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CERCLA Litigation Liability Update: Cases, New Twists

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THURSDAY, APRIL 30, 2020

Presenting a live 90-minute webinar with interactive Q&A

Denise G. Fellers, Attorney, Morgan Lewis & Bockius, Los Angeles

Jonathan Nwagbaraocha, Counsel - Environment, Health, Safety & Sustainability andCompliance Leader, Xerox, Rochester, NY

Shoshana Suzanne Ilene Schiller, Partner, Manko Gold Katcher & Fox, Bala Cynwyd, Pa.

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CERCLA Litigation Liability Update: New Cases, New Twists

DENISE FELLERS

MORGAN LEWIS & BOCKIUS, LLP

JONATHAN NWAGBARAOCHA

XEROX CORPORATION

SHOSHANA SCHILLER

MANKO GOLD KATCHER & FOX, LLP

TOPICS

Superfund Liability: An Overview

PRPs: Owners, Operators, Arrangers, and Transporters

Accrual of Claims and Statutes of Limitations

Liability Defenses: Sovereign Immunity, Preemption, and Releases

Allocation/Damages

COVID-19 Issues

Questions

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Superfund Liability: An Overview

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CERCLA Liability, Generally

Release or Substantial Threat of a Release

Of a Hazardous Substance

From a Facility

Released by one of four Categories of PRPs

Present Owners and Operators

Owners and Operators at the time of Disposal

Generators – generated hazardous substances that came to be located at the site or who “otherwise arranged” for their disposal or treatment

Transporters or anyone who arranged with transporters for transport for disposal or treatment

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Cost Recovery vs. Contribution Claims

Cost Recovery Claims. If you have incurred response costs on a cleanup you are conducting, and have not been sued by anyone, you can bring a § 107(a) cost recovery claim – joint and several liability

Contribution Claims. If you have been sued under § 106 or § 107(a), or settled with the government through an administrative or judicially approved settlement, you are limited to a § 113(f) contribution claim – several liability only

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Accrual of Claims/Statute of Limitations

Under CERCLA Section 113, contribution claims must be brought within three years of a civil action under Section 106 or 107, a CERCLA administrative order, or a judicially approved settlement with respect to costs or damages. 42 U.S.C. § 9613(g)(3).

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Defenses

Act of God, CERCLA § 107(b)(1)

Act of War, CERCLA § 107(b)(2)

Act of Omission of a Third Party, CERCLA § 107(b)(3)

Federally Permitted Release, CERCLA § 107(j)

Recycling Exemption, CERCLA § 127

Lender Liability Exemption, CERCLA § 101(20)

Bona Fide Prospective Purchaser, CERCLA § 101(40)

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Divisibility vs. Allocation

Divisibility/Apportionment is a defense to § 107(a) joint and several liability

Equitable Allocation is an equitable allocation of liability by the court between liable parties, but the result can vary significantly depending upon whether its:

An allocation between jointly and severally liable defendants in a §107(a) cost recovery action, or

An allocation involving severally liable parties in a § 113 contribution action

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Equitable Allocation

For a defendant at a multiple PRP site, the next best alternative to a divisibility defense is to seek a reasonable allocation of liability

The court may allocated response costs among liable parties using such equitable factors as the court determines are appropriate

The District Court is authorized to make the final equitable allocation of costs and to choose which equitable factors will inform its decision

A court may consider several factors, a few factors, or only one determining factors, depending on the totality of the circumstances presented to the Court. See NCR Corp. v. George A. Whiting Paper Co., 768 F.3d 682, 695-696 (7th Cir. 2014)

The Court must “balance the equities in light of the totality of the circumstances.” FMC Corp. v. Aero Industries, Inc., 998 F.2d 842, 847 (10th Cir. 1993)

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PRPs: Owners, Operators, Arrangers, and Transporters

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A. Idaho Waste Systems, Inc. v. U.S. Air Force, 2020 WL 697914 (D. Idaho Jan. 27, 2020), adopted by2020 WL 699824 (D. Idaho Feb. 11, 2020)

B. Cottman Ave. PRP Group v. AMEC Foster Wheeler Envt'l Infrastructure Inc.,2020 WL 757834 (E.D. Pa. Feb. 13, 2020)

C. U.S. v. Dico, Inc., 920 F.3d 1174 (8th Cir. 2019)

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Accrual of Claims and Statutes of Limitations

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A. Refined Metals Corporation v. NL Industries Inc.,937 F.3d 928 (7th Cir. 2019)

