower Fox River was binary
in nature: PCB concentrations above 1.0
ppm were harmful, but PCB concentrations
below 1.0 ppm were not.” After the case
was tried, the district court continued to
treat the harm as binary, but the evidence
showed that this was incorrect. Id. at 676.
“The 1.0 ppm remedial action level is not
quite the line of demarcation it previously
appeared to be….EPA seeks to achieve a
surface-weighted average concentration
(SWAC) of 0.25 ppm throughout OU4, and it
has determined that this can be achieved by
undertaking some form of remediation
wherever PCB concentrations exceed 1.0
ppm.” Id. at 676.
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The Seventh Circuit determined that SWAC
was key to whether the harm was divisible.
“EPA has identified SWAC as the relevant
metric for remedial purposes because SWAC
drives the ultimate harm with which EPA is
concerned, i.e., the harm to human health
and the environment….And because SWAC
drives the ultimate harm, it is also the
appropriate measure of contamination
for…determining whether the harm is
divisible.” Id. at 677.
This led the Seventh Circuit to find that the
harm resulting from PCB concentrations in
the River cannot be characterized as binary
because the risk of harm is positively
correlated with the concentration of PCBs.
Id.
The Seventh Circuit reversed the district
court’s decision on NCR’s divisibility defense
and remanded for further proceedings. In
doing so, the Seventh Circuit instructed the
district court to determine (i) whether the
harm is theoretically divisible, and (ii) if so,
whether there is a reasonable basis for
apportionment of the remediation costs. Id.
at 678.
NCR Corp.
On remand, the district court first examined
whether the harm is theoretically capable of
being divided. The district court noted that
the Seventh Circuit re-defined the harm that
NCR’s defense attempted to divide. The
harm is essentially toxicity – i.e., the harm to
human health and the environment. “The
Seventh Circuit found that this harm is not
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binary, but ‘continuous,’ because the harm
increases in rough proportion to the
concentration of PCBs in the water ….Simply
put, the more PCBs, the more harm. Thus,
the harm is more properly defined as a
release’s toxicity or danger to health and the
environment, as opposed to the release’s
propensity to trigger a costly remediation.”
NCR Corp., 2015 WL 2350063 at *2.
As a result, it was no longer necessary to
assess whether given discharges gave rise to
the need for a specific remedy in a portion of
the river. Id. “Now that the harm is seen as
continuous, it is much simpler to conclude
that the harm may theoretically be divided.
NCR no longer needs to show how its PCBs
contributed to the need to remedy any given
portion of the river – an undertaking
requiring detailed modeling. Instead, it is
enough to demonstrate what percentage of
the toxicity in OU4 was caused by its
discharges.” Id. at *3.
between the volume of PCBs it is responsible
for and the concentrations present in the
river. Id. at *6 and n. 2.
The expert testimony involved load or masspercentage estimates, which attempted to
determine the concentrations of PCBs in
OU4 attributable to each party. After
considering this evidence, the district court
found that the harm was theoretically
capable of being divided because NCR
provided reasonable estimates of how much
its discharges contributed to the PCBs
concentrations in OU4. Id. at *4-7.
The district court next turned to the question
of whether a reasonable basis existed for
apportioning the remediation costs. “NCR’s
task…is to determine a reasonable estimate
of the extent to which its contribution to the
contamination in OU4 gave rise to the
remediation costs incurred.” Id. at *7.
The district court found that this “new
paradigm” demanded much less from an
expert to show that the harm is theoretically
capable of being divided. It is sufficient to
show the extent to which the PRP
contributed to the chemical concentrations
at issue.
The district court noted that “it is
reasonableness, not scientific precision, that
governs the apportionment analysis.” In this
regard, the district court observed that
Burlington Northern “seemed to lower the
bar for what kind of evidence would be
acceptable for a PRP to establish
apportionment.” Id. at “8.
This opened the door “to a simple
volumetric approach to divisibility.” Id. at
*3. The district court explained that it did
not mean volumetric in the sense of dividing
harm by how much toxin each party
released. Instead, “it is enough that a party
can demonstrate a reasonable correlation
The district court also noted that the
Seventh Circuit “concluded that cleaning up
a given portion of the river becomes more
expensive the more toxic that portion is.”
Thus, “[i]f costs are correlated to
contamination (harm), then one would
expect the costs may be apportioned on
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roughly the same lines as the harm itself: the
more harm each party causes, the more cost
he is responsible for.” Id.
According to the district court, “only the
most basic modeling would be required to
establish how much PCB remained in OU4.”
The expert testimony showed that NCR
contributed to 27-43% of the harm in OU4,
and so it “also contributed roughly the same
amount to the cleanup cost.” Id. On these
facts, the district court determined that
there was a reasonable basis to apportion
NCR’s share of the remediation costs of OU4
at 28%.
Conclusion
A PRP’s potential exposure to the full cost of
remediation that is often imposed by joint
and several liability is onerous for obvious
reasons. NCR Corp. gives PRPs subject to
CERCLA claims additional credible authority
for raising a divisibility defense. Under NCR
Corp., divisibility does not require scientific
precision. Basic modeling that provides a
reasonable estimate of how much a PRP’s
discharge contributed to the contamination
is sufficient.
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Past Committee Newsletters
Visit the Committee’s newsletter archive
online at www.iadclaw.org to read other
articles published by the Committee. Prior
articles include:
MAY 2015
Can the New Illinois Asbestos Exemption
Amendment to the Construction Statute of
Repose Revive Time-Barred Claims?
Andrew Kopon, Jr. and Vincenzo R. Chimera
APRIL 2015
Recent Developments in Medical
Monitoring Case Law: Pleadings-Stage
Dismissal in California, and Updates from
Other Jurisdictions
Michael L. Fox and Caitlin C. Ross
MARCH 2015
Use and Abuse of “Historical Experts” in
Toxic Tort Cases
Scott Kozak
FEBRUARY 2015
Lone Pine Orders and Proposed Revisions to
Rule 26(B)(1)
Robert Redmond Jr.
JANUARY 2015
Garlock One Year Later
Mary Margaret Gay and Mark Behrens
SEPTEMBER 2014
New Strategies in Asbestos Litigation:
How One Company Is Seeking to Establish
Immunity From Strict Liability Under New
York Law
Deborah C. Prosser and Yasmin S. Coffey
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AUGUST 2014
The Evolution of Substantial Factor
Causation in Texas Toxic Exposure Cases
Michele Smith and Paul Heyburn
JUNE 2014
Hydraulic Fracturing Survives First Jury Trial
Test—Bombardiere v. SOS Staffing Services,
Inc., et al. (N.D.W.Va. 2013)
Raymond G. Mullady, Jr. and Harrison Kang
MAY 2014
Toxic Tort Issues Related to Spray
Polyurethane Foam
Robert F. Redmond Jr.
APRIL 2014
BP Fights Fifth Circuit Ruling on Deepwater
Horizon Settlement
Jim Shelson
MARCH 2014
Recent Developments in Medical
Monitoring Case Law (2013-2014)
Martin J. Healy and Kristie A. Tappan
NOVEMBER 2013
California Appellate Court Limits Application
of Sophisticated User Doctrine
Michael L. Fox and Brian M. Davies
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