Federal and State Hazardous Substance Litigation By John C. Cruden cercla overview

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n2 The Resource Conservation & Recovery Act ("RCRA"), 42 U.S.C. § 6901 et seq., as amended by the Hazardous & Solid Waste Amendments of 1984 ("HSWA"), Pub. L. No. 98-616, 98 Stat. 3221 (1984), and other environmental statutes provided only limited authorities to deal with abandoned sites at the time CERCLA was enacted. RCRA § 7003, 42 U.S.C. § 6973, now provides corrective action requirements similar to CERCLA authorities, and covers hazardous or solid wastes presenting an "imminent and substantial endangerment to public health or the environment."

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2. STRUCTURE AND PURPOSE

a. CERCLA is remedial. It creates a response, compensation, and liability scheme. B.F. Goodrich Co. v. Murtha, 958 F.2d 1192 (2d Cir. 1992); Young v. United States, 394 F.3d 858, 862 (10th Cir. Jan. 4, 2005).

b. The CERCLA theory is restitution. Those responsible for causing hazardous substance releases should pay the cost of cleanup.

c. CERCLA is not a prescriptive or regulatory program and does not make any conduct unlawful (with the exception of a criminal provision under Section 103, which governs spill reporting requirements). n3

d. By Executive Order 12580, 3 C.F.R. 193, most authorities for non-federally owned sites are delegated to the Environmental Protection Agency ("EPA"), except natural resource damages.

e. The primary CERCLA regulation is the National Oil Hazardous Substances Pollution Contingency Plan ("NCP"). n4 The NCP was challenged and substantially upheld in Ohio v. United States Envtl. Protection Agency, 997 F.2d 1520 (D.C. Cir. 1993).

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n3 Section 103(b) imposes criminal sanctions for failure to notify the government of releases of hazardous substances in particular quantities. Section 103(c) and (d), known as the community right-to-know provisions, require certain owners and operators to notify the government and maintain records convey treatment, storage or disposal of hazardous wastes. Violations can result in maximum penalty of five years' imprisonment and significant fines. See, e.g., United States v. Freter, 31 F.3d 783 (9th Cir. 1994). See amendments by Title I, Pub. L. 104-108 (October 11, 1996).

n4 40 C.F.R. Part 300 et seq. The NCP sets forth the basic criteria that a) governs responses to releases and threatened releases and b) oversees the development of appropriate remedies, whether privately or publicly financed. The NCP was re-promulgated in 1990. 55 Fed. Reg. 8666 (1990).

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3. FURTHERANCE OF STATUTORY GOALS

a. CERCLA was enacted to provide a framework for cleanup of the nation's worst hazardous waste sites. The primary goal of CERCLA is to protect and preserve public health and the environment from the effects of releases or threatened releases of hazardous substances to the environment. See Voluntary Purchasing Groups, Inc. v. Reilly, 889 F.2d 1380, 1386 (5th Cir. 1989); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (1st Cir. 1986); New York v. Shore Realty Corp., 759 F.2d 1032, 1040, n.7 (2d Cir. 1985); O'Neil v. Picillo, 682 F.Supp. 706, 726 (D.R.I. 1988) aff'd, 883 F.2d 176 (1st Cir. 1989).

b. Congress intended that those responsible for creation of hazardous conditions bear the burden of cleaning up those conditions. See Carter-Jones Lumber Co. v. LTV Steel Co., 237 F.3d 745, 749 (6th Cir. 2001); Monarch Tile, Inc. v. City of Florence, 212 F.3d 1219, 1221 (11th Cir. 2000); Lone Pine Steering Committee v. Envtl. Protection Agency, 777 F.2d 882, 886 (3d Cir. 1985), cert. denied, 476 U.S. 1115 (1986); OHM Remediation Servs. v. Evans Cooperage Co., 116 F.3d 1574 (5th Cir. 1997).

c. Voluntary private party cleanup of sites is strongly encouraged, as the Fund is insufficient to finance cleanups at all sites and, therefore, must be allocated to those sites where there are no viable potentially responsible parties. See 42 U.S.C. § 9622; United States v. Conservation Chem. Co., 628 F. Supp. 391 (W.D. Mo. 1985).

d. CERCLA's legislative history indicates that Congress intended to have the scope of liability determined under common law principles. The Restatement (Second) of Torts applied in United States v. Chem-Dyne, 575 F. Supp. 802, 806 (S.D. Ohio 1983) was endorsed in the legislative history of SARA.

