29 ELR 10203 | Environmental Law Reporter | copyright © 1999 | All rights reserved


Turn Out the Lights, the Party's Over: The Emerging Consensus on CERCLA Salvage Litigation Issues

William D. Evans Jr.

Editors' Summary: The enactment of CERCLA in 1980 sparked an explosion of contentious litigation between EPA and potentially responsible parties (PRPs) concerning the liability of PRPs under the Act. After over a decade of litigation in which EPA usually emerged victorious, the focus of CERCLA litigation has shifted to secondary suits between PRPs for cost recoupment, contribution, and insurance coverage, and, consequently, new issues have arisen. This Article examines the issues that dominate the emerging case law for secondary CERCLA suits. It begins by summarizing how joint and several liability and contribution under the Act affect secondary suits. The Article next discusses how seven circuit court decisions addressing CERCLA secondary suit litigation settled the five crucial issues: (1) the appropriate statutory cause-of-action, (2) the extent of liability, (3) the applicable limitations period, (4) the preemption of state-law remedies, and (5) the appropriate factors for cost allocation. The Article concludes with a description of three proposals for uniform rules governing the maintenance of CERCLA secondary suit litigation.

William D. Evans Jr. practices with the Anne Arundel County Office of Law as a Senior Assistant County Attorney in Annapolis, Maryland. Mr. Evans was previously a trial attorney with the Environmental Enforcement Section of the U.S. Department of Justice. This Article is dedicated to the memory of his uncle, Robert K. Evans, and cousin, Dr. Theodore Cooper. The excellent assistanceof Joyce A. Sokal in the preparation of this Article is appreciated.

[29 ELR 10203]

Willie Nelson's honky tonk classic "Turn Out the Lights, the Party's Over" accurately describes the recent consensus on issues in hazardous waste contribution and salvage litigation. After the passage of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)1 in December 1980, the first decade of CERCLA litigation focused on "first tier" liability issues, such as strict liability and joint and several (or entire) liability, between the U.S. Environmental Protection Agency (EPA) and potentially responsible parties (PRPs). Since EPA's CERCLA litigation record would be the envy of Tiger Woods, the focus of CERCLA litigation has recently shifted to secondary suits for cost recoupment, contribution among liable PRPs, and PRP actions against insurance carriers for cleanup cost coverage.

The major concern of PRPs today is the avoidance of paying a disproportionate share of abatement costs. Such fears are well-founded in light of the high cost of site abatement. For example, in United States v. Allied-Signal, Inc.,2 a federal district court in New Jersey approved a settlement in January 1997, in which the estimated cost of cleanup is approximately $ 350 million. These abatement costs are being shared by 90 settling parties and several federal agency defendants, including the U.S. Department of Defense.

These recoupment suits are played out against the background of critics who claim that the Superfund program is too slow to implement cleanups and too expensive with respect to CERCLA transaction costs. Indeed, in United States v. Conservation Chemical Corp.,3 an action involving 7 original defendants, 154 third-party defendants, 16 insurance company third-party defendants, and 14 federal agency third-party defendants, the court observed that litigation expenses may begin to exceed site cleanup costs. Furthermore, Congress has attempted to amend CERCLA over the last few years. Unfortunately, because major interest groups, such as business trade associations, insurance carriers, and environmental groups, have radically different views as to CERCLA's future shape, the resulting "beltway" gridlock probably will guarantee no fundamental restructuring of CERCLA in the near future.4

Despite such obstacles, EPA's Superfund program is making progress toward cleanup of toxic waste sites. In February 1998, EPA announced that 90 percent of the national priorities list (NPL) sites have either completed site remediation or undertaken construction work on a cleanup program. Also, EPA reported that 88 site remediations were completed in fiscal year 1997 and that 349 total cleanups [29 ELR 10204] were completed in the last five years.5 Moreover, states are increasingly becoming involved in site remediation. In the aggregate, states have more than 13,700 cleanups in progress and completed more than 5,500 cleanups in fiscal year 1997.6

Since 1997, decisions by the Second, Third, Fourth, Sixth, Ninth, and Tenth Circuits in, Bedford Affiliates v. Sills,7 New Castle County v. Halliburton NUS Corp.,8 Pneumo Abex Corp. v. High Point, Thomasville & Denton Railroad,9 Centerior Service Co. v. Acme Scrap Iron & Metal Corp.,10 Pinal Creek Group v. Newmont Mining Corp.,11 and Sun Co. v. Browning-Ferris, Inc.,12 respectively, have decided the following five crucial issues in CERCLA secondary litigation: (1) the appropriate statutory cause-of-action, (2) the extent of liability (including allocating the so-called orphan or phantom share), (3) the applicable limitations period, (4) the preemption of state-law remedies, and (5) the appropriate factors for cost allocation. Because the vast majority of the approximately 1,200 sites on EPA's NPL are located in these six federal circuits, these decisions will have a profound impact on CERCLA recoupment actions.13 With over 190 sites on the NPL, federal court litigation in New Jersey and Pennsylvania — the mother church of toxic waste — will be especially influenced.14

After discussing CERCLA's statutory scheme, this Article reviews the above five issues. Several academic suggestions for a uniform rule addressing secondary actions are then examined. Finally, two approaches to managing multiparty CERCLA contribution suits are discussed.

CERCLA's Statutory Scheme

The Congressional Solution

In 1979, EPA estimated that there were between 30,000 and 50,000 abandoned hazardous waste facilities in the United States.15 The main problems associated with such sites is the contamination of surface water and groundwater that potentially endangers drinking water supplies. In the late 1970s, media reports of hazardous waste sites, such as New York's Love Canal, focused public attentionon the national toxic waste disposal problem. In December 1980, Congress, responding to public pressure, quickly passed CERCLA in the last days of the 96th Congress.16 Given its speedy passage, CERCLA's legislative history is sparse and its drafting is unclear. As a result, the judiciary has been forced to fill in the statutory gaps.17 The U.S. Department of Justice (DOJ), under the leadership of Assistant Attorney General Carol E. Dinkins and Stephen D. Ramsey, Chief of the Environmental Enforcement Section, urged courts to construe CERCLA's liability scheme in a broad manner in order to promote swift cleanups. In response, courts have generally construed CERCLA in a liberal fashion, consistent with the general principle that courts should broadly construe statutes enacted for the preservation and protection of the public health.18

Because of the meager legislative history addressing CERCLA, the judiciary often looks to similar issues in tort law when construing the Act. Tort law is based on the principle that one who injures another is under a duty of compensation whenever it is just that he should pay. As a system for the creation and protection of rights, its function has been to mark out new areas for the protection of human interests.19 Federal environmental laws have their historic roots in tort causes-of-action, such as nuisance, trespass, strict liability, and negligence. Indeed, CERCLA is arguably a codification of strict liability for ultrahazardous activities, and liability for ultrahazardous activity was first articulated in the 1868 English case Rylands v. Fletcher.20

Given this historical background, CERCLA has essentially two goals. First, CERCLA requires the cleanup of inactive and abandoned hazardous waste sites, regardless of the legality of the prior dumping. Second, CERCLA imposes liability on PRPs who are responsible for improper waste disposal practices.21 This is the so-called polluter must pay theory.

CERCLA authorizes EPA to identify abandoned hazardous waste sites across the United States, rank those sites on the NPL by degree of hazard, and take enforcement action whenever there is a release or a threatened release of a hazardous substance into the environment. As one court observed, "the major provisions of Superfund create a Monopoly Game of environmental rights and liabilities."22 CERCLA provides EPA with two "rottweiler-like" litigation tools. First, pursuant to CERCLA § 106, EPA may file a [29 ELR 10205] suit for injunctive relief or issue an administrative order mandating that PRPs clean up a toxic waste facility.23 Second, EPA, pursuant to CERCLA § 107, may use Superfund monies, perform the cleanup, and seek reimbursement for site abatement costs from PRPs.24 A § 107 suit is essentially a collection or restitution action, whereby EPA can recover all cleanup costs.

