Your company, Silvers, Inc. formerly operated a silver plating facility in Anytown, USA. Your company sold the plant to Chromers, Inc. in 1978. Chromers, Inc. used the facility exclusively for chrome plating. In 1990, a citizen in your community complained to U.S. EPA about discolored drinking water. U.S. EPA conducted an investigation, ultimately focusing on the plating shop that your company operated. U.S. EPA's investigation showed that during the chrome-plating process used by Chromers, Inc., rinse water from finished parts was pumped out of the building onto the ground. This activity created a vast contamination plume emanating from the plant. In addition, U.S. EPA found low levels of silver in the groundwater, presumably from your company's past operations. The estimate for removing the silver and chrome from the groundwater is ten million dollars. About ten percent of the contamination in the groundwater is from the silver, and about ten percent of the cost of the cleanup is for the silver. The remainder is strictly for the chromium. If there were no chromium in the groundwater, the silver would not have to be removed since the concentrations are below that required for a cleanup. The chromium, however, would require a cleanup, regardless of whether the silver was present or not.
Six months ago, U.S. EPA filed a CERCLA cost-recovery action against your company, Silvers, Inc. and against Chromers, Inc. U.S. EPA seeks to hold your company and Chromers, Inc. jointly and severally liable for remedying the groundwater contamination from the site. Yesterday, Chromers, Inc. filed for bankruptcy protection., shut down production, and turned over all of its assets to the bankruptcy court. Chromers, Inc. turns out to have less than one million dollars in assets, and more than 2 million dollars in debt, excluding the cost of cleaning up the contamination in the groundwater. Since the estimated cleanup cost is going to be at least ten million dollars, you realize that little if any money will be paid to cleanup the site by Chromers, Inc.
You are well aware of CERCLA's joint and several liability provisions. You ask your attorney what, if anything, can be done to avoid having to pay more than your fair share of the costs of the removal action at the site. You explain to your lawyer that it simply does not seem fair that your company should pay a disproportionately larger share of the cost of the cleanup when the cost of removing the silver from the groundwater is so much less than the cost of removing the chromium contamination. Furthermore, but for the chromium, you would not have to be involved at this site since standing alone, the silver need not be cleaned up.
Your attorney tells you that joint and several liability can be imposed under CERCLA, but need not always be imposed. Your attorney explains that the courts around the country have developed three distinct, although closely-related, approaches to the issue of joint and several liability under CERCLA. The first is the "Chem-Dyne approach" which requires a defendant who seeks to avoid the imposition of joint and several liability to prove the amount of harm it caused. The defendant's contribution to the cleanup is then based on that amount of the cleanup cost. The second approach, the "Alcan approach," is adopted by the Second and Third Circuits and is similar to the Chem-Dyne approach except that the Alcan approach recognizes that, under the unique statutory liability scheme of CERCLA, the plaintiff (usually U.S. EPA) is not required to prove causation of the injury. Under the Chem-Dyne approach, the plaintiff must first prove that the defendant's conduct was a substantial factor in causing the harm; the defendant may limit its liability by proving its contribution to the harm. In contrast, the Alcan approach suggests that a defendant may escape liability altogether if it can prove that its waste, even when mixed with other wastes at the site, did not cause the incurrence of response costs. The third approach is the "moderate" approach. Under that approach, the court applies the principles enunciated in the Chem-Dyne approach in determining whether there is a reasonable basis for apportionment. If there is not, the court may impose joint and several liability; the court, however, retains the discretion to refuse to impose joint and several liability where such a result would be inequitable.
You are intrigued by the idea that you may not be liable for the cleanup costs of the now defunct Chromers, Inc., and you ask your attorney to explain in further detail. Your attorney informs you that the first published case to address the scope of liability under CERCLA is United States v. Chem-Dyne Corp., 572 F.Supp. 802 (S.D. Ohio 1983), which was cited approvingly in the legislative history of the SARA amendments to CERCLA. In the Chem-Dyne case, twenty-four defendants, who allegedly generated or transported hazardous substances located at Chem-Dyne's treatment facility, sought "an early determination" that they were not jointly and severally liable for the EPA's response costs. Id. at 804. After examining the statute and its legislative history, the court concluded that joint and several liability was not appropriate under CERCLA "in order to avoid its universal application to inappropriate circumstances." Id. at 810. The court used the following rationale from Section 433a of the Restatement (Second) of Torts for guidance in its decision:
(1)Damages for harm are to be apportioned among two or more causes where
(a) there are distinct harms, or
(b) there is a reasonable basis for determining the contribution of each cause to a single harm.
