Recent Developments Under CERCLA: Toward a More Equitable Distribution of Liability

Carroll E. Dubuc and William D. Evans Jr.

Editors' Summary: SARA raised the already high stakes in the CERCLA cleanup game. The incentive for potentially responsible parties (PRPs) to enlarge the pool of defendants has risen accordingly. In this Article, the authors discuss recent developments in three areas that may help PRPs in their efforts to spread out the liability for cleanup costs: joint and several liability, contribution, and liability of state and local governments. The authors conclude that while the express right of contribution under SARA may lessen the harness of joint and several liability, state and local governments present inviting targets as PRPs seek to distribute the liability for cleanup costs.

Carroll E. Dubuc is a partner in the Washington, D.C., office of Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey. William D. Evans Jr. is Of Counsel to the firm. While at the Environmental Enforcement Section, Land and Natural Resources Division, U.S. Department of Justice, Mr. Evans litigated numerous hazardous waste enforcement actions, including United States v. Ottati & Goss, Inc., and United States v. New Castle County, discussed below. The views expressed herein are not necessarily those of the firm or its clients.

[17 ELR 10197]

Since the passage of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)¹ in late 1980, the United States has achieved an impressive string of victories in federal hazardous waste enforcement actions. The vast majority of decisions on CERCLA liability issues have construed the statute in a broad and liberal fashion.² The four CERCLA trials, United States v. Hardage,³ United States v. Northeastern Pharmaceutical & Chemical Co., Inc.,⁴ United States v. Ottati & Goss, Inc.,⁵ and United States v. Tyson,⁶ have resulted in substantial victories for the U.S. Environmental Protection Agency (EPA).

The statutory affirmative defenses under Section 107(b) of CERCLA, i.e., act of God, act of war, and act of nonrelated third party, have been at best ineffective and at worst a cruel congressional joke. Moreover, traditional common law defenses, such as lack of negligence, causation, de minimis contributor, and retroactivity, have been unavailing in releasing potentially responsible parties (PRPs), i.e., owners, operators, transporters, and generators, from the tight grip of CERCLA liability.⁷

Despite an effort by the regulated community to substantially alter CERCLA's liability scheme, the Superfund Amendments and Reauthorization Act of 1986 (SARA)⁸ was overwhelmingly passed in Congress in late 1986 and made no major changes to CERCLA's liability provisions. SARA mandates an accelerated five-year hazardous waste abatement program with an additional $8.5 billion injected into the Hazardous Substance Response Trust Fund (Superfund).⁹ With SARA's tougher cleanup standards, it has been estimated that the remedial cost at each site will soar from under $10 million per site to between $20 to 30 million.¹⁰

Despite the higher stakes, several provisions of SARA as well as recent court decisions may substantially reduce a PRP's exposure to cleanup costs. This paper will discuss those recent developments in the areas of: (1) joint and several liability, (2) contribution, and (3) liability of state and local governments. Indeed, these developments insure that all parties, who have caused in the broadest sense the environmental hazard, become litigants. As District Judge Longobardi pointed out in United States v. New Castle County,¹¹ "As the size of the defendant pool increases, the chances for settlement of the suit and achievement of one of the federal government's objectives under the Act — site clean-up at the expense of responsible parties — is met."¹²

Joint and Several Liability

Methods of Apportionment

For PRPs, joint and several liability is the "Darth Vader" of hazardous waste enforcement tools. Once liability is established under CERCLA, a court may choose either of two methods of distributing liability. A court may impose joint and several liability, which makes each defendant individually liable for the entire cost of cleanup, or it may hold each defendant liable only for its share of the costs. If liability is joint and several, the United States may recover the entire judgment from any one defendant. Under this theory of liability, the United States need only sue a few solvent parties to insure recovery of all cleanup costs. On the other hand, if liability is apportioned, the shares of absent or insolvent parties go uncompensated.¹³

[17 ELR 10198]

The Majority View

The seminal case on the issue of joint and several liability is District Judge Rubin's 1983 decision in United States v. Chem-Dyne Corp.¹⁴ In responding to the defendant's motion for an early determination that joint and several liability should not be imposed under CERCLA, District Judge Rubin adopted the approach of the Restatement (Second) of Torts. Judge Rubin stated:

An examination of the common law reveals that when two or more persons acting independently caused a distinct or single harm for which there is a reasonable basis for division according to the contribution of each, each is subject to liability only for the portion of the total harm that he has himself caused. But where two or more persons cause a single and indivisible harm, each is subject to liability for the entire harm. Furthermore, where the conduct of two or more persons liable under Section 9607 has combined to violate the statute, and one or more of the defendants seeks to limit his liability on the ground that the entire harm is capable of apportionment, the burden of proof as to apportionment is upon each defendant.¹⁵ (citations omitted).