CERCLA designates four categories of PRPs that may be liable: owners, operators, arrangers, and transporters.25 In order to prove liability, EPA must establish the following in a § 107 action: (1) that a defendant is within one of the four categories of PRPs, (2) that a release or threat of a release of a hazardous substance from a facility has occurred, (3) that EPA has incurred response cost as a result thereof, and (4) that the response costs were not inconsistent with the national contingency plan. CERCLA does not require EPA to prove that a defendant caused actual harm to the environment at the liability stage. Instead, this federal statute concentrates on whether a PRP's release or threat of release caused harm to the EPA in the form of the incurrence of response costs.26

In United States v. Ottati & Goss, Inc.,27 the first major CERCLA trial, the court imposed strict liability regardless of fault or negligence.28 Subsequent courts considering this issue have followed Ottati & Goss.29 In addition to strict liability, courts have held that CERCLA can be applied retroactively to disposal practices that occurred prior to the Act's passage in 1980.30

Joint and Several Liability

[] The Common Law. In tort cases involving two or more tortfeasors, the principle that each tortfeasor is personally liable for any indivisible injury proximately resulting from his negligence is referred to as "joint and several." This terminology originated with respect to tortfeasors who acted in concert to commit a tort. In that theoretical context, it reflected the principle that all members of a conspiracy or partnership are equally responsible for the actions of each member and the furtherance of the conspiracy. As a corollary to the commonlaw rule that a joint tortfeasor who paid a judgment in full could not recover reimbursements from a co-tortfeasor, this rule enabled a plaintiff to collect his judgment in full from any solvent tortfeasor that he selected to sue.31

The law concerning joint and several liability for pollution was significantly influenced by the 1952 Texas Supreme Court decision in Landers v. East Texas Saltwater Disposal Co.32 Landers dealt with the issue of whether a tort action could be maintained against several defendants jointly, where each acted independently of the others and there was no unity or concert of design between them, resulting in the pollution of a waterway. The Texas Supreme Court noted that the existing law precluded joint and several liability. In such a case, the tort of each defendant is several when committed, and it does not become joint because subsequent to its consequence and united with the consequences of several other torts committed by other persons, it produces damages. If each tortfeasor acts independently, he is liable only for the part of injury or damage caused by his own wrong. The existing law, the court noted, embraced the philosophy that it is better for the injured party to lose all of its damages than for any of the several wrongdoers to pay more of the damages than they individually and separately caused. This situation was brought about by the general inability of the plaintiff under evidentiary rules to apportion the injury attributable to each defendant.33

The Landers court then announced the new legal principle as follows:

Where the tortious acts of two or more wrongdoers join to produce an indivisible injury, that is, injury from which its nature cannot be apportioned with reasonable certainty to the individual wrongdoers, all of the wrongdoers will be held jointly and severally liable for the entire damage and the injured party may proceed to judgment against anyone separately or against all in one suit. If fewer than the whole number of wrongdoers are joined as defendants to plaintiff's suit, those joined may by proper cross action under the governing rules bring in those omitted. To permit the joinder as defendants of such wrongdoers without at the same time imposing joint liability upon them would not relieve the inequities of the situation nor cure the ills of the plaintiff.34

[29 ELR 10206]

[] CERCLA's Entire Liability Scheme. Having found a group of PRPs liable in an EPA enforcement suit, a court may choose two alternative methods of allocating liability. First, the court may impose joint and several liability, making each defendant individually liable for the entire cleanup costs. Under joint and several liability, EPA need only sue one Fortune 500 PRP in order to insure recovery of all cleanup costs. On the other hand, joint and several liability may prove unfair when it forces certain PRPs to pay for cleaning up hazardous waste releases to which they did not contribute. Second, the court may hold each defendant severally liable only for its own share of the damage. Under several liability, EPA would absorb the share of any insolvent or unnamed parties.35

CERCLA unfortunately fails to specify a method of allocation. In order to secure enough votes for passage, Congress deleted language requiring joint and several liability. Statements in the legislative history indicate that Congress intended the courts to make allocation decisions on a case-by-case basis in accordance with principles of common law.36

The first decision to consider the allocation of liability under CERCLA was a critical victory for EPA that allowed the Agency to gain considerable leverage in enforcement actions. In United States v. Chem-Dyne Corp.,37 the court examined CERCLA's legislative history and concluded that Congress deleted the term "joint and several liability" from CERCLA to avoid a mandatory generally applicable legislative standard that might produce occasional inequitable results.38 The Chem-Dyne court then adopted the Restatement (Second) of Torts approach to the problem of liability. Under the Restatement, a court must first make the factual determination of whether the injury caused is divisible or indivisible. If the injury is divisible or reasonably subject to division, the named defendants have the burden of proof of showing apportionment. However, if the harm is indivisible, each defendant is subject to joint and several liability, rendering each defendant liable for the entire harm.39

In adopting the approach of Sections 433A, 875, and 881 of the Restatement (Second) of Torts, District Judge Rubin stated:

An examination of the common law reveals that when two or more persons acting independently caused 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. But where two or more persons cause a single and indivisible harm, each is subject to liability for the entire harm. Furthermore, where the conduct of two or more persons liable under [CERCLA] § 9607 has combined to violate the statute, and one or more of the defendants seek to limit his liability on the ground that the entire harm is capable of apportionment, the burden of proof as to apportionment is upon each defendant.40

After Chem-Dyne, the court in United States v. A&F Materials Co.,41 articulated a supposedly moderate approach to the liability problem.42 The moderate approach involves employing the Restatement rule as a general proposition, but subject to exceptions. Under the A&F Materials approach, if the court finds that the injury is indivisible, the court has the discretion to impose joint and several liability upon the defendants. On the other hand, the court may reject joint and several liability, regardless of the harm's indivisibility, where the particular facts of the case demonstrate a fairer apportionment of liability.43

Under the A&F Materials holding, the particular factors that might persuade a court to reject joint and several liability where the harm is indivisible are the following: (1) the ability of the parties to demonstrate that their contribution to a release of a hazardous waste can be distinguished; (2) the amount of the hazardous waste involved; (3) the degree of toxicity of the hazardous waste involved; (4) the degree of involvement by the parties in the creation, handling, or disposal of hazardous waste; (5) the degree of care exercised by the parties with respect to the hazardous waste involved, taking into account the waste's characteristics; and (6) the degree of cooperation by the parties with governmental agencies to prevent any harm to the public health or the environment. These criteria are known as the "Gore factors." Prior to CERCLA's enactment in 1980, the House passed the Gore Amendment to CERCLA seeking to modify the Restatement approach to joint and several liability by employing a multiple factors test to allocate liability. While the Senate did not adopt the Gore Amendment, the A&F Materials court concluded that the House's moderate approach was consistent with congressional intent.44

Despite A&F Materials, the jurisprudence on this issue has been dominated by Chem-Dyne.45 In cases in which defendants have sought apportionment, most courts have imposed joint and several liability after finding that the toxic wastes were commingled and that the harm was incapable of reasonable division. These courts have rejected PRPs' arguments that harm can be divided according to the relative volume of toxic waste deposited by each PRP at the facility. Courts have reasoned that toxic wastes differ in migratory potential and toxicity and that they have typically commingled with one another at the site.46 One suspects that the length and complexity of an A&F Materials-type trial is an incentive for courts to follow Chem-Dyne.

Three recent cases offer PRPs some hope that courts will not automatically "slam dunk" joint liability. In United States v. Alcan Aluminum Corp.,47 the Second Circuit held that defendants had carried their burden of proof by showing divisibility when their "pollutants did not contribute more than background contamination and also cannot concentrate."48 Similarly, in In re Bell Petroleum Services, Inc.,49 a [29 ELR 10207] case involving three successive owners of one site with groundwater contamination, the Fifth Circuit concluded that joint and several liability was inappropriate where the environmental contamination could be reasonably divided.50

Recently, in United States v. Township of Brighton,51 the Sixth Circuit initially noted that it interpreted CERCLA to impose entire liability when the environmental harm was indivisible. Apportionment, however, would be allowed when two or more persons independently are responsible for a single harm that is divisible. Section 433A of the Restatement (Second) of Torts is to be used to determine divisibility.52 The Restatement states that "damages for harm are to be apportioned among two or more causes when (a) there are distinct harms, or (b) there is a reasonable basis for determining the contribution of each cause to a single harm."53 More specifically, the Restatement offered up the example of several factories polluting a waterway, with damages apportioned based on the respective volume of pollutants introduced by each party. In following the Restatement approach the Sixth Circuit held that the proper standard for divisibility analysis is to seek a reasonable basis for determining the contribution of each cause to a single harm, accepting only bases that apportion causation, not those that seek to apportion blame in a normative manner. Citing Alcan, Circuit Judge Boggs stated that appropriate factors like relative toxicity, synergistic capacity of the toxic waste, migratory potential, and degree of migration would be appropriate standards to consider.54

In remanding to the lower court for examination of a possible basis of divisibility, the Sixth Circuit indicated that the trial court "should be receptive to any argument for divisibility that provides a reasonable basis — sounding in causation, not equity or normative fault — for distinguishing between the harm caused by Brighton Township and that caused by others."55 In a concurring opinion, Circuit Judge Moore indicated that where a previous operator or owner asserts a divisibility defense to entire liability, apportionment is appropriate only when a previous operator or owner presents significant evidence from which the trier of fact can determine the portion of harm caused by the toxic waste disposed of at the time of its operation or ownership of the facility, as distinguished from the portion of harm caused by toxic waste at the facility at the time when the defendant was not the site's operator or owner.56

As demonstrated above, CERCLA liability has the unfortunate twin features of being easy to obtain and expensive to discard. It is not surprising that most EPA cleanup actions are settled. As the former Assistant Attorney General Roger Marzulla once stated: "with only slight exaggeration, one government lawyer has described a … [CERCLA] trial as requiring only that the Justice Department lawyer stand up and recite: 'may it please the Court, I represent the government and therefore I win'."57

Contribution

The Common Law

Before turning to contribution under CERCLA, it might be useful to briefly discuss the general topic of contribution and indemnity. Differing in application and ultimate affect, these secondary remedies are essentially intended to secure a form of restitution for the sharing of responsibility between tortfeasors. In the law of torts, contribution is defined as a sharing of liability in which one tortfeasor, who has discharged a common liability, has the right to recover from another liable tortfeasor the aliquot portion that he ought to pay. Stated differently, contribution is the recovery of part of a loss from a co-tortfeasor whereby the loss is divided or apportioned on the basis of the responsible parties' respective fault. Contribution's predicate is the existence of joint liability.58