B. CERCLA'S LIABILITY STANDARD

1. STRICT LIABILITY

a. The definition of strict liability under § 101(32) n5 is the same as under Section 311 of the Clean Water Act ("CWA"), 33 U.S.C. Section 1321. Liability for the Government's response costs was termed by the 9th Circuit to be "super-strict." United States v. Burlington Norther & Santa Fe Railway Co., 479 F.3d 1113, 1124 (9th Cir. 2007).

b. Accordingly, plaintiffs need not prove that a potentially responsible party's ("PRP") conduct was negligent. See United States v. R.W. Meyer, Inc., 889 F.2d 1497 (6th Cir. 1989), cert. denied, 494 U.S. 1057 (1990); Kaladish v. Uniroyal Holding, Inc., Civil Action No. 3:00 CV 854, 2005 U.S. Dist. LEXIS 17272, *8-9 (D. Conn. Aug. 9, 2005).

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n5 Statutory section citations to this outline generally are to CERCLA. To convert to the statute codified at 42 U.S.C, change "1" to "96," i.e., CERCLA § 107 is 42 U.S.C. § 9607.

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2. JOINT AND SEVERAL ("J&S") LIABILITY

a. Courts have uniformly ruled that PRP liability under Section 107(a) is joint and several if two or more persons have contributed to a single indivisible harm. Thus, each and every PRP at a site where the harm is indivisible can be held liable for the entire cost of site cleanup. Meyer, 889 F.2d at 1506-08.

b. J&S liability is applicable unless a PRP can prove that the harm is divisible. See Chem. Nuclear Sys., Inc. v. Bush, 292 F.3d 254, 259 (D.C. Cir. 2002); Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1183 (9th Cir. 2000); Meyer, 889 F.2d 1497; United States v. Monsanto Co., 858 F.2d 160 (4th Cir. 1988), cert. denied, 490 U.S. 1106(1989). Cf, United States v. Alcan Aluminum Corp., 964 F.2d 252 (3d Cir. 1992) on remand 892 F.Supp. 648; aff'd 96 F.2d 1434 (3rd Cir. 1996); cert. den., 521 U.S. 11023 (1997); United States v. Alcan Aluminum Corp., 990 F.2d 711 (2d Cir. 1993), on remand 97 F. Supp. 2d 248 (N.D.N.Y. 2000); In re Bell Petroleum Service Inc., 3 F.3d 889 (5th Cir. 1993); United States v. Bell Petroleum Services, Inc., 64 F.3d 202(5th Cir. 1995); Vertac, 364 F. Supp. 2d at 950.

c. Courts cite to Restatement (Second) of Torts (1965) for the "traditional and evolving principles of common law" to determine divisibility. Meyer, 899 F.2d at 1507; Vertac, 364 F. Supp. 2d at 950. Under Restatement § 433A - "[t]he universal starting point for divisibility of harm analyses in CERCLA cases," United States v. Hercules, Inc. 247 F.3d 706, 717 (8th Cir. 2001) -- a defendant can avoid joint and several liability if it proves (a) there are distinct harms, or (b) there is a reasonable basis determining the contribution of each cause to a single harm." To determine what constitutes "a reasonable basis," federal common law applies. United States v. Township of Brighton, 153 F.3d 307 (6th Cir. 1998); Burlington Northen, 479 F.3d at 1126 ("[A]ll of the courts of appeals that have addressed the question" have held that the application of these standards "must be a uniform federal rule.").

d. Section 113(f) provides qualifying guarantees PRPs the right to seek contribution against other PRPs that are liable under Section 107. "In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate" in order to reduce potentially harsh results of J&S liability. Section 113(f)(1). A PRP does not have a right to obtain a J&S ruling against another PRP. (See cases cited at section M infra.)

