Posted on May 19, 2009 by John Barkett
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 Avialland 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…
Wait a second. The statute says nothing about “joint and several liability.” It does not set a liability standard at all. In fact in 2007, in note 7 of Atlantic Research, the Court wrote, “We assume without deciding that §107(a) provides for joint and several liability.”
Two years later, the Court appears to have deftly answered this question, albeit indirectly. It called the holding in Chem-Dyne the “seminal opinion on the subject of apportionment in CERCLA actions …written in 1983 by Chief Judge Carl Rubin of the United States District Court for the Southern District of Ohio.” Quoting Judge Rubin, the Court said that joint and several liability is not mandated in every CERCLA cost recovery action and that Congress intended the scope of liability to “’be determined from traditional and evolving principles of common law[.]’”
As the entire environmental world now knows, the Court held that the district court’s findings should not be disturbed: “The District Court’s detailed findings make it abundantly clear that the primary pollution at the Arvin facility was contained in an unlined sump and an unlined pond in the southeastern portion of the facility most distant from the Railroads’ parcel and that the spills of hazardous chemicals that occurred on the Railroad parcel contributed to no more than 10% of the total site contamination, some of which did not require remediation.”
Going forward, the facts will dictate the outcome. The Court blessed the use of basic allocation or apportionment principles that have been applied in numerous CERCLA cases and numerous consent decree approval orders over the past 25 years. Indeed, it was mildly critical of the Ninth Circuit for talking out of both sides of its mouth: “Although the Court of Appeals faulted the District Court for relying on the ‘simplest of considerations: percentages of land area, time of ownership, and types of hazardous products,’ 520 F. 3d, at 943, these were the same factors the court had earlier acknowledged were relevant to the apportionment analysis. See id., at 936, n.18 (‘We of course agree with our sister circuits that, if adequate information is available, divisibility may be established by ‘volumetric, chronological, or other types of evidence,’ including appropriate geographic considerations’ (citations omitted)).”
In cases where there is no orphan share and multiple parties, it will behoove EPA and the parties to work on apportionment issues up front to save litigation costs. Yes, I relate “apportionment” to “allocation” in saying this, but after Burlington Northern, it will be the rare case that will lack the facts to make a reasonable basis for apportionment. Volumetric waste-in information may be controlling. Or varying toxicities of released hazardous substances may be. Or geography or time of ownership or operation. There may be equitable factors as between or among jointly and severally liable parties, e.g., cooperation, that may not relate to apportionment, but not that many cases have utilized this allocation factor, and most judges engage in an allocation exercise that is indistinguishable from an apportionment exercise, as was the case in Burlington Northern. Cf. Restatement of the Law (Third) Torts, §1, cmt. a., §26 cmt. a. (focusing on the role that comparative responsibility now plays in tort law).
Where there is an orphan share, the stakes are much higher after Burlington Northern. Cf. United States v. Newmont USA Limited, 2008 WL 4612566 (E.D. Wash. Oct. 17, 2008) (after a six day trial, submission of dozen depositions or deposition excerpts and 1,600 exhibits, finding the two defendants—one of which was alleged to be an orphan–jointly and severally liable but then finding for the defendants on their counterclaim in contribution against the United States, and then equitably allocating response costs 1/3 to the United States and 1/3 each to the two defendants).
It will still behoove the regulator and the regulated to work things out. If EPA becomes the “bank” (funds the work) at a site, post Burlington Northern, it may find itself absorbing the orphan share or at least not knowing whether it will until after a trial on the merits. (Time will tell but presumably summary judgments will become rare on apportionment issues given the fact-intensive nature of the exercise.) A PRP may be reluctant to become the bank where there is a large orphan share if it does not receive assurance that the orphan share will be addressed fairly, and that may mean more than what EPA is currently offering in its orphan share policy. See, generally, Barkett, Orphan Shares, 23 N.R.E. 46 (2008). Consent order and decree negotiations should become less one-sided in the future. But budget constraints may result in more contention (trials), especially in cases where the orphan share potentially is quite large.
Arrangers of used but useful products can take comfort in Burlington Northern. The entity that recycles solvents or used oil, for example, will embrace the decision especially if reclamation wastes are disposed of at a location other than the recycler’s facility. Sellers of used but useful products will as well. Again, the facts will dictate the outcome.