In contrast, indemnity traditionally refers to the situation in which one tortfeasor is entitled to obtain reimbursement or restitution of the entire burden from another tortfeasor, whether by contract or operation of law. From its historical perspective, indemnity is the shifting of the entire burden of loss from the indemnitee to a co-tortfeasor or indemnitor.59 Indeed, as Judge Learned Hand observed in Slattery v. Marra Brothers:60 "Indemnity is only an extreme form of contribution."61

Superfund Amendments and Reauthorization Act of 1986

In October 1986, Congress ameliorated the harshness of joint and several liability by including a right to contribution in the Superfund Amendments and Reauthorization Act of 1986 (SARA).62 SARA addressed contribution issues on a [29 ELR 10208] "macro" level but specific issues of cost allocation were not answered in detail.63 Under SARA, contribution rights may be asserted in cross-claims or third-party claims by a defendant in an EPA enforcement action or in a separate contribution action.64 As evidenced by United States v. New Castle County65 discussed below, CERCLA's joint and several liability/contribution feature allows EPA to target and ultimately settle with a few deep pocket PRPs without foreclosing the cooperative PRPs' right to seek contribution.66

In CERCLA actions, the DOJ, on behalf of its agency client EPA, is usually able to reach settlement with the major PRPs. Thereafter, the settling PRPs assert a third-party claim or cross-claim or bring a separate suit against the nonsettling PRPs in order to recoup any overpayment of their equitable share. As noted above, Congress expressly provided for a right of contribution in CERCLA § 113 as part of SARA. Even before the 1986 enactment of § 113, most federal courts had implied a right of contribution from either CERCLA's objectives and overall scheme or from federal common law.67 In pre-SARA days, the DOJ argued that without contribution rights, certain PRPs might avoid an EPA settlement by playing a "Russian roulette" game with the Agency and waiting to see who would be sued.68

The seminal pre-SARA case on this issue was United States v. New Castle County69 wherein District Judge Longobardi concluded that a right of contribution exists under CERCLA as a matter of federal common law. Citing Texas Industries, Inc. v. Radcliff Materials, Inc.,70 Judge Longobardi recognized that a right of contribution may be created in one of two ways. First, Congress may create a contribution right either expressly or by clear implication. Second, a right of contribution may exist through the power of federal courts to fashion a federal common-law right of contribution.71 In commenting upon such a federal common-law contribution right, Judge Longobardi stated:

A right to contribution would encourage expeditious settlement of Superfund suits brought by the Government against these responsible persons. Because CERCLA liability is joint/several, the Government needs to sue only a limited number of responsible parties in order to recover all costs of cleanup and remedial operations at a site. With a right to contribution available to CERCLA defendants, they will be willing to undertake the burden to locate and implead other responsible persons into a CERCLA action in order to minimize their own liability. As the size of the defendant pool increases, the chances for settlement of the suit and achievement of one of the federal government's objectives under the Act — site cleanup at the expense of responsible parties — is met.72

CERCLA § 113(f) now provides, in relevant part, as follows:

Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) …, during or following any civil action under section 9606 … or under section 9607(a)…. 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.73

In representing PRPs in contribution actions, counsel must ponder the several difficult issues discussed below, the outcome of which plays a pivotal role in determining the amount each PRP pays.

Factual Background of Salvage Actions

The facts in New Castle County v Halliburton are similar to those in many hazardous waste cases. In 1980, the United States filed suit against New Castle County, Delaware, as the owner and operator of the Tybouts Corner Landfill (Landfill) — the second highest ranking site on the NPL — and against the predecessor of Rhone-Poulenc, Inc. as an arranger for the disposal of hazardous waste at the Landfill. EPA's enforcement action was later amended to include the predecessor of Zeneca, Inc., which also arranged for disposal at the Landfill.74

On April 19, 1989, EPA entered into a series of consent decrees with New Castle County, Rhone-Poulenc, Inc., Zeneca, Inc., and others (collectively the County) requiring them to finance and implement cleanup actions at the Landfill. Prior to the settlement, EPA contracted with Halliburton NUS Corporation (Halliburton) to perform a remedial investigation/feasibility study (RI/FS) to determine appropriate response actions. Upon receiving a status report on the RI/FS from Halliburton on October 28, 1991, the County concluded that Halliburton's activities at the Landfill had further contaminated the property.75

About two years later on October 26, 1993, the County filed suit against Halliburton, asserting, inter alia, a response cost claim under CERCLA § 107(a) for all or part of the costs incurred by the County in connection with the Landfill's remediation. In ruling upon Halliburton's summary judgment motion, District Judge Longobardi first held that the County's sole CERCLA claim was for contribution under CERCLA § 113(f)(1). The claim was therefore time barred under CERCLA § 113(g)(3)'s three-year statute of limitations. The County thereafter appealed to the Third Circuit.76

Bedford Affiliates,77 Pneumo Abex,78 Centerior Service,79 [29 ELR 10209] Pinal Creek,80 and Sun Co.81 have much the same factual patterns as New Castle County v. Halliburton, in that settling PRPs sought the recoupment of cleanup costs from recalcitrant PRPs. In Pinal Creek, the Ninth Circuit defined such plaintiffs as "working" PRPs. This convenient label pertains to a PRP that actually conducts site cleanup operations, as opposed to one that reimburses another party for the cost of the latter's abatement efforts.82

The Appropriate Cause-of-Action

Evidence of the contentious debate concerning the proper cause-of-action for third-party plaintiffs is found in over 20 reported decisions addressing the issue. For example in New Castle County v. Halliburton, the primary question on appeal was whether the County's suit against Halliburton was a cost recovery action under § 107(a) or a contribution action under § 113(f).83 Circuit Judge Carol Los Mansmann initially noted that contribution was a claim "by and between jointly and severally liable parties for an appropriate division of the payment one of them has been compelled to make."84 The Third Circuit noted that numerous federal circuit courts had previously held that only innocent parties could maintain a § 107(a) action.85 An action brought by a liable PRP is "by necessity" a contribution action under § 113(f)."86 The gist of the New Castle County v. Halliburton decision is that §§ 107 and 113 must be read together to provide only one cause-of-action for contribution under § 113(f). They must not be read together to provide separate and independent claims for relief. Section 107(a) merely sets forth the criteria for determining whether a party is liable under CERCLA in the first place.87

After agreeing with the conclusion reached by their sister courts, the Third Circuit discussed in dicta the parameters of actions under §§ 107(a) and 113(f). A § 107(a) cost recovery action, Circuit Judge Mansmann noted, imposes strict and entire liability, allowing a plaintiff to obtain complete relief from one of several defendants. In a § 107(a) action, a defendant may seek apportionment where there is a reasonable basis for determining the contribution of each cause to a sole harm. The burden, however, is on the defendant to prove that the harm is divisible and that the damages and costs are capable of some reasonable division. Under the County's theory, a PRP could bring a § 107(a) action against other PRPs and recoup all of its cleanup costs, regardless of fault.88 As Judge Mansmann pointed out, "this strains logic."89

Turning to § 113(f), the Third Circuit acknowledged that CERCLA originally included no express right of contribution. Prior to the passage of § 113(f) in SARA, it was unclear whether a PRP could recover from other PRPs under § 107(a) that portion of the remediation costs that exceeded its fair share. In general, courts responded to this uncertainty by recognizing an implicit cause-of-action for contribution.90

Once § 113(f) was passed as a part of SARA, it confirmed, the Third Circuit noted, a PRP's right to obtain contribution from other PRPs. In dividing remedial costs between PRPs, § 113(f) allows a court to allocate response costs using various equitable factors as the court deems appropriate. By implication, the Third Circuit held that a defendant in a Superfund contribution action is only severally liable.91

In adopting the § 113-only rule, Judge Mansmann acknowledged the statutory canon of construction that legislation should be construed so as to give effect to all its provisions. Allowing a PRP to choose between § 107(a) (with its six-year statute of limitations and joint and several liability) and § 113(f) (with its three-year statute-of-limitations period and non-entire liability based upon equitable factors) would render § 113(f) a nullity.92

The Third Circuit next considered under what circumstances a private person could bring a § 107(a) action. The court recognized that § 107(a) historically had been used by EPA or state governments to recover costs incurred in the cleanup of hazardous waste sites. A PRP, who is not entitled to any of the § 107(b) affirmative defenses93 may not bring a § 107(a) action against other PRPs. Where both parties are non-innocent PRPs, the federal appellate courts have unanimously held that any action to reapportion costs is a § 113(f) contribution action. Since the County admitted that it was a PRP and had resolved its liability to EPA via a consent decree, the County was not permitted to pursue its § 107(a) cost recovery action.94

One month later, the Third Circuit reaffirmed its contribution-only rule in In re Reading Co.95 "We rely, therefore, on CERCLA's plain meaning to hold that § 113(f) replaces the judicially created cause-of-action under § 107(a)(4)(B) to the extent that a party seeks contribution."96 The Bedford Affiliates,97 Pneumo Abex,98 Centerior Service,99 Pinal Creek,100 and Sun Co.101 courts essentially followed the Third Circuit's contribution-only rule.