In Judge Rubin's view, the focus should be on the factual question of whether the harm is divisible or indivisible.¹⁶ If the harm is divisible and if there is a reasonable basis for damage apportionment, each defendant is liable only for that portion of the harm he caused. In this situation, each defendant must carry the burden of proof as to apportionment. Conversely, if the defendants have caused an indivisible harm, each is subject to liability for the entire harm.¹⁷

A majority of courts have followed Chem-Dyne's joint and several liability ruling.¹⁸ Two recent decisions are illustrative. First, in Idaho v. Bunker Hill Co.,¹⁹ the lower court adopted the Chem-Dyne ruling, but noted that care must be taken in imposing joint and several liability upon small contributors to a waste site because of the inherent unfairness.²⁰

To the same effect is the 1986 decision of United States v. Miami Drum Services, Inc.²¹ In adopting the Chem-Dyne approach, District Judge Aronovitz noted that during the CERCLA reauthorization process, Representative Eckart, SARA's primary sponsor, stated that "nothing in this bill is intended to change the application of the Federal rule of joint and several liability enunciated by the Chem-Dyne court."²² Moreover, in rejecting an argument as to the fairness of the Chem-Dyne approach, the court observed that "[p]roving divisibility in a toxic tort waste case is not an insurmountable burden."²³ In a footnote, the court defined indivisible harm by declaring that "[t]he legislative history of CERCLA suggests that an indivisible harm at hazardous waste sites is the situation 'where many parties have contributed to the contamination or other endangerment and there are no reliable records indicating who disposed of the hazardous waste or in what quantities.'"²⁴ Thus, the Miami Drum court would allow apportionment if each generator's share could be accurately determined.

Minority View

The minority view, actually three cases, adoptseither the Gore Amendment approach or a volume approach. In United States v. A & F Materials Co.²⁵ the court first noted that CERCLA was hastily and inadequately drafted and reiterated Representative Harsha's perceptive remark that "the bill is not a superfund bill — it's a welfare and relief act for lawyers."²⁶ After reviewing the statutory language and the legislative history, District Judge Foremen concluded that "Congress did not intend to preclude the imposition of joint and several liability."²⁷

In ruling that joint and several liability may be imposed, the court rejected the Chem-Dyne approach and selected what it termed as a "moderate approach."²⁸ The court adopted the approach of the Gore Amendment that was passed by the House on September 23, 1980, but not incorporated into the final bill.²⁹ District Judge Foreman held:

Under the Gore Amendment, a court had the power to impose joint and several liability whenever a defendant could not prove his contribution to an injury, however, a court can still apportion damages in this situation according to the following criteria:

(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.³⁰

To the same effect is the 1984 decision of United States v. Stringfellow,³¹ a high profile enforcement action involved in the Burford-Lavelle controversy.

In United States v. Ottati & Goss, Inc.,³² the "Bataan Death March" of hazardous waste cases, the trial of the liability phase lasted from 1983 until 1985, in excess of 110 [17 ELR 10199] trial days.³³ This action involved two adjacent hazardous waste facilities: (1) the Great Lakes Container Corporation Site, a drum reconditioning plant, and (2) the Ottati & Goss Site, a hazardous waste processing facility. The proof showed that the soil and groundwater at both facilities were contaminated by hazardous substances and that groundwater contamination from the Ottati & Goss Site had mixed with similar contamination from the Great Lakes Container Corporation Site and had migrated off site. For relief, the United States sought the recovery of approximately $1.6 million for EPA's emergency drum removal action at the Ottati & Goss Site and injunctive relief to abate all groundwater contamination.³⁴

In his December 1985 decision, District Judge Loughlin found 16 of 17 parties liable and accepted the Chem-Dyne approach imposing joint and several liability. Liability was imposed even though each generator defendant was able to establish the number of drums sent to the Ottati & Goss Site.³⁵ Three months later in March 1986, Judge Loughlin modified his decision as to the United States' response cost claim at the Ottati & Goss Site.³⁶ "A reasonable basis exists for determining the contribution of each liable generator to the harm relating to surface clean-up at the Ottati & Goss Site. The basis is the number of drums sent to the site by each generator."³⁷ In applying a straight volume approach, the court was apparently adopting § 443A of the Restatement (Second) of Torts. That section provides: "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."³⁸ The issue of whether joint and several liability or some other apportionment scheme will be applied to remedy the groundwater contamination must be ultimately decided by Judge Loughlin. The remedy phase began in February 1987 and is estimated to last from three to six months.³⁹

Recent Trends In Joint and Several Liability

Two recent trends may arguably assist PRPs in their efforts to gain acceptance of the minority view. First, the tort law reform movement has generally criticized the imposition of joint and several liability. In March 1986, the Reagan Administration released the Report of the Tort Policy Working Group on the Causes, Extent and Policy Implications of the Current Crises in Insurance Availability and Affordability.⁴⁰ The Report is a product of an interagency working group consisting of representatives from several federal agencies and the White House. The U.S. Department of Justice, the U.S. Department of Commerce, and Small Business Administration were the primary contributing agencies.⁴¹