3. RETROACTIVE LIABILITY

a. Congress intended CERCLA to apply retroactively to situations in which past acts have contributed to existing endangerment. Franklin County Convention Facilities Auth. v. American Premier Underwriters, 240 F.3d 534, (6th Cir. 2001); United States v. Northeastern Pharm. & Chem. Co. ("NEPACCO"), 810 F.2d 726, 734 (8th Cir. 1986), cert. denied, 484 U.S. 848 (1987); United States of America v. Olin Corp., 107 F.3d 1506, (11th Cir. 1997) (reversing 927 F.Supp. 1502 (S.D. Ala. 1998)). See also United States v. Alcan Aluminum Corp., 49 F. Supp. 2d 96, 99 (N.D.N.Y. 1999) (rejecting application of Eastern Entes. v. Apfel, 524 U.S. 498 (1998) to CERCLA). Accord Combined Props, v. Morrow, 58 F.Supp. 2d 675 (E.D. Va. 1999); United States v. Dico, Inc., 266 F.3d 864 (8th Cir. 2001).

b. For natural resource damages, there is no cause of action if both the release of hazardous substances and the resulting damages that occurred were "wholly before" CERCLA was enacted. Section 107(f)(1). See In re Acushnet River and New Bedford Harbor: Proceedings re Alleged PCB Pollution, 716 F. Supp. 676, 683 (D. Mass. 1989).

C. GOVERNMENTAL ALTERNATIVES AT A SUPERFUND SITE

1. RESPONSE ACTIONS

a. Under Section 104(a), EPA may spend Superfund monies whenever there is a release or substantial threat of release of any hazardous substance into the environment. n6

b. The President is given the discretion to take necessary "removal" or "remedial" actions in response to releases or threat of releases of hazardous substances, pollutants or contaminants. n7

(1) Removal Actions are broadly defined in Section 101(23) to include short-term actions necessary to protect public health or welfare or the environment. This type of action has temporal (twelve months) and monetary ($ 2 million) restrictions, but the site does not need to be on the NPL. See U.S. v. W.R. Grace & Co., 429 F.3d 1224 (9th Cir. 2005). A removal action can either be "time-critical," when the lead agency determines that cleanup must begin in less than six months, or "non-time critical," when the lead agency determines that a planning period of at least six months is available before on-site activities must begin. 40 C.F.R. § 300.415(b). For non-time-critical removals, the lead agency must undertake an Engineering Evaluation/Cost Analysis (EE/CA) to investigate the site, characterize the potential risks involved, and identify the alternatives for removal action. 40 C.F.R. § 300.415(B)(4)(I). The lead agency, after a public comment period, then selects the removal action alternative by documenting the decision in a removal action memorandum.

(2) Remedial Actions ("RA") are also broadly defined in Section 101(24) to include long-term, permanent actions necessary to abate a release and contamination. A site must be listed on the NPL to undergo federal RA using Superfund monies. These actions must be funded jointly by Federal and State governments. The State must agree to pay 10% of RA costs (and all Operations and Maintenance costs), before EPA can use superfund monies. If the release is from a state facility, the state share is 50%. Section 104(c)(3). See Minnesota v. Abrams Metals Inc., 155 F.3d 1019 (8th Cir. 1998) (Because state project was remedial and not removal, state actions were inconsistent with NCP). n8

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n6 Section 104 (a)(3) has three limitations on response authority, associated with naturally occurring substances, products part of structures, and releases into drinking water supplies. These limits may be overcome by criteria set forth in Section 104(a)(4).

n7 Depending on the type of action, e.g., "removal," Section 101(23), or "remedial," Section 101(24), there are limits on the cost expenditures and requirements as to state shares. See generally Section 104(c)(1), (3), and (4). The most seriously contaminated sites are placed on the National Priorities List ("NPL"), a compilation that now includes over 1200 sites across the nation. However, any property where hazardous substances have been deposited may fall under CERCLA authority. See United States v. W.R. Grace, 280 F. Supp 2d 1135, 1149 (D. Mont 2003), appeal pending (EPA's decision to conduct removal action rather than remedial action was consistent with NCP and could not be second-guessed.)

n8 These temporal and monetary limits do not apply to privately funded removal actions, CERCLA § 104(c)(1).