If the harm cannot be apportioned, pursuant to the above test from the Restatement, joint and several liability will be imposed. The nature of the harm is the key factor in determining whether apportionment is possible. Distinct harms -- e.g., where two defendants independently hurt someone at the same time, one injuring person's arm and the other injuring the person's leg -- are regarded as separate injuries. Although some of the elements of damages (such as lost wages or pain and suffering) may be difficult to apportion, "it is still possible, as a logical, reasonable, and practical matter, . . . to make a rough estimate which will fairly apportion such subsidiary elements of damages." Id., comment b on subsection (1). Following the rationale from the Restatement, the court concluded that the twenty-four defendants in the Chem-Dyne case could avoid the imposition of joint and several liability. United States v. Chem-Dyne Corp., 572 F.Supp. at 810.
The second test used by some of the federal courts, the Alcan approach, came from United States v. Alcan Aluminum Corp., 964 F.2d 252, 255 (3d Cir. 1992). The Alcan court also refused to apply joint and several liability to the defendants. The Alcan case involved millions of gallons of liquid wastes containing hazardous substances which were disposed of through a bore hole that led directly into underground mine workings. In 1985, 100,000 gallons of contaminated water were released from the site into the Susquehanna River. The government filed a cost-recovery action against twenty defendants; all but Alcan settled. The district court granted summary judgment for the government, holding that Alcan was jointly and severally liable for the response costs. The Third Circuit held that the "intensely factual nature of the 'divisibility' issue" highlighted the district court's error in granting summary judgment without conducting a hearing. Id. at 269. It remanded the case in order to give Alcan the opportunity to limit or avoid liability by attempting to prove its personal contribution to the harm to the Susquehanna River. Thus, under the Third Circuit's approach, Alcan could escape liability altogether if it could prove that its "emulsion did not or could not, when mixed with other hazardous wastes, contribute to the release and the resultant response costs." Id. at 270.
The Second Circuit essentially adopted the Third Circuit's approach to joint and several liability in another case involving Alcan, United States v. Alcan Aluminum Corp., 990 F.2d 711 (2d Cir. 1993). In that case, the Second Circuit reversed a summary judgment in favor of the government, stating that "Alcan should have the opportunity to show that the harm caused at PAS was capable of reasonable apportionment." Id. at 722. The court reasoned that Alcan was entitled to "present evidence relevant to establishing divisibility of harm, such as, proof disclosing the relative toxicity, migratory potential, degree of migration, and synergistic capacities of the hazardous substances at the site." Id. The court stated that Alcan could escape liability if it could prove that its oil emulsion, when mixed with other hazardous wastes, did not contribute to the release and resulting clean-up costs. It acknowledged that "causation is being brought back into the case -- through the backdoor, after being denied entry at the frontdoor -- at the apportionment stage." Id. However, the court pointed out that causation was "reintroduced only to permit a defendant to escape payment where its pollutants did not contribute more than background contamination and also cannot concentrate." Id.
The third test for avoiding joint and several liability is called the "moderate" approach, and was adopted by the court in United States v. A & F Materials Co., Inc., 578 F.Supp. 1249 (S.D. Ill. 1984). The A & F Materials case involved a disposal site at which over 7,000,000 gallons of waste were deposited. The court in A & F Materials thought that joint and several liability would be inconsistent with congressional intent, because Congress was "concerned about the issue of fairness, and joint and several liability is extremely harsh and unfair if it is imposed on a defendant who contributed only a small amount of waste to a site." Id. at 1256. The court concluded that six factors delineated in an unsuccessful amendment to CERCLA proposed by Representative (now Vice President) Gore could be used to "soften" the modern common law approach to joint and several liability in appropriate circumstances. Under this "moderate" approach, a court has the power to impose joint and several liability upon a defendant who cannot prove its contribution to an injury, but it also has the discretion to apportion damages in such a situation according to the "Gore factors":
(i) the ability of the parties to demonstrate that their contribution to a discharge[,] release or disposal of a hazardous waste can be distinguished;
(ii) the amount of the hazardous waste involved;
(iii) the degree of toxicity of the hazardous waste involved;
(iv) the degree of involvement by the parties in the generation, transportation, treatment, storage, or disposal of the hazardous waste;
(v) the degree of care exercised by the parties with respect to the hazardous waste concerned, taking into account the characteristics of such hazardous waste; and
(vi) the degree of cooperation by the parties with Federal, State, or local officials to prevent any harm to the public health or the environment.
