CERCLA Divisibility: Two Strikes and Bases are Loaded

Joint and several liability means one defendant can be liable for all of the damages in a case, even where other defendants are at fault.  In the CERCLA arena, this means a potentially responsible party can be forced to pay all of the costs to clean up a site, a reality when other defendants are unable to pay, defunct or otherwise unavailable.  While CERCLA does not explicitly impose joint and several liability, the courts have traditionally imposed it.  However, some federal courts have recently entertained an exception to the rule of joint and several liability where a defendant can establish “divisibility of harm.” 

Divisibility of harm was brought to the forefront of potential defenses to CERCLA joint and several liability with the 2009 case of Burlington Northern & Santa Fe Railway Co. v. United States.  In Burlington Northern, the United States Supreme Court upheld a lower court’s determination of divisibility among CERCLA defendants relying on a two part test:  (1) is the harm to the environment capable of division; and (2) is there a reasonable basis to apportion damages among the defendants.  In the six years since Burlington Northern, federal trial courts across the country entertained the concept of divisibility, but mostly rejected it on the grounds that the defendant had not met its burden of proof.  However, United States v. NCR Corp. has resuscitated the divisibility defense and become the case to watch. 

In NCR, EPA sued multiple parties to recover over a billion dollars spent to remediate PCB contamination in the Fox River.  Defendant NCR argued that it should not be held jointly and severally liable because the harm was volumetrically divisible.  At trial, NCR’s expert testified as to the highest percentage of toxicity in the river that could be attributed to NCR’s discharges.  NCR then argued that a reasonable basis for apportioning damages was to apportion to NCR only the costs associated with remediating this percentage contribution.  In 2013, the trial court found the record did not support NCR’s attempt to apportion the environmental harm.  Strike one.

NCR appealed, and last year, the U.S. Court of Appeals for the Seventh Circuit remanded the case to the trial court to look again.  On remand, the trial court reversed its earlier decision and found that NCR had met its burden of proving it was responsible for only 28% of the remediation costs.  But this wasn’t a home run.  EPA and the other defendants filed motions asking the trial court to reconsider.  Late last month, it reversed itself yet again, holding that NCR had not met its burden because the evidence on divisibility was unreliable.  Strike two.  However, as Yogi Berra said, “It ain’t over til it’s over.”  On November 2, 2015, NCR requested that the trial court again reconsider its ruling.  On November 9, the court did so, but reaffirmed its prior ruling.  Strike three.  The case now appears to be headed back to the Seventh Circuit.

Notwithstanding the ultimate outcome in the NCR case, the Seventh Circuit has opened the door a bit wider to divisibility and apportionment of damages in CERCLA cases.  However, based on the current caselaw, the burden is high, and the outcome is unpredictable.  Certainly, where multiple contaminants form one continuous release, divisibility will be difficult to prove.  However, when the costs are in the millions, it’s often worthwhile for a CERCLA defendant to argue that there is a reasonable basis to divide the harm and apportion the costs.

Burlington Northern & Santa Fe Railway Co. v. U.S., 556 U.S. 599 (2009);
U.S. v. NCR Corp., No. 10-C-910 (E.D. Wis. May 15, 2015)