While New Castle County v. Halliburton NUS Corp. is the clear majority view, several federal district courts, such [29 ELR 10210] as United States v. SCA Services of Indiana, Inc.,102 allow a settling PRP to pursue both §§ 107 and 113 actions.103 One suspects that the SCA Services line of cases, with its associated threat of entire liability, were rendered to place the maximum leverage on PRPs to settle. While this issue may seem academic, its ramifications, as discussed below, can be significant.

Extent of Liability: Joint or Several

Before discussing the extent of liability, the Pinal Creek court initially observed that § 113(f)'s legislative history supports the conclusion that Congress was only clarifying and confirming an existing right of contribution under § 107. Sections 107 and 113 together provide and regulate a PRP's right to claim contribution from other PRPs.104 Citing New Castle County v. Halliburton NUS Corp., Circuit Judge A. Wallace Tashima stated: "The contours and mechanics of this right are now governed by § 113. Put another way, while § 107 created the right of contribution, the 'machinery' of § 113 governs and regulates such actions, providing the details and explicit recognition that were missing from the text of § 107."105 Thus, a PRP's contribution suit finds explicit recognition in § 107, and § 113 merely regulates its implementation.106

Since a settling PRP is limited to asserting a contribution claim, the Ninth Circuit then considered the extent of liability for a defendant PRP.107 Consistent with contribution actions between tortfeasors, Circuit Judge Tashima held that a CERCLA contribution claim creates several-only liability among PRPs and stated:

If a group of defendant-PRPs is held jointly and severally liable for the total response costs incurred by a claimant-PRP, reduced by the amount of claimant-PRP's own share, those defendant-PRPs would end up absorbing all of the cost attributable to "orphan shares" — those shares attributable to PRPs who either are insolvent or cannot be located or identified.108

A contrary rule would immunize the claimant-PRP from the risk of orphan share liability, thus drastically reducing the ability of courts to apportion costs using equitable factors as mandated by § 113(f)(1). In short, the orphan or phantom share costs are distributable equitably among all liable PRPs.109

A contrary rule, the Ninth Circuit noted, could result in a chain reaction of multiple and unnecessary suits, prolonging the CERCLA cleanup process.110 The Ninth Circuit's several-only ruling is consistent with Section 886A(2) of the Restatement (Second) of Torts,111 the Uniform Contribution Among Joint Tortfeasors Act,112 and the Uniform Comparative Fault Act,113 as well as several previous CERCLA decisions, including the Eleventh Circuit's Redwing Carriers, Inc. v. Saraland Apartments.114

In its orphan share issue ruling, the Pinal Creek court appropriately addressed a substantial problem in CERCLA contribution litigation. For example, in United States v. Atlas Minerals & Chemicals, Inc.,115 the orphan or phantom share, the lower court noted, could be approximately 19 percent of the estimated $ 25 million in cleanup costs.116 Moreover, in a 1993 EPA study of 78 sites, 52 sites (6 percent) had an orphan share, and the average size of the orphan share was 26.9 percent.117

At early common law, the courts of law and equity approached the phantom share issue differently. At equity, the shares were determined by the number of solvent parties. At law, the contributive shares were determined by the total number of parties, including insolvent entities. Eventually, the courts of law adopted the equity rule.118

The Pinal Creek court's global allocation of the phantom share approach is consistent with Section 886A(2) of the Restatement (Second) of Torts.119 Section 886A(2)'s comment reads as follows:

In determining equitable shares of the obligation, it seems wise … to confine the determination to parties to the action rather than to attempt to calculate the equitable shares for alleged tortfeasors who were not parties and not bound by the decision. If one tortfeasor's equitable share turns out to be uncollectible, it should be spread proportionally among the other parties at fault.120

In dealing with the orphan share issue, PRPs should not overlook the orphan share policy issued in 1995 by EPA. Prior to 1995, EPA generally took the position that any orphan share was to be borne by the PRPs. However, on October 2, 1995, EPA announced 20 new common sense administrative reforms to the EPA toxic waste cleanup program. Under this reform program, EPA will seek to compensate settling parties for a limited portion of the known shares attributable to nonviable parties in future cleanup negotiations. This compensation may take the form of forgiveness of past costs, provisions of proceeds from other settlements at the site, or a reduction in oversight costs.121 This program will hopefully result in a substantial portion of the orphan share being resolved up front in the negotiations between the agency and settling PRPs.

From the perspective of a defendant PRP, an early resolution of §§ 107 and 113 issues and joint or several liability issues [29 ELR 10211] should be sought through pretrial motions. A successful resolution will enhance a defense counsel's ability to negotiate on an individualistic, usually volumetric, basis with the claimant.

Statute-of-Limitations Issues

New Castle County v. Halliburton NUS Corp.

In a § 113(f) action, the claim is governed by the three-year statute of limitations at § 113(g)(3). The New Castle County v. Halliburton district court determined that the limitations period began to run on the entry of the April 19, 1989, Consent Decree. Since the County did not file its lawsuit until October 26, 1993, its suit was therefore time barred. On appeal, the County argued that pursuant to the discovery rule, the cause-of-action did not accrue until October 28, 1991, when the County first discovered Halliburton's alleged onsite negligence, resulting in the limitations period being equitably tolled.122

The County asserted that it did not learn of Halliburton's negligence until October 28, 1991. However, the Third Circuit observed that the discovery rule does not delay the running of the limitations statute until a plaintiff is aware of all the facts necessary to bring suit. Under the discovery rule, the claim accrues upon awareness of actual injury, not upon awareness that the injury constitutes a cognizable claim. Thus, the County was aware of its injury in 1989 when it entered into the judicially approved settlement agreement.123

The discovery rule, the Third Circuit noted, does not delay the accrual of a cause until the plaintiff has identified every party who may be liable for the claim. At the time of the EPA settlement, the County was aware that other PRPs were responsible for the conditions at the Landfill.124

The County finally asserted the doctrine of equitable tolling. This doctrine, unlike the discovery rule, presumes the accrual of the action but stops the running of the limitations period in light of established equitable considerations. These considerations are as follows: (1) where the defendant has actively misled plaintiff respecting its cause-of-action, (2) where the plaintiff in some extraordinary way has been thwarted from asserting its rights, or (3) where the plaintiff has timely asserted its rights mistakenly in the wrong forum.125

Relying on the second of these three options, the County contended that the difficult implementation of site cleanup constitutes an extraordinary circumstance preventing it from bringing suit in a timely fashion. The County claimed that it was so busy cleaning up the landfill that it did not have time to bring its suit. To invoke equitable tolling, the County must establish that it exercised appropriate diligence in investigating and bringing its claim. When the County learned of Halliburton's alleged negligence on October 28, 1991, it had six months before the expiration of the limitations period but waited two years before filing suit. In rejecting the equitable tolling doctrine, the Third Circuit held that the County was not prevented by extraordinary circumstances from filing its action earlier.126

Sun Co. v. Browning-Ferris, Inc.

Pursuant to a CERCLA § 106 unilateral administrative order, EPA ordered the Sun Company (Sun) and Texaco, Inc. (Texaco) to pay the costs of remediation at a toxic waste landfill. From January 1990, until August 29, 1991, Sun and Texaco completed the remediation program at a cost of $ 6.2 million. Thereafter, on August 29, 1994, Sun and Texaco brought an action against nonsettlers under §§ 107 and 113. The major issue was whether the three-year statute of limitation barred the claim.127

Citing United States v. Colorado & Eastern Railroad,128 the Tenth Circuit noted that any action by a PRP who was a defendant in a cost recovery action was a claim by and between "entirely" liable parties for an appropriate division of the payment one of them had been compelled to make.129 Such an action was "the quintessential claim for contribution."130 The fact that the settling parties incurred abatement costs by complying with a unilateral administrative order, without forcing EPA to take them to court, does not change the status of the action as one for contribution. Citing New Castle County v. Halliburton and Pinal Creek, Circuit Judge Kelly held that a settling PRP's contribution action seeks to recover costs referred to in § 107 from PRPs whose liability is defined by § 107 but is governed by the equitable apportionment principles established in § 113(f). Because a § 107 claim filed by a PRP requires the application of § 113, a PRP is limited to a contribution claim governed by the joint operations of §§ 107 and 113.131

Having settled that issue, the court then turned to whether the three- or six-year statute of limitations applied. CERCLA § 113(g)(3) provides that a contribution claim must be commenced more than three years after (1) the date of judgment in any action for recovery of such costs or damages, (2) the date of any administrative order pertaining to de minimis settlements, or (3) the entry of a judicially approved settlement. Since none of the three triggering events had occurred in Sun Co., § 113(g)(2) was examined. Section 113(g)(2) provides, in pertinent part, as follows: "An initial action for recovery of the costs referred to in section 9607 of this title must be commenced … (B) for a remedial action, within 6 years after initiation of physical on-site construction of the remedial action…."132

In Sun Co., because no previous suit under §§ 106 or 107 had been filed with respect to the landfill cleanup, the PRPs' contribution action — while governed by § 113(f)'s equitable principles — is the "initial action" for recovery of such abatement costs. Accordingly, a PRP's § 113(f) contribution suit is the "initial action for recovery of the costs" and must be commenced within the six-year period.133

