The Fox River clean-up – or rather, litigation concerning the clean-up – has resulted in some meaty written opinions for CERCLA lawyers to chew over, particularly on the issue of apportionment in a post BNSF world. Friday’s decision by the Seventh Circuit Court of Appeals in United States v. NCR Corp., No. 10-C-910 (7th Cir. Aug. 3, 2012) is no exception, with the Court not only tackling divisibility, but also hinting that NCR might have 107(a) claim against other PRPs, an issue that the United States Supreme Court left unresolved in the Atlantic Research decision.
First, some background on the underlying trial court decision. In United States v. NCR Corp., 2011 WL 2634262 (E.D. Wisc. July 5, 2011), the EPA sought an injunction requiring the defendants NCR Corp. and Appleton Papers to complete sediment remediation in the Fox River. The defendants argued for apportionment based upon volumetric divisibility, and NCR also contended that the harm could be divided based upon geography, in that it was possible to show that a certain stretch of the river downstream from NCR’s facilities was a significant contributor to the river’s contamination. In the end, the court rejected both arguments on the ground that the remediation costs would have been substantially the same whether or not there were other dischargers. In analyzing defendants’ divisibility defense, the court took what it described as a “detour” on this issue in an attempt to define what the “harm” is that must be divisible in order for there to be apportionment:
Implicit in my analysis so far is that the “harm” at issue here is the cost required to clean up the river. After all, this is not a case about the environment or pollution in the abstract, but about who should pay for cleaning up the Site. These cleanup costs—not the pollution itself—are what is subject to apportionment, and if these costs do not have a strong causal link with pollution volume, then there would seem to be little reason to apportion them on that basis. . . . The divisibility cases before and after Burlington Northern do not generally focus on the harm’s relationship to cleanup costs, however. Instead, they treat the divisibility issue as though the “harm” to be divided is the actual, physical pollution at issue: the plume of oil, the contaminated river, or the land itself. That is, many cases treat the divisibility question as a matter of whether the pollution in question can actually be divided, rather than whether the cost of cleaning up the pollution is separable based on geography or volume. . . . Ultimately, the divisibility question is a causation question, and when the case is about cleanup we should be concerned with assessing to what extent the parties’ behavior caused the cleanup expenses rather than which parties caused the pollution itself. Although in many cases the two questions have identical answers, here the cleanup expenses are not reasonably correlated with the volumes of pollution each party contributed.
The Seventh Circuit, in addressing an appeal by NCR, came to the same conclusion but, as the panel noted, “by taking a slightly different approach.” Like the trial court, the Seventh Circuit noted that apportionment requires a two-step approach requiring the trial court to determine, first, whether the harm is capable of apportionment and then, only if it is, how the harm should be apportioned among the responsible parties. Addressing only the first question, the Court found that even though NCR may have contributed less than 10% of the PCBs found in various stretches of the Fox River, the government’s “unrefuted expert testimony” was that such contamination, even in the absence of other contributors, would have resulted in sediment contamination above the EPA’s maximum safety threshold. Since “a cubic yard of sediment would need to be dredged whether it contained 10 ppm or 100 ppm,” and there was insufficient evidence put forth by NCR that the cost of dredging was increased by virtue of the higher concentration, the “harm” was thus not divisible. While the Court agreed with NCR that “cleanup costs, on their own, are not exactly equal to harm,” it disagreed that cost was not a factor at all, since cost may approximate the damage caused. While leaving open the possibility that volumetric considerations may be an appropriate measure of divisibility “[i]n other cases in with the facts are simple,” when “a chemical [such as PCBs] is harmful when it surpasses a certain amount, . . . it will not suffice to look solely at the amount of contamination present in order to estimate the harm.” Perhaps one of the most important takeaways from the decision is the Court’s acknowledgement that “there is not necessarily one universal way that we should approach apportionment in pollution cases. Instead, apportionment will vary depending on who the harm that flows from pollution is characterized.”
Another takeaway comes at the end of the Court’s decision, in which it reviewed the other elements necessary for the government to obtain injunctive relief. NCR argued that a balancing of the harms weighed in its favor because “it should not have to bear the costs of the cleanup before it is determined to be liable on the merits” as its ability to recover would be limited to contribution pursuant to CERCLA Section 113(f) and, importantly, such amounts would be limited given that some contributors had already resolved their liability and were therefore immune to such a claim. While acknowledging this bar, the Court noted that the circuits are split as to whether a party can have both a 113(f) claim and a 107(a) claim, allowing that at the end of the day, non-settling PRPs could be jointly and severally liable to NCR – a topic that was not before the Court on NCR’s present appeal.