Has the BNSF Case Changed the Superfund Practice?
It has been nearly nine months since the U.S. Supreme Court decided Burlington Northern and Santa Fe Railway Company v. United States (BNSF),[1] a case some called a landmark decision that would change the Superfund practice.[2] In some respects that has turned out to be the case, in others it has not. There have been several reported cases citing BNSF, and all of them confirm that the decision requires both the EPA and potentially responsible parties (“PRPs”) to engage in a more fact-intensive inquiry into “arranger” liability. Less clear, however, is how the apportionment of liability among liable parties in private contribution cases will be affected, given the relatively small number of reported decisions.
Readers will recall that the BNSF decision had two elements: (1) it addressed the scope of arranger liability under CERCLA, and (2) it affirmed the view of several circuit courts that PRPs can avoid joint and several liability if a “reasonable basis” to apportion liability exists. This article reviews how lower court decisions issued subsequent to BNSF have applied those two components.
Continue Reading...Practical Impacts of Burlington Northern on Multi-Party Superfund Sites
To many Superfund practitioners, United States v. Burlington Northern & Sante Fe Railway Company, __ U.S. __, 129, S. Ct. 1870 (2009) represents the latest in a series of surprises from the Supreme Court. The decision follows Cooper Industries, Inc. v. Aviall Services, Inc, 543 U.S. 157 (2004), from which we learned that the statutory words “during or following” really mean just what they say and contribution claims under the Comprehensive Response Compensation and Liability Act (also referred to as CERCLA or the Superfund statute) are only available in those limited circumstances. A few years later, in United States v. Atlantic Research Corp., 551 U.S. 128 (2007), we learned that “covered persons” (also referred to as potentially responsible parties or PRPs) under the statute may, in certain procedural circumstances, have cost recovery claims in the event they do not meet the criteria for contribution claims. In Burlington Northern, we learned that “arranger” liability may not be as broad as we had thought it was, and that joint and several liability may not be the automatic we thought it was. It is probably fair to say that the outcome in Burlington Northern, like the outcomes in Aviall and Atlantic Research, was not intuitive to Superfund practitioners.
A Superfund practitioner might have expected the Supreme Court decision in Burlington Northern to look more like the Ninth Circuit opinion it reversed (found at 502 F.3d 781), endorsing a broad reading of “arranger” liability under the statute and applying joint and several liability to all the defendants, the latter being the norm for more than 25 years since the seminal decision in United States v. ChemDyne, 572 F. Supp. 802 (S.D. Ohio 1983).
Continue Reading...Ninth Circuit Rejects CERCLA UAO Due Process Challenge
The 9th Circuit affirmed the dismissal, for lack of jurisdiction, over a “pattern and practice” claim by a company that complied with an Environmental Protection Agency (EPA) unilateral administrative order (UAO) to conduct a remedial investigation. City of Rialto v. W. Coast Loading Corp., 581 F.3d 865 (9th Cir. 2009). While acknowledging that CERCLA's judicial review provisions contain "some pitfalls and difficult decisions for a PRP that faces a UAO," the court stated that the pattern and practice claim was not an “automatic shortcut” to federal court jurisdiction.
The case arose as a result of a unilateral administrative order (UAO) issued by EPA in July 2003 directing Goodrich to conduct a remedial investigation at a 160-acre site in Rialto, California. Goodrich elected to comply with the order. However, in late 2006 Goodrich filed a complaint against EPA alleging, inter alia, that the CERCLA review provisions on their face constitute a coercive regime violating due process. The district court held that it lacked jurisdiction over Goodrich’s “as-applied” challenge to the UAO because such pre-enforcement judicial review is foreclosed by §9613(h) of CERCLA. Goodrich then filed an amended “pattern and practice” claim alleging that EPA issues orders where no emergency exists, obstructs judicial review by delaying its discretionary certificates of completion, and controls and manipulates the record of decision. The district court granted EPA’s motion to dismiss, and Goodrich appealed to the Ninth Circuit.
The Ninth Circuit affirmed. The court of appeals concluded that Goodrich’s allegation that EPA routinely issues orders beyond its statutory authority was substantive because it necessarily depended on the facts of the particular UAO, and that meaningful judicial review of Goodrich’s substantive challenge is available under §9613(h). A claim that a UAO is unlawful can be addressed, the court stated, either by not complying with the UAO and defending an enforcement action, or by complying with a UAO and seeking reimbursement from the government. With respect to Goodrich’s claim that EPA routinely delays certifications of completion in order to thwart judicial review, the Ninth Circuit held that Goodrich’s claim is not ripe because the work required by the UAO has not been completed. Once Goodrich completes the work, it may bring a claim for reimbursement under §9606(b)(2). Finally, with respect to Goodrich’s allegation that EPA controls and manipulates the administrative record supporting the selected cleanup plan, the Ninth Circuit concluded that Goodrich allegations were not a “pattern and practice” claim , but rather were a challenge to the judicial review provisions of the statute itself, which were rejected by the District Court and not appealed by Goodrich.