[29 ELR 10212]

In summary, by virtue of § 113(g)(2) and (3), Congress has provided, as the Sun Co. court noted, an express limitations statute to cover all CERCLA contribution suits, regardless of how the settling party in question incurred its abatement costs. If the PRP incurred its abatement costs pursuant to a § 106 or a § 107 civil action, it will have three years in which to bring its claim. If the PRP incurred its cleanup costs in some other fashion, without the procedural safeguards of a CERCLA judgment or settlement, its contribution suit will be the initial action for recovery of such costs and must be brought within six years from the start of remediation or three years after completion of a removal action.134

Available State-Law Remedies

In a CERCLA salvage suit, may a settling PRP assert a state-law claim for equitable indemnity or restitution? In tort actions, Section 886 B(1) of the Restatement (Second) of Torts sets forth the rule as to indemnity between joint tortfeasors as follows: "If two persons are liable in tort to a third person for the same harm and one of them discharges a liability of both, he is entitled to indemnity from the other if the other would be unjustly enriched at his expense by the discharge of the liability."135 If suit for such indemnity is brought to recover the total amount of payment from the plaintiff, on the ground that the plaintiff's acts were not as blameworthy as the defendant's, it is an indemnity action. Over the years, the dichotomy between contribution and indemnity has been severely eroded by courts to the point where there is an increasing number of states that have adopted the doctrine of "equitable or partial indemnity." Under this rule, a tortfeasor may obtain partial indemnity, actually contribution, from a co-tortfeasor on a comparative fault basis.

In addition to claims for equitable indemnity, many plaintiffs also assert a claim for restitution. Section 76 of the Restatement of Restitution provides:

A person who, in whole or in part, has discharged a duty which is owed by him but which as between himself and another, should have been discharged by the other, is entitled to indemnity from the other, unless the payor is barred by the wrongful nature of his conduct."136

This rule applies when two or more persons are subject to a duty to a third party either as joint promissors or otherwise, under such facts that one or more of them, as between themselves, should perform it rather than the other. Numerous courts have applied § 76 to allow restitution for cleanup costs of a hazardous waste facility.137

In CERCLA contribution actions, PRPs have attempted to invoke common-law remedies with mixed results. For example, in Allied Corp. v. Frola,138 District Judge Wolin read the House Judiciary Committee's report for the 1986 SARA amendments as expressing a statutory intent to preserve to a plaintiff state causes-of-action for common-law or non-contractual indemnity between liable parties.139 To the same effect is United States v. Hooker Chemicals & Plastics Corp.,140 where the court read CERCLA § 107(e) to allow the defendant to bring a cause-of-action against a governmental entity under New York indemnity principles, even though the governmental entity was not a PRP under CERCLA. However, it went on to find the county not liable.141

An example of the contrary view is found in the September 28, 1998, decision in Bedford Affiliates.142 In that action, the Second Circuit framed the issue as to whether CERCLA § 113(f) preempted a PRP's state-law restitution claim. Under the Supremacy Clause of Article IV of the U.S. Constitution, Congress may enact statutes that preempt state law. First, Congress may in express terms indicate its intention to preclude state regulation in a given area. Second, preemption may be implied where federal law is so comprehensive to make reasonable the inference that Congress left no room for state regulation. Third, state law may be preempted to the extent that it actually conflicts with federal legislation. Such conflict preemption occurs when compliance with both federal and state legislation is a physical impossibility. State law thus stands as an obstacle to the execution of the congressional purpose.143

Circuit Judge Cardamon concluded that it was not part of the legislative intention that CERCLA be a comprehensive regulatory scheme occupying the entire field of toxic waste and that CERCLA does not prevent the state from enacting laws to supplement federal measures relating to the cleanup of hazardous waste facilities.144 Circuit Judge Cardamon, however, then stated that:

In enacting § 113(f) as part of SARA — an Act that expressly created a statutory right of contribution — Congress created a statutory settlement scheme. The scheme was put in place to aid the expeditious resolution of environmental claims. To accomplish this objective Congress employed incentives for potentially responsible parties to settle and strong disincentives for non-settling potentially responsible parties. Thus, potentially responsible parties who choose to settle are granted protection from contribution actions being asserted against them under § 113(f)(2), but retain the right to bring contribution actions against other non-settling parties. The statute further provides that the amount recoverable from the remaining non-settling parties is reduced only by the amount of the settlement. Hence, potentially responsible parties who choose to settle gain protection from contribution, enjoy potentially favorable settlement terms, and retain the ability to seek contribution from other defendants. Those responsible parties who choose not to settle are barred from seeking contribution from the settling parties and thereby face potentially disproportionate liability.145

Since state-law remedies would bypass the above "carefully crafted" settlement system, creating an actual conflict between [29 ELR 10213] CERCLA and state law, the Second Circuit held that CERCLA preempts these state-law remedies.146

On November 13, 1998, a certiorari petition was filed in the U.S. Supreme Court in PMC, Inc. v. Sherwin-Williams Co.,147 requesting the Court to decide whether a PRP can recover cleanup costs under state law regardless of whether those costs are recoverable under CERCLA. In PMC, the Seventh Circuit held, similar to the Second Circuit, that CERCLA preempts state-law remedies.148 The PRP noted there was a split in the federal circuits warranting high court review since decisions in the Ninth and Tenth Circuits conflicted with the Seventh and the Second Circuits.149 While the U.S. Supreme Court rejected the certiorari petition in PMC on January 19, 1999,150 this issue will continue to be litigated as state cleanups accelerate.

Equitable Factors Allocation

What are the equitable factors mandated by § 113(f) that courts are to use in allocating costs in a contribution action? Under common law, courts, as noted in Section 886A of Restatement (Second) of Torts, have applied two rules in apportioning liability in contribution actions. First, the doctrine of legal contribution (the majority rule) follows the principle of "equality is equity" that results in each tortfeasor being required to pay his pro rata share, arrived at by dividing the damages by the number of tortfeasors. Since generators send varying amounts of toxic waste to a hazardous waste facility, this rule would arguably be an unfair way of allocating cleanup costs in a third-party action.151

Second, under the minority view of equitable contribution, the distribution of the liability is in proportion to the pro tanto or comparative fault of each defendant. This approach is derived from the Uniform Comparative Fault Act. CERCLA essentially follows the minority rule.152

Courts have considered various factors in resolving CERCLA contribution claims, but the Gore factors are the most widely used. In fact, § 113(f) does not require a trier of fact to consider a particular list of factors.153 In Boeing Co. v. Cascade Corp.,154 District Judge Marsh stated: "Depending on the totality of circumstances, a court may consider many factors, a few factors, or it may find one factor determinative."155 Allocation is thus an intensely factual determination.156

The primacy of the Gore factors in contribution actions was emphasized in the August 31, 1998, decision in Centerior Service.157 In that action, the settling PRP sought to shift the entire burden to the nonsettling PRPs in a contribution action.158 In rejecting the position that they deserved to receive full benefits for their efforts, the Sixth Circuit stated: "Contrary to the rosy picture painted by the plaintiffs, they did not come forward in an effort to initiate a site cleanup, but were forced to do so under the compulsion of a § 106(a) order facing stiff penalties and fines."159 However, § 113(f) authorizes a court to allocate response costs between the parties using any equitable factor, especially the Gore factors, that a court deems proper. One of the Gore factors a court may consider is the degree of cooperation by a party with the government. As a result thereof, § 113(f) does provide a similar incentive for a party to respond quickly to cleanup efforts. For those settling PRPs, they need not worry about getting stuck with the "phantom share."160 Thus, the Gorefactors allows a trier of fact to fine tune the allocation scheme so that a settling PRP can receive credit for cooperation with EPA but will still pay an appropriate share of the abatement costs.

Proposals for a Consistent Rule

Sections 107 and 113 and associated issues are arguably the most litigated issues in CERCLA litigation at this time. In light of the intense activity surrounding §§ 107 and 113, three academic commentators have submitted proposals for a uniform rule governing secondary CERCLA actions.

First, Professor Steven Ferrey has advocated a "muscular" application of joint and several liability. Where a private party settles with EPA and thereby obtains global contribution protection under CERCLA § 113(f)(2), the settling PRP may use its settlement as both a shield and a sword and proceed against nonsettling PRPs under § 107(a). In a subsequent § 107(a) action, it is theoretically conceivable that the settling party may shift 100 percent of the liability to nonsettling PRPs under "entire" liability. The possibility of this total shifting of liability to recalcitrant PRPs depends upon the court employing a strict interpretation of joint and several liability and treating contribution protection as absolute.161

Professor Ferrey believes that a total shift of all cleanup costs to the nonsettling PRPs would encourage earlier settlements and faster remedial action. Under this scenario, the conventional approach in which PRPs "hide in the woods" and decline any voluntary cleanup activity unless compelled would have to change. If the settling PRPs can shift all response costs, it is considerable incentive for PRPs to voluntarily step forward, negotiate an early settlement with EPA, and then file a § 107(a) suit.162 Professor Ferrey's proposal may promote swifter cleanups. However, fundamental fairness arguably will only be achieved if the nonsettling PRPs were responsible for a substantial portion of the site's conditions. The proposed rule could unfairly apportion cleanup costs on the low-level or minor PRPs, especially [29 ELR 10214] small volume generators. In other words, Professor Ferrey's proposal could result in "mom and pop" operations having to pick up the entire cleanup cost. Since many low-level PRPs are judgment-proof, Professor Ferrey's "trickle down" proposal may be viewed as either impractical or unfair and will result in a multiplicity of suits.