Id. at 1256. The A & F Materials court stated that its moderate approach would promote fairness by allowing courts to be sensitive to the inherent unfairness of imposing joint and several liability on minor contributors, and to make rational distinctions based on such factors as the amount and toxicity of a particular defendant's contribution to a waste site. Id. at 1257.
Your attorney cautions you however to beware of those case which have held that joint and several liability is appropriate under CERCLA. In United States v. Ottati & Goss, Inc., 630 F.Supp. 1361 (D.N.H. 1988), operators of drum reconditioning businesses, property owners, and generators of wastes contained in the drums that were sent to the site for reconditioning were sued by U.S. EPA for the cost of the cleanup. The evidence in the Ottati case showed that chemical substances leaked or spilled from drums and were mixed together. The defendants proved approximately how many drums each brought to the site. However, the court nevertheless imposed joint and several liability, because "the exact amount or quantity of deleterious chemicals or other noxious matter [could not] be pinpointed for as to each defendant[, and] [t]he resulting proportionate harm to surface and groundwater [could not] be proportioned with any degree of accuracy as to each individual defendant." Id. at 1396.
A similar situation existed in O'Neil v. Picillo, 883 F.2d 176 (1st Cir. 1989). The site at issue in O'Neil was a Rhode Island pig farm that had been used as a waste disposal site. The site was described as having "massive trenches and pits 'filled with free-flowing, multi-colored, pungent liquid wastes' and thousands of 'dented and corroded drums containing a veritable potpourri of toxic fluids.'" Id. at 177. The defendants argued that it was possible to apportion the removal costs, because there was evidence of the total number of barrels excavated during each phase of the clean-up, the number of barrels in each phase attributable to them, and the cost of each phase. Id. at 181. There was testimony that, of the approximately 10,000 barrels excavated, only 300-400 could be attributable to a particular defendant. Id. at 182. The court concluded that because most of the waste could not be identified, and the defendants had the burden of accounting for the uncertainty, the imposition of joint and several liability was appropriate.
Your attorney advises you that since the silver placed into the groundwater is much less toxic than the chromium, and since the silver is a fingerprint to your business, and the chromium is a fingerprint to Chromers, Inc., there is a reasonable basis for apportioning liability. Furthermore, since the cost of the cleanup is being dictated by the chromium and not the silver, under the moderate approach or the Alcan Approach, your share of the cleanup cost would be significantly less than Chromers, Inc. Therefore, your attorney advises you to fight any attempt by U.S. EPA to impose joint and several liability for the site on your company. Accordingly, your attorney suggests that your company should only pay at most 10% of the cost of the cleanup as your fair share under the Chem-Dyne approach. Under the Alcan approach, your company should pay none of the costs of the cleanup since the chromium caused the entire harm. Under the moderate approach, your attorney explains that your fair share should also be no more than ten percent when weighing the equities of this case.
You are amazed, but you have a question. You ask your attorney who pays for the cleanup if Chromers, Inc. is out of business. Your attorney looks off into the distance, and explains that the government would have to fund Chromers, Inc.'s share. "Therefore," says your attorney, "I guess we all do."
I always advise clients not to give up hope in CERCLA cases as to joint and several liability, even when there are bankrupt defendants involved. Although the case law is not entirely uniform, certain basic principles emerge. First, joint and several liability is not mandated under CERCLA; Congress intended that the federal courts impose joint and several liability only in appropriate cases. If your company can show that you contributed little or nothing to the contamination, and the cost of cleaning up the amount you contributed will be little or nothing, you have a very good argument that you should pay exactly little or nothing.