The Ninth Circuit noted that in General Electric v. Whitman, 360 F.3d 188, 191 (D.C. Cir. 2004), the D.C. Circuit remanded GE’s suit to the district court to address the merits of GE’s facial due process claim, and on remand the district court ruled on merits and rejected GE’s pattern and practice claim. General Electric v. Jackson, 595 F.Supp.2d 8 (D.D.C. 2009). This ruling on the merits contrasts with the Ninth Circuit’s ruling that the district court lacked jurisdiction. The Ninth Circuit, however, commented that its decision was “consistent” with the District Court’s decision in GE, noting that the District Court there held that it had jurisdiction not because of any independent analysis but because of its interpretation of the D.C. Circuit’s decision remanding the case for further proceedings.
Companies receiving a UAO and facing the statutory pitfalls and difficult decisions will likely not find much solace in the Ninth Circuit’s opinion. The district court’s opinion in the GE case is being appealed.
Judge Dismisses Contribution Claims re: Fox River PCB Contamination
“Thus, the Plaintiffs’ present claim that they never knew about the dangers of PCBs until after 1971 rings roughly as hollow as Captain Renault’s feigned outrage upon being ‘shocked, shocked’ to discover gambling at Rick’s Casablanca café.”
Appleton Papers Inc. and NCR Corp. v. George A. Whiting Paper Co., et al. (slip op. at 25, US District Court, Eastern District of WI, Case No. 08-C-16)
With those words, on December 16, 2009 Judge William C. Griesbach, United States District Judge for the Eastern District of Wisconsin dismissed CERCLA §107 contribution claims brought by Plaintiffs Appleton Papers, Inc. (API) and NCR Corp. against all Defendants. NCR and API sought contribution from 23 other paper mills, cities, utilities, and sewerage districts, and industrial dischargers to allocate the multi-million dollar costs of remediating the polychlorinated byphenyl (PCB) contamination in the Lower Fox River in northeastern Wisconsin. Defendants’ Summary Judgment motions asserted that Plaintiffs were not entitled to contribution because the Defendants are “essentially innocent parties who had no knowledge that recycling NCR paper or processing wastewater could lead to environmental damage.” Slip op. at 4. The Judge agreed.
Beginning in 1954, NCR developed a carbonless copy paper that relied on an emulsion based on Aroclor 1242, a PCB solvent manufactured by Monsanto Corporation. NCR created the emulsion and developed and sold the carbonless paper product. API’s predecessor manufactured the paper and coated it with the NCR emulsion. API’s wastewater was discharged to the Fox River, taking the PCBs with it. API also sold its waste paper to other mills to be recycled into paper products, resulting in PCB-containing wastewater discharges from those facilities. The result: significant PCB-contamination in the sediments of the Lower Fox River from the mouth at Green Bay to Lake Winnebago and what has been called the largest contaminated sediment cleanup in the world..
Continue Reading...Tenant Liability Under CERCLA: Is It time To Move Beyond Enforcement Discretion Guidance?
Arguably the most significant moderation of CERCLA’s harsh “owner” liability scheme occurred in 2002 through the enactment of the “Brownfields Amendments.” Included in those amendments was the creation of new liability protection for “Bona Fide Prospective Purchasers” (“BFPP”) who acquire ownership of a facility after January 11, 2002.
A relatively straightforward roadmap for prospective purchasers to achieve BFPP status is set out in the Brownfields Amendments and the subsequently-promulgated All Appropriate Inquiry rule. The extent to which tenants might obtain protection from possible “owner” liability has, however, always been far less certain.
The potential applicability of this liability defense to tenants is currently limited to a short parenthetical in CERCLA §101(40). Specifically, a “tenant of a person” that achieves BFPP status shares the liability protections of the property purchaser. Although this “derivative” BFPP status established by the Brownfields Amendments helped clarify the reach of the liability defense with respect to tenants, a number of questions remained unanswered. For example, what happens if the property owner loses its BFPP status through non-compliance with the statutory requirements? Also, does the language of the amendment as it relates to tenants preclude a tenant from independently achieving BFPP status?