In commenting on the ills of joint and several liability, the Report stated:

Joint and several liability thus frequently operates in a highly inequitable manner — sometimes making defendants with only a small or even de minimus percentage of fault liable for 100% of the plaintiff's damage. Accordingly, joint and several liability in the absence of concerted action has lead to the inclusion of many "deep pocket" defendants such as governments, large corporations, and insured entities whose involvement is only tangential and who probably would not be joined except for the existence of joint and several liability.⁴²

As recently as March 1987, the Tort Policy Working Group recommended the elimination of joint and several liability in the state tort law systems, except in the limited circumstances where the plaintiff can show that the defendants have actually acted in concert to cause the injury.⁴³ Clearly, the federal government is speaking out of both sides of its mouth on this issue.⁴⁴

Second, several provisions of SARA arguably bless the Gore Amendment approach. Under new CERCLA § 122(e), EPA is authorized to submit the names and addresses of PRPs to each other, the volume and nature of hazardous substances contributed to the hazardous waste facility by each PRP, and the ranking of PRPs by volume.⁴⁵ Thereafter, SARA authorizes EPA to provide a nonbinding preliminary allocation of responsibility among the PRPs.⁴⁶ Moreover, new CERCLA § 122(g) allows EPA to settle with de minimis generators or innocent landowners.⁴⁷

Commentators have suggested that when EPA brings suit against only several PRPs, the imposition of joint and several liability may prove unfair since it fails to insure that each PRP bears the full cost of its activity and forces certain parties to pay for abating releases to which they did not contribute and for which they derived no prior financial benefit. In fact, the Gore Amendment approach would eliminate the potential for unfair selection of solvent defendants. In comparison to joint and several liability, the Gore factor approach would be more equitable and likely to create safety incentives for future waste disposal practices.⁴⁸ In short, this approach "does not impose liability on some defendants for cleaning up the waste of others."⁴⁹

The Gore factors are best suited to an enforcement action with multiple owners, operators, transporters, and generators. While it is easy to determine the volume of waste contributed by generators and transporters, the Gore Amendment approach does not answer the questions of what percentage of the cleanup responsibility should be carried by the owners and operators. Congress has offered some limited guidance on this issue. Section 107(c) of CERCLA provides that a state or local government must pay the United States under a cooperative agreement 50 [17 ELR 10200] percent, more or less, of the abatement costs where the state or local government has owned or operated the site.⁵⁰

The Gore Amendment approach has one practical disadvantage. With their legal, factual, and scientific complexity and considerable public and media attention, these multi-party actions have gained an unfortunate judicial reputation from a case management perspective. The trial length of Ottati & Goss has only supplemented this perception. It is one thing for the United States, as was done in Ottati & Goss, to prove that a group of hazardous substances pose a risk to the public health and environment.⁵¹ It is quite another matter to engage in complex and lengthy scientific proof contrasting the toxicity of numerous hazardous substances, which may be required under the Gore Amendment approach. Since most sites contain a variety of toxic wastes, the "High Noon" of such proof could be evidentiary chaos.

If a court is amenable to apportioning damages, § 443A of the Restatement (Second) of Torts, as apparently adopted in Ottati & Goss, offers a predictable and potentially efficient method of cost division. The use of this approach plus EPA's injection of mixed funding for orphan shares of missing or insolvent PRPs could reduce years of litigation and foster prompt settlement and resulting cleanup.⁵² Since most sites are contaminated by similar industrial solvents, a volume apportionment may be practicable. One commentator has noted that "[d]espite the difficulties created by commingling of waste, volume might under some circumstances provide a 'reasonable basis' for dividing — particularly when the defendants can show that the various substances in the release require identical cleanup procedures."⁵³

SARA's creation of a statutory right of contribution, as discussed below, will ease some of the unfairness of joint and several liability. However, because many PRPs continue to be either missing or judgment-proof, the issue of joint and several liability will continue to be a major issue in CERCLA litigation. As one noted commentator has suggested, "Whether future courts adopt the Ottati straight volume approach or delve into complicated apportionment schemes remains an issue of great interest to CERCLA lawyers and concerned businesses."⁵⁴

Contribution

Pre-SARA

United States v. Conservation Chemical Co.⁵⁵ is illustrative of an EPA litigation tactic of naming only a handful of major PRPs as party defendants. In that case, EPA initially brought suit against seven original defendants. Thereafter, third-party claims were filed against 154 generator defendants, 16 insurance company defendants, and 14 federal agency defendants. Thus, the issue of a right of contribution under CERCLA was raised.⁵⁶

The first decision to consider this issue directly was United States v. Ward.⁵⁷ In a brief decision, the Ward court held that rights of contribution and indemnity were available under CERCLA § 107. It reasoned that CERCLA has been construed to impose joint and several liability; other cases have suggested, in dictum, that such claims are available under CERCLA; and a majority of states allow actions for indemnity and contribution.⁵⁸ Since the court did not thoroughly address this issue, the Ward decision had little precedential value.⁵⁹ After Ward, a majority of the courts, with a few possible exceptions, held that a cause of action for contribution was created by CERCLA.⁶⁰ Despite this trend, the issue was continually being contested by third-party defendants.