Second, Professor William D. Araiza proposed a two-part test with respect to the relationship between §§ 107 and 113. Under the first part of Professor Araiza's proposed rule, any PRP should have the choice of suing for § 107 cost recovery or § 113 contribution. If the PRP sues for cost recovery, the court must make an initial determination of the plaintiff's liability under CERCLA. If the third-party plaintiff is found not liable underCERCLA, its cost recovery suit could then continue. However, if the court determines the PRP to be liable under CERCLA, its action would be converted into a § 113 contribution suit. On the other hand, a PRP that decided to initially sue under § 113 would not be required to litigate the issue of its liability. Thus, under Professor Araiza's proposal, private-party cost recovery suits under § 107(a) may be brought only by non-PRPs, such as a neighbor of a hazardous waste site that incurs cleanup costs when it remediates contaminated groundwater, and by PRPs that are able to establish their nonliability under CERCLA, by establishing one of the affirmative defenses set forth in § 107(b).163

The second part of Professor Araiza's proposed rule offers two guidelines for cost distribution in a § 113 action. First, a court should have the discretion to impose on defendants "entire" liability for any portion of the total remedial cost found to be unattributable to the plaintiff.164 This portion of the rule was adopted in Chesapeake & Potomac Telephone Co. v. Peck Iron & Metal Co.165 Second, judges should consider as an equitable factor any actual cleanup action taken by the plaintiff and the degree to which the court considers that remedial action to be voluntary. Such "credit for cleanup," Professor Araiza argues, should become a regular component of judicial equitable division calculus.166

Third, Professor Jerome M. Organ believes that the congressional goals of enacting CERCLA would be better served if all PRPs were aware that, at a minimum, nonsettling PRPs would share in the liability associated with phantom shares. Congress should thus amend CERCLA so that recalcitrant PRPs would share in the risk, or possibly bear the entire risk, attributable to phantom shares. In other words, § 113(f)(1) should be amended to give courts more explicit direction regarding the application of the equitable factors in cost recovery or recoupment actions, clarifying that courts should distribute phantom share liability over all solvent PRPs, so that cooperating PRPs are not left "holding the bag."167

Professor Organ submits that the proposed legislation promotes the congressional goal of facilitating expeditious cleanup of toxic waste sites by PRPs in two ways. First, any congressional direction to courts to allocate orphan shares among all solvent PRPs according to their equitable shares rebalances the playing field such that PRPs considering settlement with EPA are assured that they will not have to absorb the phantom shares. Second, the proposed amendment directs courts to use the determination of equitable share liability as both a carrot and a stick — to reward cooperative PRPs by reducing their equitable share liability and by penalizing noncooperative PRPs by increasing their liability. Because cooperative PRPs generally do more to promote CERCLA's goal by entering into settlements than do non-cooperative PRPs, the statutory framework for determining equitable share liability under the proposed amendment rewards cooperative PRPs and penalizes nonsettling PRPs.168 It would seem that federal courts already have sufficient authority under § 113's "equitable factors" provision to follow Professor Organ's suggestion without a statutory amendment.

It would seem that Professors Araiza's and Organ's proposals are consistent with emerging case law. A rule whereby a PRP liable under CERCLA is limited to a § 113(f) action has much to offer. Predictability and certainty values suggest that a clear rule will be beneficial in CERCLA third-party litigation, where important negotiation and litigation decisions turn on an estimation of liability. In Town of New Windsor v. Tesa Tuck, Inc.,169 District Judge Parker warned that allowing a PRP to file under § 107(a) results in increased ancillary and third-party litigation that typically bogs down CERCLA actions. The truth of the matter is that such litigation is similar to "herding cats." Applying a § 113(f) rule reduces piecemeal litigation and transaction costs, enabling courts to perform liability allocation more efficiently.170 Moreover, in rejecting such "serve and volley" litigation, District Judge Elfvin in Atlantic Richfield Co. v. Current Controls, Inc.,171 stated:

This court has an interest in focusing the parties' and its own attention on the relevant issues — who's responsible, who pays and how much? By eliminating ARCO's claim for Section 9607(a) costs, this case becomes further focused and streamlined. Such should lead to a more expeditious and efficient disposition of this case, in furtherance of another of CERCLA's purposes — viz., the prompt and effective response to problems resulting from hazardous waste disposal. While CERCLA does impose strict liability, it does so only upon responsible persons. The imposition of damages disproportionate to one's responsibility has little to do with remedial purposes of CERCLA.172

The § 113-only rule will thus streamline the litigation by potentially eliminating the paper war of counterclaims and cross-claims.

Approaches to Managing Multiparty CERCLA Contribution Litigation

Managing CERCLA third-party litigation toward an expeditious, fair, and cost-effective resolution is the major problem [29 ELR 10215] facing PRPs today. Simply put, corporate counsel are not eager to engage in lengthy CERCLA recoupment litigation. For example, the Atlas Minerals173 contribution suit took 50 days to try, wherein the court heard testimony from 80 witnesses and admitted 700 exhibits into evidence.174 Two recent suits, discussed below, show approaches to resolving third-party claims — especially where the party defendants are small volume generators — without resorting to trial.

The District of Maryland's alternative dispute resolution procedures in Bridgestone/Firestone, Inc. v. Board of County Commissioners of Cecil County, Maryland175 suggests a model for a speedy resolution of CERCLA recoupment litigation. In 1994, Bridgestone/Firestone, Inc. (Bridgestone) brought suit against Cecil County, the owner and operator of the Woodlawn Landfill, and several alleged direct generators with respect to the then estimated $ 50 million cleanup of the landfill. In May of 1996, Bridgestone amended its pleading to add 60 new small quantity generators. In its amended pleading, Bridgestone alleged that these new defendants had shipped toxic waste to the Galaxy/Spectron Site wherein some of the waste had later found its way to the Woodlawn Landfill.

Federal District Judge Andre M. Davis entered a case management order in November 1996, requiring informal discovery and the disclosure of waste volumes and transportation information, as well as scheduling settlement conferences to be conducted by U.S. Magistrate Susan K. Gauvey. Magistrate Gauvey ordered each party to submit short position papers on critical issues and scheduled settlement conferences. Subsequently, a global resolution was quickly reached in February 1997.

Another approach seeks to eliminate minor PRPs from the contribution litigation. In Acushnet Co. v. Coaters, Inc.,176 District Judge Robert E. Keeton recognized that CERCLA third-party actions involved complex legal rules and their application to complicated factual patterns. Moreover, the court noted a fundamental principle of the legal system: courts should leave harms and losses where they find them unless some good reason appears for shifting a loss from one party to another party. Given this rule, a plaintiff in a CERCLA third-party action must offer evidence sufficient to support a finding that toxic wastes traceable to a defendant were in quantity, nature, and durability sufficient to invoke an exception to the above principle. Thus, a plaintiff has the burden of showing that a defendant was a source of hazardous waste disposal at the site satisfying a threshold of significance. If the admissible evidence offered by the plaintiff fails to satisfy this threshold-of-significance burden, a defendant's motion for judgment as a matter of law under Rules 50, 52, or 56 of the Federal Rules of Civil Procedure will be granted. On the other hand, if the plaintiff does satisfy this initial burden, the burden shifts to the defendant.177 In defining the defendant's burden, District Judge Keeton stated:

A defendant may offer evidence to show that it is entitled to judgment as a matter of law because, even though plaintiff has satisfied the threshold-of-significance burden, hazardous substances from defendant as a source were so limited in quantity and nature in comparison with the hazardous substances from other sources that, as a matter of law, that defendant's contributions were too small proportionally to warrant allocation of any share of responsibility under an 'equitable factors' test.178

If a defendant satisfies this burden, the burden then shifts back to the plaintiff. Judge Keeton's evidentiary "ping pong" game is done at the pretrial phase. While Judge Keeton did not discuss the quantity of evidence necessary to sustain the respective burdens, his approach could, at the pretrial stage, eliminate minor PRPs from CERCLA third-party litigation.179

Conclusion

Given the multiparty nature of Superfund secondary litigation, recoupment rights and liabilities under CERCLA are complicated. Clearly, the cost and duration of CERCLA suits, as well as the dread of being left "holding the bag" if entire liability is imposed, are the driving forces in CERCLA third-party actions, and, consequently, inspire settlements in most cases. These recent decisions will substantially add to the emerging agreement in CERCLA contribution jurisprudence and assist in streamlining CERCLA recoupment litigation. At the early stages of litigation, defense counsel should seek a judicial resolution of such core issues as the application of CERCLA §§ 107 and 113, joint or several liability, and/or allocation of liability so that an evaluation of case exposure can be made.

1. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA §§ 101-405.

2. No. 92-2726 (D.N.J. Jan. 17, 1997) (unpublished consent decree).

3. 106 F.R.D. 210 (W.D. Mo. 1985).