Continue Reading...EPA Issues a New Policy on Superfund Negotiations: Time For Another Rant?
Late last week, Elliott Gilberg, Acting Director of EPA’s Office of Site Remediation Enforcement (OSRE) issued an Interim Policy on Managing the Duration of Remedial Design/Remedial Action Negotiations. Members of the regulated community may not be surprised by the contents of the memo, but they certainly will not be pleased. In brief, the memorandum fundamentally makes two points:
EPA wants to shorten the duration of RD/RA negotiation
EPA is going to use the heavy hammer of unilateral administrative orders, or UAOs, to keep PRPs’ feet to the fire and ensure that negotiations move quickly.
PRPs will likely agree that shortening the duration of negotiations would be a good outcome in the abstract – but achieving it by greater use of UAOs? I don’t think so.
I can only wonder if EPA has even considered the impact of the Burlington Northern decision here. Is this a perverse reaction from EPA? A metaphorical throwing down the gauntlet to PRPs? It certainly feels that way.
I have a different suggestion, if EPA truly wants to shorten negotiations. First, acknowledge Burlington Northern and compromise on the merits in those great majority of cases where there are legitimate divisibility arguments. Second, stop acting like the last bastion of command and control regulation. Set cleanup standards and then, to the maximum extent permitted by existing law, let PRPs clean up to those standards, without micromanaging every detail of the cleanup process.
Statute of Limitations: Don't Miss Your CERCLA Deadline
Overview
There are three avenues of recovery under CERCLA - a contribution action and two types of cost recovery actions. These cost recovery actions are based on either the plaintiff’s “removal” of the hazardous substances or “remediation” efforts at the site. Each of these avenues has an independent statute of limitations provision. Thus, whether the statute of limitations period has been triggered will depend on how an action is characterized, i.e. whether the action constitutes a contribution action, a cost recovery removal action, or a cost recovery remedial action. While there are various state-specific causes of action related to environmental contamination in Connecticut, this article is confined to the statute of limitations for CERCLA cost recovery and contribution claims.
Continue Reading...The Burlington Northern Decision
The Supreme Court’s decision in Burlington Northern was not unexpected from my vantage point especially given the literal interpretation of CERCLA by the Court in Aviall and Atlantic Research and the flow of the oral argument.
I was a little surprised that Justice Stevens was assigned the task of writing the opinion since Justice Thomas wrote Aviall and Atlantic Research. But with 7-2 (Justices Ginsburg and Stevens dissented in Aviall because the Court would not decide the issue of entitlement to sue under Section 107), 9-0 (Atlantic Research decided the Section 107 private of action question left unresolved in Aviall), and 8-1 (Justice Ginsburg was the lone dissenter in Burlington Northern) votes in these three opinions, the Court is not going out of its way to fix CERCLA’s language. Section 113(f)(1) means what it says. Section 107 means what it says. An arranger must have an intent to dispose. And joint and several…
Continue Reading...A Rant Against Superfund
As some of my clients know all too well, I’ve been spending a lot of time on some Superfund matters recently. Although I can’t remember a period when I didn’t have at least one moderately active Superfund case, significant immersion in complex remedial decision-making and negotiations provides an unwelcome reminder just how flawed CERCLA is. Almost 20 years after the acid rain provisions of the Clean Air Act ushered in wide-spread acceptance of the use of market mechanisms to achieve environmental protection goals and the state of Massachusetts successfully privatized its state Superfund program, the federal Superfund program, like some obscure former Russian republic which remains devoted to Stalinism, is one of the last bastions of pure command and control regulation.
Continue Reading...Superfund Liability and Apportionment - Burlington Northern v. United States
Although the Superfund statute is now 28 years old, basic issues of liability and apportionment of liability remain unresolved. This term, the U.S. Supreme Court will decide a case with broad implications for CERCLA liability, Nos. 07-1601 and 07-1607, Burlington Northern v. United States. These consolidated cases, which will be argued early in 2009, raise important issues concerning the circumstances under liability is divisible and the scope of “arranger” liability under CERCLA. If the Ninth Circuit’s approach is upheld, the heightened evidentiary standards may impose a difficult hurdle on parties to prove reasonable apportionment of liability. The Ninth Circuit’s approach to “arranger” liability is of concern to entities that sell chemicals or other products in the ordinary course of business. The allocation of risk and provisions for insurance and best practices to avoid spills in contracts between suppliers and common carriers may need to be reviewed in light of the Supreme Court’s opinion in this case.
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