If there was ever any doubt about the issue, District Judge Longobardi's July 1986 decision in United States v. New Castle County⁶¹ put a quietus to the debate. Citing Texas Industries, Inc. v. Radcliff Materials, Inc.,⁶² and Northwest Airlines, Inc. v. Transport Workers⁶³, he recognized that a right of contribution can exist in the framework of a particular statutory scheme in one of two ways: first, by the affirmative creation of a right of action by Congress, either expressly or by obvious implication, and second, through the power of federal courts to fashion a federal common law of contribution. After reviewing CERCLA's language and legislative history, he ruled that Congress did not create a right to contribution under CERCLA either expressly or by clear implication.

Judge Longobardi ruled, however, that a right to contribution under CERCLA is authorized under federal common law. Again citing Texas Industries, the New Castle court noted that federal courts have the need and authority in some limited areas to formulate federal common law. These instances are those where a federal rule of decision is needed to protect uniquely federal interests and those in which Congress has given the judiciary the power to develop substantive rules. Creation of this right is necessary to "fill in the gaps" of statutes. Senator Randolph and Representative Florio, CERCLA's floor managers, stated that the liability of joint tortfeasors will be determined under common law. Thus, Judge Longobardi held that CERCLA's legislative history supports creation of a federal common law right of contribution.⁶⁴

Judge Longobardi further held that the presence of a substantial federal interest also supports a federal common law right to contribution. He noted that a right to contribution under CERCLA would enhance unique federal interests in two substantial ways:⁶⁵

First, the Federal Government is authorized by CERCLA to take action against responsible persons to achieve compliance [17 ELR 10201] with the goals of the Act. A right to contribution would encourage expeditious settlement of Superfund suits brought by the Government against these responsible parties. Because CERCLA liability is joint/several, the Government needs to sue only a limited number of responsible parties in order to recover all costs of clean-up and remedial operation at a site. With a right to contribution available to CERCLA defendants, they will be willing to undertake the burden to locate and implead other responsible persons into a CERCLA action in order to minimize their own liability. As the size of the defendant pool increases, the chances for settlement of the suit and achievement of one of the federal government's objectives under the Act — site clean up at the expense of responsible parties — is met. In addition, a right to contribution through its ability to encourage settlement, will cause a substantial reduction in the Government's CERCLA enforcement costs by eliminating the need for expensive and drawn out litigation.⁶⁶ (citations omitted)

Second, Judge Longobardi noted that a CERCLA right to contribution protects a unique federal interest insofar as it encourages private party cleanups and protects the Superfund's financial resources from substantial reduction.⁶⁷

SARA

With the passage of SARA in late 1986, Congress put an end to all this brief writing and expressly created a right of contribution under new CERCLA § 113(f).⁶⁸ Shortly after the passage of SARA, United States v. Miami Drum Services, Inc.,⁶⁹ recognized a statutory right of contribution under SARA.⁷⁰

Under SARA, the contribution claim can be brought during or following the enforcement action, and courts are authorized to allocate response costs among liable parties using equitable factors as the court deems appropriate. Moreover, a settling party who has resolved its liability to the United States shall not be liable for claims of contribution regarding matters addressed in the settlement agreement. Unless otherwise provided, such settlement does not discharge any other PRP, but it reduces its potential liability to the others by the amount of the settlement.⁷¹ Congress was in effect adopting the Uniform Contribution Among Tortfeasors Act.⁷²

A party who has resolved its liability to the United States for some or all of a response action in an administrative or judicially approved settlement may seek contribution from any party who is not a signatory to the settlement.⁷³ Finally, SARA mandates a three-year statute of limitation for contribution actions. The statute begins to run on the date of judgment, date of administrative order, or date of entry of a judicially approved settlement in a hazardous waste enforcement action.⁷⁴

Post-SARA Issues

In passing SARA, Congress set forth no guidance as to the elements of a CERCLA contribution claim. However, the New Castle County court declared that a third-party complaint for contribution must allege and provide the following: (1) that the third-party defendant disposed of waste at the hazardous waste facility; (2) that the waste contained "hazardous substances" as that term is defined in CERCLA § 101(14); and (3) that those particular hazardous substances contained in the third-party defendant's waste were located or found at the hazardous waste facility.