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2. INFORMATION GATHERING AND SITE ACCESS

a. Section 104(e) provides substantial authorities for EPA to gather information and gain site access. See United States v. Gurley, 235 F. Supp. 2d 797 (W.D. Tenn., 2002), aff'd 304 F.3d 316 (6th Cir. 2004).

b. U.S. must show reasonable basis to believe there may be a release or threat of release of a hazardous substance. EPA may obtain access by warrant, agreement, or administrative order. EPA access orders comply with Four Amendment. United States v. Tarkowski, 248 F.3d 596 (7th Cir. 2001).

c. Section 104(e) requests are equivalent to administrative discovery, and subject to a penalty of $ 27,500 for each day of inadequate response or non-compliance. See; e.g., United States v. Crown Roll Leaf, Inc., 29 E.R.C. 2018 (D.N.J.), aff'd 888 F.2d 1382 (3d Cir. 1989), cert. denied, 493 U.S. 1058 (1990); United States v. Barkman, 784 F. Supp. 1181 (E.D. Pa. 1992); United States v. JG-24, Inc., 331 F.Supp.2d 14 (D.Puerto Rico 2004). Pharmacia Corp. v. Clayton Chem. Acquisition, LLC, No. 02-cv-0428-MJR, 2005 U.S. Dist. LEXIS 5286, at *10 (S.D. Ill. Mar. 8, 2005).

d. CERCLA Section 113(h) applies to limit judicial review. (See outline at section O, infra.)

3. CLEANUP PROCESS

a. To accomplish the goal of cleaning up release of hazardous substances, Section 105(a) requires EPA to promulgate a list of sites subject to releases or threatened releases which require remediation. This is known as the National Priority List (NPL) of hazardous waste sites, and it is included in the National Contingency Plan (NCP). 40 C.F.R. pt. 300, app.B.

b. The remedy selection is a three-step process. First, EPA conducts a study and prepares a report called a remedial investigation and feasibility study (RI/FS) which determines the extent of contamination at a particular site or operable unit and the alternatives available to remediate the site. 40 C.F.R. 300.430(a), (d), (e) (detailing purpose and content of RI and FS). Second, EPA uses the RI/FS to develop a proposed remedy for a particular hazardous waste site, 40 C.F.R. 300.430(a)(2), which is made available to interested persons prior to selection of a remedy for a site. Finally, EPA reviews and responds to the comments, and consults with the affected state and other agencies where appropriate, before making a final decision.

c. EPA's final decision selecting a remedy is determined in a Record of Decision (ROD), which is also made available to the public before the commencement of any remedial action. CERCLA § 117, 40 C.F.R. 300.430(f)(1)(ii); 300.430(f)(4), (5), (6). EPA compiles and maintains an administrative record, which contains the documents relevant to the remedy selection. CERCLA limits judicial review of any response action to administrative record.

d. The ROD documents the decision that selects the remedy from among the alternatives evaluated. 40 C.F.R. §300.430(f). At sites where there is typically a separate ROD for each Operable Unit, and the remedial action selected for each Operable Unit comprises an incremental step toward comprehensively addressing the site problems. EPA may also approve "interim" RODs or action that allow for selection of initial measures that are expected to advance the cleanup process and can be implemented while the RI/FS is being completed and a final ROD issued, in which case the interim measure may become part of the final remedial action at the site. See Preamble to the NCP, 55 Fed. Reg. 866, (CHECK SITE)

4. WORK OPTIONS

a. EPA can do the work itself using money from the Superfund and charge the PRPs; or

b. EPA can order the PRPs to do the work by an administrative order ("AO") or court-ordered injunctive relief.

D. PRIVATE PARTY RESPONSE ACTIONS UNDER GOVERNMENT DIRECTION - CERCLA SECTION 106

1. STANDARDS (WHETHER ADMINISTRATIVE ORDER OR INJUNCTION)

a. A PRP may be ordered to take response actions by an Administrative Order (AO) or injunctive relief when there "may be" an imminent and substantial endangerment. United States v. E.I. du Pont de Nemours & Co., 341 F. Supp. 2d 215 (W.D.N.Y. 2004).

