Allocation of Liability at a
Sediment Cleanup Site
by
Joan P. Snyder, Esq.
Stoel Rives LLP
jpsnyder@stoel.com
(503) 294-9657
Types of Costs to Recover
• EPA and DEQ site assessment and oversight
• Remedial investigation/feasibility study (RI/FS)
• Remedial design/remedial action (RD/RA)
• Natural resource damage assessment (NRDA)
• Natural resource damages (NRD)
• Consequence of no timely allocation: EPA (or DEQ)
can issue a unilateral administrative order to compel
remedial action to multiple PRPs
2
Parties Who Might Sue to Recover
Sunk Costs, Future Costs
• EPA
• DEQ
• PRPs who have incurred costs
• Natural Resource Damage Trustees
3
Primary Legal Grounds for
Recovery
• Federal Superfund
• Oregon Environmental Cleanup Law
4
Oregon Environmental Cleanup
Law
• ORS 465.255 creates strict liability and cost recovery
action for
– Remedial action costs
– Natural resource damages
• ORS 465.325(6)(a) and ORS 465.257 create right of
contribution
6
Oregon Environmental Cleanup
Law (cont.)
• 5 categories of liable parties
– Owner/operator at time of release
– Owner/operator after the release who knew or reasonably should
have known of the release at time of becoming owner/operator
– Owner or operator who obtained actual knowledge of the release
and then subsequently transferred ownership without disclosure
– Person who, by any acts or omissions, caused, contributed to or
exacerbated the release, unless the acts or omissions were in
material compliance with applicable laws, standards, regulations,
licenses or permits
– Person who unlawfully hinders or delays entry to, investigation of or
removal or remedial action at a facility
7
Oregon Statutory
Defenses/Exemptions/ Exclusions
• Act of God, ORS 465.255(2)(b)(A)
• Act of war, ORS 465.255(2)(b)(B)
• Acts or omissions of a third party [other than
employee, agent or one in contractual relationship] ,
ORS 465.255(2)(b)(C)
• Others (definitions, exclusions)
8
Federal Superfund Liable Parties
• 42 USC §9607 defines liable parties:
– Current owners and operators;
– Owners and operators at the time of the disposal
– Arrangers; and
– Transporters.
9
Federal Statutory Defenses/
Exemptions/ Exclusions
• Act of God, 42 USC §9607(b)(1)
• Act of war, 42 USC §9607(b)(2)
• Act or omission of third party [other than employee,
agent or one in contractual relationship] , 42 USC
§9607(b)(2)
10
Statutory Defenses/Exemptions/
Exclusions (cont.)
• Others
– Small Business Liability Relief and Brownfields Revitalization
Act of 2002
– Definitions
– Exemptions
11
Pure Cost Recovery Claim Under
CERCLA §107(a)
• “Cost recovery” cause of action, on a joint and
several liability basis, clearly available to government,
state or tribes, §107(a)(4)(A)
• Most circuits have decided “cost recovery” cause of
action, on a joint and several liability basis, also
available to an "innocent" private party, §107(a)(4)(B)
12
Implied Contribution Claim Under
CERCLA §107(a)
• Prior to 1986 Superfund Amendments and
Reauthorization Act (SARA), which added §113,
many courts had recognized an implied right of
contribution for both innocent private parties and noninnocent private parties under §107
13
Contribution Action Under
CERCLA §113(f)
• Added by SARA in 1986
• Under §113(f)(1), “any person” may seek contribution
during or following a civil enforcement action brought
against it under §106 or §107(a)
• Under §113(f)(3)(B), “a person” who has resolved its
liability to the US or a state in an administrative or
judicially approved settlement may seek contribution
from any other liable party
• Several circuits have limited non-innocent parties to a
§113 contribution claim
14
9th Circuit and District of Oregon
Hybrid Claim for Non-innocent PRP
• A non-innocent PRP’s cause of action is “ limited to a
contribution claim governed by the joint operation of
§§ 107 and 113.” Pinal Creek Group v. Newmont
Mining, 118 F3d 1298 (9th Cir 1997)
15
Cooper Industries Inc. v. Aviall Services
Inc., 543 US __, 125 S Ct 577 (12/13/04)
• Holding: §113(f) does not allow a non-innocent PRP
to recover contribution from another PRP where the
claimant voluntarily completed a cleanup under threat
of state enforcement but without either a civil
enforcement action brought against it under §106 or
§107(a) or a settlement that resolved its liability to the
US or a state
16
Questions Raised by the Aviall Court
for Consideration on Remand
• Whether Aviall had a valid cost recovery claim under
§107(a)
• Whether Aviall had an implied contribution claim
under §107(a)
17
Post Aviall Status
Federal and State government, tribes or innocent
private party
Pre-Aviall
–
§107(a) cost recovery claim (joint and several)
–
ORS Ch. 465.255 claim
Post-Aviall
–
No change
18
Post Aviall Status
Non-innocent PRP performing work under CERCLA judicial
order or under federal or state settlement
Pre-Aviall
–
§ 113(f) contribution claim
–
ORS Ch. 465 claim
–
§107(a) implied contribution claim (in some circuits)
Post-Aviall
–
No change
19
Post Aviall Status
Non-innocent PRP performing work without enforcement
action or settlement
Pre-Aviall
–
§ 113(f) contribution claim
–
ORS Ch. 465 claim
–
§107(a) implied contribution claim (in some circuits)
Post-Aviall
–
Does not have § 113(f) claim
–
ORS Ch. 465 claim
–
§107(a) implied contribution claim (in some circuits)
20
Post Aviall Status
Non-innocent PRP performing work under CERCLA
administrative order that is not a settlement
Pre-Aviall
–
§ 113(f) contribution claim
–
ORS Ch. 465 claim
–
§107(a) implied contribution claim (in some circuits)
Post-Aviall
–
Unclear whether have § 113(f) claim (hinges on meaning
of “”civil action”)
–
ORS Ch. 465 claim
–
§107(a) implied contribution claim (in some circuits)
21
Allocation Factors
• Federal
– “Gore Factors”
– Other equitable factors
• State
– ORS 465.257: “using such equitable factors as the court
deems appropriate, including but not limited to the following”
22
Summary of Factors
• Amount
• Knowledge
• Toxicity
• Finances
• Fault
• Benefit
• Involvement
• Timing
• Care
• Equitable Defenses
• Cooperation
• Quality of Evidence.