4. Two commentators have stated:

Even more fundamentally, congressional leaders will have to be willing to ignore the siren cause of the extreme wings of their respective constituencies and legislate toward a moderate, reasonable center. The filibuster will still be there, but its use, or the threat of its use, should be something that senators, who value senatorial courtesy highly, pressure one another to use only for grave issues. Until that happens, either side can effectively stall any initiative and the prospects for significant environmental legislation remain dirn.

Ann R. Klec & Ernie Rosenburg. The Moribund State of CERCLA Reauthorization, NAT. RESOURCES & ENV'T, Winter 1999, at 451.

5. Jennifer Silverman, GAO's New Evidence of Cleanup Delays Fails to Discourage EPA Official at Hearing, 28 Env't Rep. (BNA) 2113 (Feb. 13, 1998).

6. States Taking on More Responsibilities for Waste Cleanups, EPA Official Says, 29 Env't Rep. (BNA) 1421 (Nov. 20, 1998) (discussing an Environmental Law Institute Superfund study that documented states' increased management of cleanup activities).

7. 156 F.3d 416, 29 ELR 20229 (2d Cir. 1998).

8. 111 F.3d 1116, 27 ELR 21159 (3d Cir. 1997).

9. 142 F.3d 769, 28 ELR 21261 (4th Cir. 1998).

10. 153 F.3d 344, 29 ELR 20065 (6th Cir. 1998).

11. 118 F.3d 1298, 27 ELR 21211 (9th Cir. 1997).

12. 124 F.3d 1187, 27 ELR 21465 (10th Cir. 1997).

13. 40 C.F.R. § 300, app. B (1996).

14. Id.

15. Carolyn E. Cornell, The Toxic Mortgage: CERCLA Seeps Into the Commercial Lending Industry, 63 ST. JOHN'S L. REV. 839 (1989).

16. Patricia L. Quentel, The Liability of Financial Institutions for Hazardous Waste Cleanup Costs Under CERCLA, 1988 WIS. L. REV. 139, 145.

17. Developments in the Law — Toxic Waste Litigation, 99 HARV. L. REV. 1458, 1485 (1986).

18. Scott Wilsdon, When a Security Becomes a Liability: Claims Against Lenders in Hazardous Waste Cleanup, 38 HASTINGS L.J. 1261, 1292 (1987).

19. WARREN A. SEAVEY, COGITATIONS ON TORTS 5 (1959).

20. H.C. 774, 159 Eng. Rep. 737 (1865), rev'd, 1 L.R.-Ex. 265 (1866), aff'd, L.R. 3 H.L. 330 (1868). See W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 78 (5th ed. 1984). The Rylands principle was adopted by the Restatement of Torts. Completed in 1939 by the American Law Institute, the Restatement analyzed tort law and sought to classify it into a set of black-letter principles. The First and Second Restatements expanded the Ryland's principle to focus not on the incompatibility of the land use, the original English view, but on whether the activity is abnormally dangerous. The policy position is to impose on those engaged in activities that introduced abnormal risk into the community the cost of resulting accidents. Section 519 of the Restatement (Second) of Torts provides that although a person may exercise the utmost care to prevent harm, one who carries on an abnormally dangerous activity is subject to liability for the harm to the person, land, or chattels of another resulting from the activity.

21. Uniroyal Chem. Co. v. Deltech Corp., 160 F.3d 238, 242-43, 29 ELR 20285, 20286 (5th Cir. 1998).

22. Allied Corp. v. Acme Solvents Reclaiming, Inc., 691 F. Supp. 1100, 1105, 19 ELR 21254, 21255 (N.D. Ill. 1988) (footnote omitted).

23. 42 U.S.C. § 9606, ELR STAT. CERCLA § 106.

24. Id. § 9607(a), ELR STAT. CERCLA § 107(a).

Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section —

(1) the owner and operator of a facility,

(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,

(3) any person who by contract, agreement, or otherwise arranged for the disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances, and

(4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable for —

(A) all costs of removal or remedial action incurred by the United States Government or State or 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;

(C) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release; and

(D) the costs of any health assessment or health effects study carried out under section 9604(i) of this title.

Id.

25. Id.

26. Id.

27. 630 F. Supp. 1361, 16 ELR 20763 (D.N.H. 1985).

28. Id. at 1395-96 (full text of opinion is available from the ELR Document Service, ELR Order No. C-1353).

29. New Jersey Turnpike Auth. v. PPG Indus., Inc., 16 F. Supp. 2d 460, 466-67 (D.N.J. 1998).

30. United States v. Conservation Chem. Co., 619 F. Supp. 162, 220, 16 ELR 20193, 20218 (W.D. Mo. 1985).

31. KEETON ET AL., supra note 20, §§ 46-52.

32. 248 S.W.2d 731 (1952).

33. Id. at 732-34.

34. Id. at 734.

35. Developments in the Law — Toxic Waste Litigation, supra note 17, at 1524-25, 1530.

36. ALLAN J. TOPOL & REBECCA SNOW, SUPERFUND LAW AND PROCEDURE § 44 (1992).

37. 572 F. Supp. 802, 13 ELR 20986 (S.D. Ohio 1983).

38. Id. at 807-08, 13 ELR at 20987.

39. Id. at 810, 13 ELR at 20988.

40. Id. (citations omitted).

41. 578 F. Supp. 1249, 14 ELR 20105 (S.D. Ill. 1984).

42. Id. at 1256, 14 ELR at 20107-08.

43. Id. at 1252-56, 14 ELR at 20106-07.

44. Id. at 1256-57, 14 ELR at 20108.

45. Developments in the Law — Toxic Waste Litigation, supra note 17, at 1524-39.

46. Id. at 1528.

47. 990 F.2d 711, 23 ELR 20706 (2d Cir. 1993).

48. Id. at 722, 23 ELR at 20711.

49. 3 F.3d 889, 23 ELR 21474 (5th Cir. 1993).

50. Id. at 902-04, 23 ELR at 21479-80.

51. 153 F.3d 307, 29 ELR 20045 (6th Cir. 1998).

52. Id. at 318, 29 ELR at 20049.

53. Id.

54. Id. at 317-20, 29 ELR at 20049-50.

55. Id. at 320, 29 ELR at 20050-51.

56. Id. at 328-31, 29 ELR at 20054-55.

57. Roger J. Marzulla, Superfund 1991, How Insurance Firms Can Help Clean Up the Nation's Hazardous Waste, 4 Toxics L. Rep. (BNA) 685 (Nov. 8, 1989).

58. KEETON ET AL., supra note 20, §§ 46-52. Under common law, claims for contribution arise when a joint tortfeasor, having paid more than its equitable share to resolve a claim, sues the other joint tortfeasor to recoup the amount it paid in excess of its fair share of the liability. Id. The concept of contribution dates back to 1799 in the English case of Merrywither v. Nixon, 101 Eng. Rep. 1337 (1799). The common-law rule against contribution was based on the concept that a person should not be allowed to profit from his wrong. From that case grew the English rule that contribution was available to a joint tortfeasor, but only so long as the joint tortfeasor had satisfied a judgment and had not committed an intentional tort. Confronted with growing dissatisfaction and the inherent unfairness of a rule of law that permitted an injured party to discriminate against two tortfeasors and which precluded a sharing of financial responsibility, a majority of states altered the common-law rule by statute or judicial decision. KEETON ET AL., supra note 20, §§ 46-52. Professors Prosser and Keeton noted:

There is obvious lack of sense and justice in a rule which permits the entire burden of a loss, for which two defendants were equally, unintentionally responsible, to be shouldered onto one alone, according to the accident of a successful levy of execution, the existence of liability insurance, the plaintiff's whim or spite, or his collusion with the other wrongdoer, while the later goes scot free.

Id. § 50.

Unfortunately, there is no uniform American rule that federal courts may draw upon to fashion the parameters of CERCLA contribution.

59. Id. § 51.

60. 186 F.2d 134 (2d Cir. 1951).

61. Id. at 138.

62. Pub. L. 99-499, 100 Stat. 1613.

63. 42 U.S.C. § 9613, ELR STAT. CERCLA § 113.

64. Id.

65. 642 F. Supp. 1258, 16 ELR 21007 (D. Del. 1986).

66. Developments in the Law — Toxic Waste Litigation, supra note 17, at 1524-39.

67. TOPOL & SNOW, supra note 36, § 10.1.

68. SUSAN M. COOKE & CHRISTOPHER P. DAVIS, THE LAW OF HAZARDOUS WASTE § 16.01 (1998).

69. 642 F. Supp. at 1258, 16 ELR at 21007.

70. 451 U.S. 630 (1980).

71. 642 F. Supp. at 1262, 16 ELR at 21008.

72. Id. at 1268-69, 16 ELR at 21010-11.

73. 42 U.S.C. § 9613(f)(1), ELR STAT. CERCLA § 113(f)(1).

74. New Castle County v. Halliburton, 111 F.3d 1116, 1119-20, 27 ELR 21159, 21160 (3d Cir. 1997).

75. Id.

76. Id.

77. Bedford Affiliates v. Sills, 156 F.3d 416, 419-23, 29 ELR 20229, 20229-31 (2d Cir. 1998).

78. Pneumo Abex Corp. v. High Point, Thomasville & Denton R.R., 142 F.3d 769, 772-73, 28 ELR 21261, 21261-62 (4th Cir. 1998).