B. Premcor Ref. Grp., Inc. v. Apex Oil Co., Inc.,2019 WL 1489543 (S.D. Ill. Feb. 6, 2019)

C. 2121 Abbott Martin Partners, LLC. v. Lee,2019 WL 3818870 (M.D. Tenn. Aug. 14, 2019)

D. Cranbury Brick Yard, LLC v. United States, et. al.,943 F.3d 701 (3rd Cir. 2019)

E. Government of Guam v. United States of America,950 F.3d 104 (D.C. Cir. 2020)

F. Arconic, Inc., et al. v. APC Inv. Co., et al.,2019 WL 398001 (C.D. Cal. Jan 15, 2019)

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Liability Defenses: Sovereign Immunity, Preemption, and Releases

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A. Gold King Mine Release in San Juan County, CO,2019 WL 1369349 (D.N.M. Mar. 26, 2019) &2019 WL 999016 (D.N.M. Feb. 28, 2019)

B. LCCS Group v A.N. Logistics,341 F. Supp.3d 847 (N.D. Ill. 2018)

C. LAJIM, LLC v. General Electric Company,917 F.3d 933 (7th Cir. 2019)

D. Asarco, LLC v. Union Pacific Railroad,778 Fed. Appx. 423 (9th Cir. 2019)

E. Atlantic Richfield Co. v. Gregory A. Christian, et al.,2020 WL 1906542 (U.S. Apr. 20, 2020)

F. Idaho Waste Systems, Inc. v. U.S. Air Force,2020 WL 697914 (D. Idaho Jan. 27, 2020)

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Allocation/Damages

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A. Giovanni v. U.S. Dept. of Navy,906 F.3d 94 (3rd Cir. 2018)

B. Valbruna Slater Steel Corp. v. Joslyn Mfg. Co.,934 F.3d 553 (7th Cir. 2019)

C. Mission Linen Supply v. City of Visalia,2019 WL 446358 (C.D. Cal. Feb. 5, 2019)

D. Thomas & Betts Corp. v. New Albertson's, Inc.,915 F.3d 36 (1st Cir. 2019)

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COVID-19 Issues

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List of State Orders (updated daily as needed):

https://www.mankogold.com/publications-Stay-at-Home-Orders-Environmental-Remediation.html

Does the state/local order directly or indirectly prevent site work?

Identify the applicable order(s) – state and local

Review exemptions

Understand their unique application on a site-by-site basis

Consider the context – strength of the order vs. urgency of the work

Anticipate varying interpretations

IMPACT OF STAY-AT-HOME ORDERS

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EPA’S INTERIM GUIDANCE ON SITE FIELD WORK

DECISIONS DUE TO IMPACTS OF COVID-19

No Blanket Waivers of Obligations

Prioritize health and safety of public and workers while maintaining ability to prevent and respond to any substantial endangerment to human health or the environment

Refer to Enforcement Instrument for Provisions Related to Delayed Performance and Force Majeure

Consider Applicable Health Orders, Safety and Availability of Work Crews and Staff, Need for Travel, Critical Nature of Work, and other Site-Specific Issues

https://www.epa.gov/sites/production/files/2020-04/documents/interim_guidance_on_site_field_work_decisions_due_to_impacts_of_covid.pdf

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Mitigate and Document the Impact

Analyze the guidance, regulation, permit, order, consent decree, or contract

Duty to notify?

Duty to mitigate?

Duty to perform as soon as practicable?

Document the Impact and the Actions

Work scheduled

Applicable order(s)

Direct/indirect impact on work

Implementation of site-specific COVID-19 protocols

Communicate with the appropriate Agency (and document communications)

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Potential Areas of Future

Disputes

Ambiguous exemptions in state orders

Inconsistent policy across EPA regions

Opportunistic interpretations from third parties (force majeure, impossibility, impracticability, frustration of purpose)

Indirect disputes – site access, contract claims

Future third party/citizen suits

Disagreements with outside consulting firms

Insurance coverage disputes

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Shoshana Schiller

Manko, Gold, Katcher & Fox, LLP

Bala Cynwyd (Philadelphia), Pennsylvania

sschiller@mankogold.com

Jonathan Nwagbaraocha

Xerox Corporation

Rochester, New York

jonathan.nwagbaraocha@xerox.com

Denise Gail Fellers

Morgan, Lewis & Bockius LLP

Los Angeles, California

denise.fellers@morganlewis.com

Questions?

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