allocation of liability at a sediment cleanup site by joan p. snyder, esq. stoel rives llp...

Allocation of Liability at a Allocation of Liability at a Sediment Cleanup SiteSediment Cleanup Site

by

Joan P. Snyder, Esq.Stoel Rives LLP

jpsnyder@stoel.com(503) 294-9657

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Types of Costs to RecoverTypes 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

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Parties Who Might Sue to Recover Parties Who Might Sue to Recover Sunk Costs, Future CostsSunk Costs, Future Costs

• EPA

• DEQ

• PRPs who have incurred costs

• Natural Resource Damage Trustees

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Primary Legal Grounds for Primary Legal Grounds for RecoveryRecovery

• Federal Superfund

• Oregon Environmental Cleanup Law

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Oregon Environmental Cleanup Oregon Environmental Cleanup Law 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

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Oregon Environmental Cleanup Oregon Environmental Cleanup Law Law (cont.)(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

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Oregon Statutory Oregon Statutory Defenses/Exemptions/ ExclusionsDefenses/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)

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Federal Superfund Liable PartiesFederal 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.

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Federal Statutory Defenses/ Federal Statutory Defenses/ Exemptions/ ExclusionsExemptions/ 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)

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Statutory Defenses/Exemptions/ Statutory Defenses/Exemptions/ Exclusions Exclusions (cont.)(cont.)

• Others

– Small Business Liability Relief and Brownfields Revitalization Act of 2002

– Definitions

– Exemptions

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Pure Cost Recovery Claim Under Pure Cost Recovery Claim Under CERCLA §107(a)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)

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Implied Contribution Claim Under Implied Contribution Claim Under CERCLA §107(a)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 non-innocent private parties under §107

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Contribution Action Under Contribution Action Under CERCLA §113(f)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

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9th Circuit and District of Oregon 9th Circuit and District of Oregon Hybrid Claim for Non-innocentHybrid Claim for Non-innocent PRPPRP

• 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)

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Cooper Industries Inc. v. Aviall Services Cooper Industries Inc. v. Aviall Services Inc.Inc., 543 US __, 125 S Ct 577 (12/13/04), 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

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Questions Raised by the Questions Raised by the AviallAviall Court Court for Consideration on Remandfor Consideration on Remand

• Whether Aviall had a valid cost recovery claim under §107(a)

• Whether Aviall had an implied contribution claim under §107(a)

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Post Post AviallAviall Status 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

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Post Post AviallAviall Status 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

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Post Post AviallAviall Status 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)  

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Post Post AviallAviall Status 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)  

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Allocation FactorsAllocation 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”

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Summary of FactorsSummary of Factors

• Amount

• Toxicity

• Fault

• Involvement

• Care

• Cooperation

• Knowledge

• Finances

• Benefit

• Timing

• Equitable Defenses

• Quality of Evidence.

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DivisibilityDivisibility

• 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

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Orphan ShareOrphan 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

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Orphan Share Orphan Share (cont.)(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.”

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Application of Factors to Application of Factors to River/Sediment Sites in Case LawRiver/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 multi-contaminant sites

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Port of Portland v. Union Pacific Port of Portland v. Union Pacific Railroad Co.Railroad Co., USDC Oregon, (1999), USDC Oregon, (1999)

• Port had 90% of liability and Union Pacific had 10%, based on relative toxicity of contaminants

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Lower Fox RiverLower 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)

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Lower Fox River Lower Fox River (cont.)(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

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Kalamazoo River Study Group v. Kalamazoo River Study Group v. Rockwell Int’lRockwell 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

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Hylebos Natural Resource Trustee Hylebos Natural Resource Trustee Settlement Proposal Report on AllocationSettlement 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

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Difficulty of Applying Factors to Difficulty of Applying Factors to River/Sediment SitesRiver/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

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Complexity of Applying Factors to Complexity of Applying Factors to River/Sediment SitesRiver/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

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Complexity of Applying Factors to Complexity of Applying Factors to River/Sediment SitesRiver/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

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Complexity of Applying Factors to Complexity of Applying Factors to River/Sediment SitesRiver/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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