It is not necessary for the third-party plaintiff to state precisely the types and amounts of hazardous substances sent to the hazardous waste facility by the third-party defendant. Since many cases involve old, abandoned land-fills and information concerning a corporation's hazardous waste disposal practices are generally not known outside the organization, the dismissal of a third-party claim for lack of specificity would restrict CERCLA's remedial efforts and cost-spreading.⁷⁵

In apportioning costs among joint tortfeasors, Congress provided the federal judiciary with broad discretion. Under SARA, Congress requires federal courts to use "such equitable factors as the court determines are appropriate" in allocating response costs among joint tortfeasors.⁷⁶ The only court to previously address this issue was United States v. Conservation Chemical Co.⁷⁷ In 1985, Special Master Freilich held that a right of contribution existed under CERCLA.⁷⁸ Upon appeal of the Special Master's Report, District Judge Wright restricted the contribution right as follows:

Under CERCLA, if the harm caused by the defendants is determined to be indivisible under the theory of joint and several liability, a right of contribution exists against third-party defendants for costs of injunctive relief and response costs imposed on or incurred by the defendants, and the third-party defendants' liability for contribution under CERCLA is several, but not joint and several, as liability for contribution does not extend beyond a tortfeasor's equitable share of the liability.⁷⁹

On the other hand, one commentator has suggested that courts should impose joint liability in suits for contribution as a way of spreading costs, including transaction costs, throughout the entire pool of PRPs.⁸⁰

A recent state court decision is illustrative of the equitable factors that a court can employ in apportioning cleanup costs among third-party defendants. In Advance Circuits, Inc. v. Carriere Properties,⁸¹ the court held that the owners and operators of two contaminated industrial recycling facilities were liable for 70 percent of the costs incurred by 13 generators in cleaning up the sites. In imposing a majority of the cost on the owners and operators, the court found that: (1) their actions were the substantial [17 ELR 10202] cause of the release of toxic waste at the sites, (2) all materials remaining at the sites at the time of the cleanup were the by-products of their activities, (3) they took no action to reduce the toxicity of the materials, (4) they had control of the treatment and storage of material at the two sites, (5) they were uncooperative with responsible governmental authorities in addressing the problem; and (6) they were experts in hazardous waste handling and aware of the hazardous nature of the substances accepted at the site. In contrast, the court found that the generators had relied upon the representations of the owners and operators that the materials would be handled properly. Moreover, the generators cooperated fully with governmental officials to prevent any harm to the environment.⁸² The analysis of various equitable factors that was performed by the Advance Circuits court is precisely the type of inquiry that SARA now contemplates.

Liability of State and Local Governments

Introduction

In the backwaters of CERCLA has been the issue of the liability of state and local governments for permitting and otherwise regulating hazardous waste facilities. To encourage economic development and expand their tax revenue base, many state and local governments have permitted hazardous waste facilities and encouraged, if not mandated, local industry to ship their waste to the permitted facility. In fact, these permitting activities commence a chain of events that may result in releases of toxic waste. Since EPA regulates facilities under the Resource Conservation and Recovery Act, it has been most reluctant to press this issue for fear of future liabilities. However, recent court decisions as well as SARA will propel this issue forward.

Liability for Permitting Sites

Special Master Peetris' September 1986 Report and Recommendation in United States v. Stringfellow⁸³ is the first decision to address this issue in detail. The Stringfellow Acid Pits are located in the Jarupa Mountains near Glen Avon, California, and occupy approximately 22 acres, 14 of which are composed of disposal pond areas. From 1956 until 1972, approximately 33,900,000 gallons of hazardous substances were dumped into the pond areas.⁸⁴

In the 1950s, the State of California and local governments recognized the need for an industrial waste disposal facility in the region if commercial and industrial enterprises were to be attracted to the area. The California Division of Water Resources commissioned a geological study that found the Stringfellow property to be underlain with impermeable bedrock that would make a suitable site since no material could escape from the property. Thereafter, California approached the property owners, who agreed that the property would be used for the disposal of hazardous waste. Since the property owners lacked experience in such a venture, the state and local government entities took an active role in the "regulation" of the facility. Thereafter, California played an aggressive role in the application for the appropriate permits and in designing the evaporation ponds and auxiliary components.⁸⁵

From 1956 through 1972, this facility was operated under the close supervision of California. For example, all site deliveries had to have prior approval by the Regional Board and the Riverside County Department of Health. California conducted regular inspections as well as monitoring of land downgradient from the site for possible leaks.⁸⁶

Beginning in 1968, considerable evidence began to accumulate that wastes were migrating off site. Because of community complaints, this facility was temporarily closed in 1969 and 1972, but the Regional Board allowed the facility to reopen in June of 1973. With increased community opposition and further evidence of off-site migration, the facility was shut down in 1974. California then took control of the site with the intention of abating the releases. While under the control of the state, the site experienced heavy rainfall during 1977 and 1978. When the rains threatened to collapse portions of the facility, California intentionally released 1,500,000 gallons of liquid waste into a navigable water.⁸⁷