23
Divisibility
• Basis
– Geographic
– Type of contaminant/type of remedy/type of harm
• Requires reasonable basis for determining
contribution of each divisible harm. Government
must make prima facie case to show PRP caused
harm in geographic area of site and then burden
shifts back to PRP to disprove that inference to show
divisible
24
Orphan Share
• Two types:
– Insolvent Orphans and
– Orphans who are solvent, but not at table
• Procedural aspect of dealing with Orphan Share depends on
who has incurred costs: If EPA, joint and several; if private party
seeking contribution, several only
• Courts make equitable decision on appropriate method of
allocation of orphan share
• May be appropriate to allocate insolvent orphan share to only
certain (i.e. similarly situated) PRPs
25
Orphan Share (cont.)
• ORS 465.257(2): “the court may, in its discretion,
allocate [any orphan share] to the other liable
persons in proportion to their equitable shares or on
any other equitable basis taking into consideration
any relationship between the orphan share’s liable
person and each other liable person.”
26
Application of Factors to
River/Sediment Sites in Case Law
• Paucity of case law regarding allocation of liability in
urban river systems
– Many sites are in the pipeline , but most are at the beginning
of the process
– Complexity encourages private, arbitrated resolution
– Reported cases that do exist are, for the most part, not multicontaminant sites
27
Port of Portland v. Union Pacific
Railroad Co., USDC Oregon, (1999)
• Port had 90% of liability and Union Pacific had 10%,
based on relative toxicity of contaminants
28
Lower Fox River
• Seven PRPs
• River divided into 5 “segments”
• Cleanup costs estimated by DNR at $400 M (DNR
estimate)
• NRD damages originally estimated between $176M$333M by US Fish & Wildlife Service (and the
Wisconsin DNR valued the damages at $55 million)
29
Lower Fox River (cont.)
• USFWS settlement with one PRP, Fort James, for
$12M
– Approved by court over challenge
– Settlement apparently based on a preliminary estimate of the
amount of PCBs discharged into the Lower Fox by each
PRP
30
Kalamazoo River Study Group v.
Rockwell Int’l
• “Liable” PRP allocated 0% damages
– Inconsequential contribution
• Other PRP allocated 10%
– Based on credibility of conflicting expert testimony on type
and amount of PCBs contributed
31
Hylebos Natural Resource Trustee
Settlement Proposal Report on Allocation
• Proposed by the NRD Trustees
• Not binding on any party
• Allocated liability between sites, not between entities
• Based on a habitat equivalency analysis
– Allocation of contaminant footprint to a single site
– Allocation of liability by mass loading analysis within
waterway systems
– Allocation of contaminated footprint adjacent to multiple sites
by mass loading analysis
32
Difficulty of Applying Factors to
River/Sediment Sites
• Investigation/assessment costs not function of
amount or toxicity
• Fate and transport affects significance of
contamination to ultimate remedy
– To river
– Once in sediment
– Upstream vs. downstream sources
• Receptors present in area of site may result in
different risk drivers in different locations of site
33
Complexity of Applying Factors to
River/Sediment Sites
• “But for” contaminants—secondary risk drivers
• Effect of designation of Sediment Management Units
– New/different assessment risk drivers
– Additional opportunities for cooperation
• Orphan sources
34
Complexity of Applying Factors to
River/Sediment Sites
• Pollutant load would have decreased as regulations
increased, so length of time of operations may not be
an appropriately predictive factor
• Quality of evidence varies over time
• Economic benefit to state (owner of harbor)
measured in different terms than economic benefit to
private owner/operators of riparian sites
35
Complexity of Applying Factors to
River/Sediment Sites
• Overarching Principles in Allocation
– Principle for allocation between
owner/operator/arranger/transporter liability
– Follow the money (remedial action costs)
– Contribution of PRP’s contaminants to cost (not necessarily
volume or toxicity)
– Recalcitrance/Cooperation
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