79. Centerior Service Co. v. Acme Scrap Iron & Metal Corp., 153 F.3d 344, 344-47, 29 ELR 20065, 20065-66 (6th Cir. 1998).

80. Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1300-01, 27 ELR 21211, 21211-12 (9th Cir. 1997).

81. Sun Co. v. Browning-Ferris, Inc., 124 F.3d 1187, 1188-89, 27 ELR 21465, 21465-66 (10th Cir. 1997).

82. Pinal Creek, 118 F.3d at 1303-04, 27 ELR at 21213-14.

83. New Castle County v. Halliburton, 111 F.3d 1116, 1120-24, 27 ELR 21159, 21160-62 (3d Cir. 1997).

84. Id. at 1121, 27 ELR at 21161.

85. Id. at 1120-24, 27 ELR at 21160-62.

86. Id. at 1120, 27 ELR at 21161.

87. Id. at 1120-24, 27 ELR at 21160-62.

88. Id.

89. Id. at 1121, 27 ELR at 21161.

90. Id. at 1120-24, 27 ELR at 21160-62.

91. Id.

92. Id.

93. The affirmative defenses to CERCLA liability are: an act of God, an act of war, or an act of a nonrelated third party. 42 U.S.C. § 9607(b), ELR STAT. CERCLA § 107(b).

94. Id.

95. 115 F.3d 1111, 27 ELR 21075 (3d Cir. 1997).

96. Id. at 1120, 27 ELR at 21078.

97. Bedford Affiliates v. Sills, 156 F.3d 416, 423-25, 29 ELR 20229, 20231-32 (2d Cir. 1998).

98. Pneumo Abex Corp. v. High Point, Thomasville & Denton R.R., 142 F.3d 769, 776, 28 ELR 21261, 21263 (4th Cir. 1998).

99. Centerior Service Co. v. Acme Scrap Iron & Metal Corp., 153 F.3d 344, 347-56, 29 ELR 20065, 20066-70 (6th Cir. 1998).

100. Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1301-06, 27 ELR 21211, 21212, 21215 (9th Cir. 1997).

101. Sun Co. v. Browning-Ferris, Inc., 124 F.3d 1187, 1194, 27 ELR 21465, 21468 (10th Cir. 1997).

102. 849 F. Supp. 1264, 24 ELR 21437 (N.D. Ind. 1994).

103. TOPOL & SNOW, supra note 36, §§ 10.1 and 10.2.

104. Pinal Creek Group, 118 F.3d at 1301-02, 27 ELR at 21212.

105. Id. at 1302, 27 ELR at 21212-13.

106. Id.

107. Id. at 1303, 27 ELR at 21213.

108. Id.

109. Id.

110. Id.

111. RESTATEMENT (SECOND) OF TORTS § 886A(2) (1997).

112. 12 U.L.A. 185-290 (1996).

113. Id. at 123-53.

114. 94 F.3d 1489, 1496, 27 ELR 20028, 20030-31 (11th Cir. 1996).

115. 41 Env't Rep. Cas. (BNA) 1417, 1513-15 (E.D. Pa. 1995).

116. Id.

117. Ridgway M. Hall Jr. et al., Superfund Response Cost Allocation: The Law, The Science, and The Practice, 49 BUS. LAW. 1489, 1502-04 (1994).

118. Michael V. Hernandez, Cost Recovery or Contribution?: Resolving the Controversy Over CERCLA Claims Brought by Potentially Responsible Parties, 21 HARV. ENVTL. L. REV. 83, 116 (1997).

119. RESTATEMENT (SECOND) OF TORTS § 886A(2) (1997).

120. Id.

121. U.S. EPA COMMUNICATIONS, EDUCATION, AND PUBLIC AFFAIRS OFFICE, TWENTY NEW REFORMS CAP TWO-YEAR EFFORT TO REFORM SUPERFUND, EPA ADMINISTRATOR CALLS FOR LEGISLATIVE CHANGE (Environmental News Oct. 2, 1995). See also Cost Review Board, More State Responsibility Among Administrative Reforms Announced by EPA, 26 Env't Rep. (BNA) 1012 (Oct. 5, 1995).

122. New Castle County v. Halliburton, 111 F.3d 1116, 1124-26, 27 ELR 21159, 21162-64 (3d Cir. 1997).

123. Id.

124. Id.

125. Id.

126. Id.

127. Sun Co. v. Browning-Ferris, Inc., 124 F.3d 1187, 1188-89, 27 ELR 21465, 21465-66 (10th Cir. 1997).

128. 50 F.3d 1530, 25 ELR 20309 (10th Cir. 1995).

129. Sun Co., 124 F.3d at 1190-94, 27 ELR at 21466-68.

130. Id. at 1194, 27 ELR at 21468.

131. Id. at 1193-94, 27 ELR at 21467-68.

132. 42 U.S.C. § 9613(g)(2), ELR STAT. CERCLA § 113(g)(2).

133. Sun Co., 124 F.3d at 1193-94, 27 ELR at 21467-68.

134. Id.

135. RESTATEMENT (SECOND) OF TORTS § 886B(1) (1997).

136. RESTATEMENT OF RESTITUTION § 76 (1937).

137. National R.R. Passenger Corp. v. New York City Hous. Auth., 819 F. Supp. 1271, 1279, 26 ELR 20379, 20381-82 (S.D.N.Y. 1993); T.E. Indus. v. Safety Light Corp., 123 N.J. 371, 587 A.2d 1249, 1263 (1991).

138. 730 F. Supp. 626, 20 ELR 21193 (D.N.J. 1990).

139. Id. at 636-40, 20 ELR at 21198-200.

140. 739 F. Supp. 125, 20 ELR 21346 (W.D.N.Y. 1990).

141. Id. at 127-35, 20 ELR at 21346-51.

142. 156 F.3d 416, 425-27, 29 ELR 20229, 20232-33 (2d Cir. 1998).

143. Id.

144. Id.

145. Id. at 427, 29 ELR at 20232-33.

146. Id. at 425-27, 29 ELR at 20232-33.

147. 151 F.3d 610, 28 ELR 21568 (7th Cir. 1998), petition for cert. filed, No. 98-784 (U.S. Nov. 13, 1998).

148. Id. at 618, 28 ELR at 21571.

149. Supreme Court Asked for CERCLA Ruling on Preemption of State Contribution Claims, 29 Env't Rep. (BNA) 1466 (Nov. 27, 1998).

150. PMC, Inc. v. Sherwin-Williams Co. 151 F.3d 610, 28 ELR 21568 (7th Cir. 1998), cert. denied, 119 S. Ct. 871 (1999).

151. KEETON ET AL., supra note 20, § 50.

152. Id.

153. 42 U.S.C. § 9613(f), ELR STAT. CERCLA § 113(f).

154. 920 F. Supp. 1121, 26 ELR 21212 (D. Or. 1996).

155. Id. at 1132, 26 ELR at 21218.

156. Steven B. Rosso, Contribution Under CERCLA: Judicial Treatment After SARA, 14 COLUM. J. ENVTL. L. 267 (1989); see also One Wheeler Road Assocs. v. Foxboro Co., No. 90-12873-RGS, 1995 WL 791937 (D. Mass. Dec. 13, 1995); COOKE & DAVIS, supra note 68, § 16.01(4)(c).

157. 153 F.3d 344, 353-55, 29 ELR 20065, 20069 (6th Cir. 1998).

158. Id.

159. Id. at 354, 29 ELR at 20069.

160. Id. at 353-55, 29 ELR at 20069.

161. Steven Ferrey, Allocation and Uncertainty in the Age of Superfund: A Critique of the Redistribution of CERCLA Liability, 3 N.Y.U. ENVTL. L.J. 36 (1994).

162. Id.

163. William D. Araiza, Text, Purpose, and Facts: The Relationship Between CERCLA Sections 107 and 113, 72 NOTRE DAME L. REV. 193, 200, 247-50 (1996).

164. Id.

165. 814 F. Supp. 1266, 23 ELR 20648 (E.D. Va. 1992).

166. Araiza, supra note 163.

167. Jerome M. Organ, Superfund and the Settlement Decision: Reflections on the Relationship Between Equity and Efficiency, 62 GEO. WASH. L. REV. 1043 (1994).

168. Id. at 1090-99.

169. 919 F. Supp. 662, 26 ELR 21230 (S.D.N.Y. 1996).

170. Id. at 679-81, 26 ELR at 21237-39.

171. No. 93-CV-0950-E(H), 1996 U.S. Dist. LEXIS 13828, at *20 (W.D.N.Y. Sept. 5, 1996).

172. Id. at *20.

173. 41 Env't Rep. Cas. (BNA) 1417, 1418-19, 1513-17 (E.D.Pa. 1995).

174. Id.

175. No. 94-2259-AMD (D. Md. filed in 1994) (unpublished).

176. 948 F. Supp. 128, 27 ELR 20652 (D. Mass. 1996).

177. Id. at 132-36, 141-42, 27 ELR at 20654-56, 20658-59.

178. Id. at 141, 27 ELR at 20658-59.

179. Id. at 141-42, 27 ELR at 20658-59.


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