Because of the State of California's "active role in site investigation, geological studies, subsequent representations to third parties, supervision and regulation of site construction, operation and maintenance of the site," the generator defendants asserted a Section 107(b) defense, i.e., a release caused by nonrelated third-party. The Special Master noted that a public agency can be a third-party for purposes of the third-party exception to liability of Section 107(b) of CERCLA. However, as a result of the close and continuing relationship between the governmental entities and the property owner, these agencies cannot be found to be a detached third-party in this case. Since California acted as a "quasi-private consultant," it cannot be a nonrelated third-party under Section 107(b). Despite rejecting the statutory defense, the Special Master ruled that the defendants could assert a counterclaim against California for its alleged acts and omissions.⁸⁸

Eleventh Amendment Immunity

United States v. Mottolo⁸⁹ represents the dilemma faced by state governments in seeking recovery of CERCLA response costs. In that action, EPA and the State of New Hampshire sought to recover cost incurred in the cleanup of a hazardous waste site located in Raymond, New Hampshire. A counterclaim was filed requesting that New Hampshire be denied cost reimbursement because it had significantly contributed to the cost necessary for cleanup through "its failure to adequately conduct and supervise the various clean-up operations."⁹⁰

In responding to the motion to dismiss the counterclaim, the state did not contend that the Eleventh Amendment to the United States Constitution barred the counterclaim. However, it claimed that the doctrine of sovereign immunity [17 ELR 10203] barred the counterclaim since the New Hampshire Legislature had not expressly waived the state's immunity from tort, contribution, and indemnity claims. District Judge Devine first noted that the doctrines of Eleventh Amendment immunity and sovereign immunity are not identical. The Eleventh Amendment represents a restraint upon the federal judicial power to consider suits against an unconsenting state. On the other hand, the doctrine of sovereign immunity goes to the question of whether the state may be sued at all.⁹¹ He stated:

However, these two doctrines do overlap here, where the State of New Hampshire has initiated litigation in a federal court. Filing suit as a plaintiff constitutes a waiver of the Eleventh Amendment immunity as well as sovereign immunity with respect to any counterclaim asserted by defendant which arises out of the same event underlying the State's claim and which is asserted defensively in recoupment for the purpose of diminishing the State's recovery. This implied waiver does not extend to any counterclaim unrelated to the State's claim or asserted for the purpose of obtaining an affirmative judgment against the State.⁹²

As a result of this waiver, the defensive counterclaim whereby defendant resisted payment of cleanup costs incurred by New Hampshire stood. However, to the extent that the counterclaim seeks indemnity and contribution for cleanup costs incurred by the United States, the motion to dismiss was granted since the counterclaim fell outside the scope of New Hampshire's complaint and waiver of sovereign immunity.⁹³

In United States v. Union Gas Co.,⁹⁴ the predecessors of Union Gas Company owned and operated an industrial facility adjacent to Broadhead Creek in Stroudsberg, Pennsylvania, between 1890 and 1948. In 1955, as a result of flooding, the Commonwealth of Pennsylvania and the municipality, together with the U.S. Army Corps of Engineers, erected dikes, dug levies, and deepened and narrowed the creek.⁹⁵

In October 1981, the Commonwealth of Pennsylvania was excavating the creek when it struck a large deposit of coal tar that began to seep into the Broadhead Creek. After $720,000 had been spent to abate the coal tar release, the United States brought suit under CERCLA to recoup its costs. In a third-party action, Union Gas Company named the Commonwealth of Pennsylvania and the Borough of Stroudsberg as third-party defendants claiming that these governmental entities had negligently caused the discharge of coal tar by their excavation work.

Pursuant to Rule 12 of the Federal Rules of Civil Procedure, Pennsylvania moved to dismiss the third-party complaint alleging that it was immune to CERCLA suit pursuant to the Eleventh Amendment of the U.S. Constitution. On appeal from the district court's dismissal of the third-party claim,⁹⁶ the Third Circuit first noted that the Eleventh Amendment's immunity can be avoided in two ways: "(a) Congress can abrogate it by providing through statute for suits against states, or (b) states can waive their sovereign immunity and consent to be sued."⁹⁷ Since the state had not waived its sovereign immunity, the issue was whether CERCLA abrogated Pennsylvania's immunity. In upholding the lower court's decision, the Third Circuit held that "CERCLA does not evidence congressional intent to abrogate states' eleventh amendment immunity."⁹⁸

Several days after a certiorari petition was filed with the U.S. Supreme Court, President Reagan signed SARA.⁹⁹ In briefs filed by Union Gas Company and the United States as amicus curiae, they noted that SARA amends CERCLA's definitions relating to a state's liability.¹⁰⁰ Section 101(20) of CERCLA, defining "owner or operator," was amended by the addition of the following new subparagraph:

