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Supreme Court Rejection of a Divisibility of Harm Argument

U.S. Supreme Court won't review the rejection of a divisibility of harm argument for potentially responsible parties at a South Carolina superfund site in the case PCS Nitrogen Inc. v. Ashley II of Charleston LLC, U.S., No. 13-139, 11/4/13. Divisibility of harm will remain difficult to establish and uncommon in superfund cases.  As reported by Bloomberg BNA EDDG, the U.S. Supreme Court declined to review whether an appeals court erred in rejecting a divisibility of harm argument for potentially responsible parties at a South Carolina superfund site (PCS Nitrogen Inc. v. Ashley II of Charleston LLC, U.S., No. 13-139, 11/4/13).

The Supreme Court's decision Nov. 4 leaves intact a decision by the U.S. Court of Appeals for the Fourth Circuit that found joint and several liability among the parties under the Comprehensive Environmental Response, Compensation, and Liability Act was more appropriate than apportionment of the harm because the parties could not establish a reasonable basis for apportioning the liability (PCS Nitrogen Inc. v. Ashley II of Charleston LLC, 714 F.3d 161, 76 ERC 1683, 2013 BL 90779 (4th Cir. 2013).  PCS Nitrogen Inc., the successor to a former owner of a fertilizer plant at the site, had asked whether the Fourth Circuit erred in adopting too strict proof requirements to establish a basis for divisibility of harm under the superfund law. PCS had also asked the Supreme Court to review the standard of review an appeals court should apply in reviewing a trial court's decision not to divide harm under CERCLA.

In its petition, PCS argued the Fourth Circuit's proof requirements to establish divisibility of harm are contrary to those established by a 2009 decision by the Supreme Court (Burlington N. & Santa Fe R.R. Co. v. United States, 556 U.S. 599, 612-15, 68 ERC 1161, 2009 BL 95907 (2009).).  In Burlington Northern the Supreme Court said CERCLA did not mandate joint and several liability in every case but rather that apportionment is governed by “traditional and evolving principles of law.”

If there is a reasonable basis for dividing the harm according to the party's contribution, joint and several liability among all these tortfeasors does not apply, and a party is responsible only for its apportioned contribution, PCS had argued in its petition.

In the more than 40 district court opinions issued since Burlington Northern however, not one has found liability from a CERCLA site to be capable of apportionment, the petition said.

The PCS lawsuit involved a 43-acre site on the Ashley River in Charleston, S.C., contaminated with arsenic, lead and other hazardous substances from decades of phosphate fertilizer production. Owners later conducted earth-moving activities, spreading the contamination around the site.  In 2005, Ashley II of Charleston LLC, the current owner of the site, brought a CERCLA cost-recovery suit against PCS to recover the nearly $200,000 it spent remediating the site. Ashley II argued that PCS was a successor corporation to Columbia Nitrogen Corp., a former owner of the site. PCS counterclaimed against Ashley II for contribution under CERCLA and brought third-party contribution claims against additional parties with past and current connections to the site.  The district court declared PCS a potentially responsible party jointly and severally liable for response costs at the site. The court also found that other parties—including Ashley II—were PRPs as well, each liable for an allocated portion of the response costs. The Fourth Circuit affirmed in a decision in April.

In this case, the district court identified two factors that must be addressed for there to be a reasonable basis for apportionment: (1) the amount of contamination each party contributed to the site, and (2) the amount of soil each liable party caused to be contaminated through earth moving (secondary disposal).  PCS argued at trial that it was only responsible for 6 percent of the harm, but the district court found that PCS did not account for the amount of soil contaminated by secondary disposals in its calculations and rejected its apportionment argument. The district court allocated a 30 percent share of incurred and future costs to PCS, and the Fourth Circuit affirmed. The imposition of joint and several liability upon PCS means that PCS is ultimately liable if other potentially responsible parties are not able to pay their allocated shares of incurred cleanup costs.

 

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