(1) Imminent: Only the risk of harm need be imminent, not the harm itself. Risk may be imminent even if actual harm is months/years away.

(a) "[W]hile the risk of harm must be 'imminent' for the Administrator to act, the harm itself need not be. Thus, for example, the Administrator may invoke this section when there is an imminent likelihood of the introduction into drinking water of contaminants that may cause health damage after a period of latency." Safe Drinking Water Act, Pub. L. No. 93-523, H.R. Rep. 1185, 1974 U.S.C.C.A.N. (88 Stat.) 6454, 6488.

(b) The term refers to the imminence of risk, not harm. Imminent endangerment is one likely to materialize, even though this may be far off in time. "[T]he imminence of a hazard does not depend on the proximity of the final effect but may be proven by the setting in motion of a chain of events which would cause serious injury." See United States v. Hardage, Civ-80-1031-W slip op. at 3, 4 (W.D. Okla. Dec. 2, 1980). Actual proof of harm need not be shown. See United v. Vertac Chem. Corp., 489 F. Supp. 870 (E.D. Ark 1980) and United States v. Dickerson, 660 F. Supp. 227 (M.D. Ga. 1987).

(2) Substantial: "Among those situations in which the endangerment may be regarded as 'substantial' are the following: (1) a substantial likelihood that contaminants capable of causing adverse health effects will be ingested by consumers if preventive action is not taken; (2) a substantial statistical probability that disease will result from the presence of contaminants in drinking water; or (3) the threat of substantial or serious harm (such as exposure to carcinogenic agents or other hazardous contaminants)." H.R. Rep. 1185, 1974 U.S.C.C.A.N. (88 Stat.) 6454, 6488.

(3) Endangerment: "[E]ndanger means something less than actual harm. It is sufficient if harm is threatened; no actual injury need ever occur." Endangerment "is not prone to factual proof alone but must be decided by assessment of risk." Risk is to be assessed "from suspected, but not completely substantiated, relationships between facts, from trends among facts, from theoretical projections . . . or from probative preliminary data." United States v. Vertac Chem. Corp., 480 F. Supp. 870, 885 (E.D. Ark. 1980), quoting Reserve Mining Co. v. Envtl. Protection Agency, 514 F.2d 492, 529 (8th Cir. 1975); Interfaith Cmty. Org. v. Honeywell Int'l, Inc., 399 F.3d 248, 258 (3d Cir. Feb. 18, 2005).

(a) Endangerment includes harm to public health or welfare or environment. This phrase encompasses a very broad standard. Public "welfare" potentially embraces safety, recreational, aesthetic, environmental, and economic interests.

(b) Harm may occur due to actual or threatened release of hazardous substances from a facility. An actual or threatened release must be a listed hazardous substance, not merely a "pollutant" or "contaminant."

b. Parties liable under Section 107.

(1) Section 106 does not define liable parties, but the United States argues that it applies to the same category of parties as under Section 107, i.e., owners, operators, generators, and transporters. See this outline at Section E.

2. SANCTIONS FOR NON-COMPLIANCE

a. Administrative Order

(1) The civil penalty for violating an Administrative Order "without sufficient cause" is $ 27,500 per day of noncompliance ($ 25,000 before January 30, 1997) per day (Section 106(b)(1)) plus treble damages (Section 107(c)(3)) if EPA must spend Superfund monies to carry out the response action. See United States v. Parsons, 723 F. Supp. 757 (N.D. Ga. 1989), vacated on other grounds by (11th Cir. 1991) (treble damages and punitive penalty of $ 2.26 million).

(2) If a party complies and then later proves that it was not a liable party under Section 107, the party has the right to seek reimbursement from the Superfund under Section 106(b). No later than 60 days after completing the work required by an administrative order, a party may "petition the President for reimbursement from the Fund for reasonable costs of such action, plus interest." Section 106(b)(2)(1). Before filing suit, a petitioner must exhaust its administrative remedies with EPA. United States v. Dico, 136 F.3d 572 (8th Cir. 1998).