The term "owner or operator" does not include a unit of State or local government which acquired ownership or control involuntarily through bankruptcy, tax delinquency, abandonment, or other circumstances in which the government involuntarily acquires title by virtue of its function as sovereign. The exclusion provided under this paragraph shall not apply to any State or local government which has caused or contributed to the release or threatened release of a hazardous substance from the facility, and such a State or local government shall be subject to the provisions of this chapter in the same manner and to the same extent, both procedurally and substantively, as any nongovernmental entity, including liability under Section 107.¹⁰¹

On January 12, 1987, the U.S. Supreme Court vacated the Third Circuit's June 1986 decision and ordered the appellate court to consider the impact of SARA on the case.¹⁰²

It is unclear what level of involvement with a hazardous waste facility will constitute "caused or contributed to the release or threatened release of a hazardous substance from the facility." In the past, the United States has brought enforcement actions, such as New Castle County, where the hazardous waste facility was owned or physically operated by the state or local government. It would seem that the activities of the state in Union Gas Company would be sufficient to establish CERCLA liability. In Stringfellow, the Special Master believed that the aggressive promotion of the Stringfellow Acid Pits by California would be a sufficient predicate for liability.¹⁰³

In determining the issue of causation, it should be noted that courts have defined causation under CERCLA in a broad fashion. For example, in United States v. Miami Drum Services, Inc.,¹⁰⁴ the court noted that CERCLA establishes a rebuttable presumption that PRPs are causally connected to the hazardous substance release or threat of release at the site. This presumption shifts the burden of proof to the party defendant to show by a preponderance of the evidence that it did not cause or contribute to the [17 ELR 10204] environmental threat at the site within the meaning of CERCLA § 107(b).¹⁰⁵ The Miami Drum court stated:

The causation requirement under CERCLA differs from state common law causation, which normally requires a showing of cause-in-fact and proximate cause. As initially stated, however, interpretation of CERCLA's liability provisions is a matter of Federal common law. CERCLA's causation requirement has been somewhat relaxed due to the difficult proof problems inherent in toxic waste cases.¹⁰⁶

Conclusion

With SARA's tougher cleanup standards and resulting higher costs, hazardous waste enforcement actions may become more litigious, especially contribution claims seeking to spread cleanup costs. SARA's express right of contribution has diminished, to some extent, the harshness of joint and several liability. However, as PRPs seek to enlarge the pool of defendants, state and local governments will become inviting targets. The extent of the enlargement of state and local government's liability under a Stringfellow theory will await future judicial pronouncements.

1. 42 U.S.C. 9601-9657, ELR STAT. 44001; see generally Moorman & Kirsch, Significant CERCLA Decisions During The Past Year, ALI-ABA ENVIRONMENTAL LAW SEMINAR 441 (1987).

2. Moorman, supra note 1.

3. 13 ELR 20188 (W.D. Okla. Sept. 29, 1982).

4. 579 F. Supp. 823, 14 ELR 20212 (W.D. Mo. 1984), aff'd, 810 F.2d 726, 17 ELR 20603 (8th Cir. 1986).

5. 630 F. Supp. 1361, 16 ELR 20763 (D.N.H. 1985).

6. No. 80-1274-6 (E.D. Pa. Aug. 22, 1986).

7. Moorman, supra note 1, at 473-477, 482-484, and 489-498.

8. Pub. L. No. 99-499, 100 Stat. 1613 (1986). For a detailed analysis of the amendments, see Atkeson et al., An Annotated Legislative History of the Superfund Amendments and Reauthorization Act of 1986 (SARA), 16 ELR 10360 (Dec. 1986).

9. CERCLA § 221, 42 U.S.C. § 9631, ELR STAT. 44065.

10. Address by Lee M. Thomas, Administrator of the U.S. Environmental Protection Agency, ALI-ABA Hazardous Waste, Superfund and Toxic Substance Seminar (Oct. 23, 1986).

11. 642 F. Supp. 1258, 16 ELR 21007 (D. Del. 1986).

12. 642 F. Supp. at 1264, 16 ELR at 21011.

13. Note, Development — Toxic Tort Litigation, 99 HARV. L. REV. 1458, 1525 (1986).

14. 572 F. Supp. 802, 13 ELR 20986 (S.D. Ohio 1983). See generally Comment, CERCLA Litigation Update: The Emerging Law of Genrator Liability, 14 ELR 10224 (June 1984); Comment, CERCLA 1985: A Litigation Update, 15 ELR 10395 (Dec. 1985).

15. 572 F. Supp. at 810, 13 ELR at 20988.

16. 572 F. Supp. at 810-11, 13 ELR at 20988.

17. 572 F. Supp. at 805-811, 13 ELR at 20988-89.

