United States v. P.H. Glatfelter Company
2014 U.S. App. LEXIS 18436, 768 F.3d 662, 79 ERC (BNA) 1177 (2014)
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Rule of Law:
Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), a party responsible for a release of hazardous substances at a Superfund site is liable for the entire site's cleanup costs, but may apportion liability by demonstrating a reasonable basis for its individual contribution to a continuous, non-binary harm. Additionally, a permanent injunction is an improper mechanism for enforcing a unilateral administrative cleanup order under CERCLA § 106(b), which is instead enforced through statutory civil penalties following a declaratory judgment.
Facts:
- From the mid-1950s through the 1970s, several paper mills discharged wastewater containing polychlorinated biphenyls (PCBs) into Wisconsin's Lower Fox River.
- NCR Corporation operated two mills that produced carbonless copy paper and discharged PCB-contaminated wastewater into a downstream section of the river designated Operable Unit 2 (OU2).
- P.H. Glatfelter Company is the corporate successor to a mill that recycled carbonless copy paper and discharged PCB-contaminated wastewater into an upstream section of the river, Operable Unit 1 (OU1).
- The Environmental Protection Agency (EPA) designated the Lower Fox River and Green Bay as a single Superfund Site, dividing it into five operable units (OU1-OU5) for a phased cleanup.
- In 2007, the EPA issued a unilateral administrative order under CERCLA § 106(a) directing NCR, Glatfelter, and other potentially responsible parties (PRPs) to conduct the cleanup of OUs 2 through 5.
- The EPA's cleanup plan was a hybrid remedy of dredging, capping, and sand covering, which was later updated with significantly higher cost estimates.
- After initially leading remedial efforts, NCR ceased full compliance with the 2007 order, prompting the government to file an enforcement action.
Procedural Posture:
- The United States sued NCR Corporation, P.H. Glatfelter Company, and other PRPs in the U.S. District Court for the Eastern District of Wisconsin to enforce a 2007 EPA unilateral administrative cleanup order.
- The district court granted the government's motion for a preliminary injunction against NCR in 2012, which the Seventh Circuit affirmed in a prior appeal.
- On cross-motions for summary judgment, the district court upheld the remedy selected by the EPA and held Glatfelter liable for downstream cleanup costs.
- Following an eleven-day bench trial on the defendants' divisibility defenses, the district court found in favor of the government.
- The district court entered a declaratory judgment and a permanent injunction requiring the non-settling PRPs, including NCR and Glatfelter, to comply with the EPA's 2007 order.
- NCR Corporation and P.H. Glatfelter Company (Appellants) appealed the district court's final judgment to the U.S. Court of Appeals for the Seventh Circuit.
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Issue:
Under CERCLA, is the harm from commingled pollution divisible where a party can provide a reasonable basis for apportioning its contribution to the continuous, non-binary harm, and is a permanent injunction the proper judicial remedy to enforce an EPA administrative cleanup order?
Opinions:
Majority - Judge Tinder
Yes, as to divisibility; No, as to the permanent injunction. Harm from commingled pollution is divisible if a party provides a reasonable basis for apportionment, but a permanent injunction is not the proper remedy to enforce an EPA administrative cleanup order. The court reasoned that the district court erred by treating the harm from PCB contamination as binary (i.e., either above or below a 1.0 ppm threshold). Instead, the harm is continuous, as higher PCB concentrations pose greater risks and necessitate more costly remediation. Because remediation costs are positively correlated with the degree of contamination, they can serve as a reasonable basis for apportionment. NCR presented expert analysis to quantify its percentage contribution to the PCB mass and the associated remediation costs, which was a legally sufficient theory of divisibility that the district court must reconsider on remand. Glatfelter's all-or-nothing defense that it caused zero harm downstream failed because it was based on unsound expert testimony. Regarding the remedy, the court vacated the permanent injunction, holding that CERCLA § 106(b) provides for enforcement of administrative orders through civil penalties, not equitable injunctions. An action to enforce a § 106 order involves a limited review of the administrative record, not the broad equitable inquiry required for an injunction. A declaratory judgment that the order is valid is sufficient to trigger the statutory penalty provisions, making an injunction both improper and unnecessary.
Analysis:
This decision significantly clarifies the divisibility of harm defense under CERCLA, especially in complex water contamination cases with multiple polluters. It rejects a simplistic, binary view of harm in favor of a continuous model where liability can be apportioned based on the degree of contamination. By allowing remediation costs to serve as a proxy for harm, the court provides a viable path for PRPs to limit joint and several liability by quantifying their specific contribution. The ruling also sharply delineates the EPA's enforcement powers, holding that permanent injunctions are unavailable for § 106(b) administrative orders, thereby compelling the agency to rely on declaratory judgments and the statutory threat of daily fines to ensure compliance.