18. Note, supra note 13, at 1524-1533.

19. 635 F. Supp. 665, 16 ELR 20879 (D. Idaho 1986).

20. 635 F. Supp. at 677.

21. 17 ELR 20539 (S.D. Fla. Dec. 12, 1986).

22. 17 ELR at 20541.

23. 17 ELR at 20541.

24. 17 ELR at 20541 (quoting 126 CONG. REC. H11788 (daily ed. Dec. 3, 1980)).

25. 578 F. Supp. 1249, 14 ELR 20105 (S.D. Ill. 1984).

26. 578 F. Supp. at 1253 n.1, 14 ELR at 20106 n.1 (quoting 126 CONG. REC. H11791 (daily ed. Dec. 3, 1980)).

27. 578 F. Supp. at 1254, 14 ELR at 20107.

28. 578 F. Supp. at 1257, 14 ELR at 20108.

29. 578 F. Supp. at 1256, 14 ELR at 20108.

30. Id.

31. 14 ELR 20385 (C.D. Cal. 1984), modified, No. CV-83-2501 (C.D. Cal. Sept. 23, 1986) (report and recommendation).

32. 630 F. Supp. 1361, 16 ELR 20763 (D.N.H. 1985).

33. Id.

34. Id.

35. 630 F. Supp. at 1395.

36. No. 80-225-L (D.N.H. Mar. 3, 1986).

37. Id.

38. RESTATEMENT (SECOND) OF TORTS § 443A (1976).

39. Hazardous Waste Lit. Rep. 10616 (Mar. 16, 1987).

40. TORT POLICY WORKING GROUP, REPORT OF THE TORT POLICY WORKING GROUP ON THE CAUSES, EXTENT AND POLICY IMPLICATIONS OF THE CURRENT CRISES IN INSURANCE AVOIDABILITY AND AFFORDABILITY (1986).

41. Id.

42. Id. at 64.

43. TORT POLICY WORKING GROUP, AN UPDATE ON THE LIABILITY CRISES (1987).

44. See generally Freeman, Tort Law Reform: Superfund/RCRA Liability As A Major Cause of the Insurance Crisis, 21 TORT AND INS. L.J. 517 (1986).

45. CERCLA § 122(e)(1), 42 U.S.C. § 122(e)(1), ELR STAT. 44059.

46. CERCLA § 122(e)(3), 42 U.S.C. § 9622(e)(3), ELR STAT. 44060.

47. CERCLA § 122(g), 42 U.S.C. § 122(g), ELR STAT. 44061.

48. Note, supra note 13, at 1527-1535.

49. Id. at 1534.

50. 42 U.S.C. 9607(c), ELR STAT. 44024.

51. 630 F. Supp. 1361, 16 ELR 20762 (D.N.H. 1985).

52. CERCLA § 122(b); see generally Quarles, The Superfund Amendments and Reauthorization Act of 1986, ALI-ABA HAZARDOUS WASTE, SUPERFUND AND TOXIC SUBSTANCE SEMINAR (1986); Rogers, Changes in Procedures for Settlement of Superfund Cases, Contribution Claims and Related Enforcement Issues, ALI-ABA ENVIRONMENTAL LAW SEMINAR (1987).

53. Note, supra note 13, at 1529.

54. Moorman, supra note 1, at 482.

55. 619 F. Supp. 162, 16 ELR 20193 (W.D. Mo. 1985).

56. Id.

57. 14 ELR 20804 (E.D.N.C. May 14, 1984).

58. Id.

59. Note, Apportionment and Contribution Under The "Superfund" Act, 53 UMKC L. REV. 594 (1985).

60. Note, supra note 13, at 1535-1539.

61. 642 F. Supp. 1258, 16 ELR 21007 (D. Del. 1986).

62. 451 U.S. 630 (1981).

63. 451 U.S. 77 (1981).

64. New Castle County, 642 F. Supp. at 1269, 16 ELR at 21010.

65. Id.

66. Id.

67. 642 F. Supp. at 1269, 16 ELR at 21010-21011.

68. 42 U.S.C. § 9613(f), ELR STAT. 44041.

69. 17 ELR 20539 (S.D. Fla. Dec. 12, 1986).

70. Id.

71. CERCLA § 113(f)(2), 42 U.S.C. § 9613(f)(2), ELR STAT. 44041.

72. 12 U.L.A. 63 (1975); see generally Note, supra note 59, at 622-624.

73. CERCLA § 113(f)(3)(B), 42 U.S.C. § 9613(f)(3)(B), ELR STAT. 44041.

74. CERCLA § 113(g), 42 U.S.C. § 9613(g), ELR STAT. 44041.

75. New Castle County, 642 F. Supp. at 1273, 16 ELR at 21012.

76. CERCLA § 113(f)(1), 42 U.S.C. § 9613(f)(1), ELR STAT. 44041.

77. 619 F. Supp. at 222-30, 16 ELR at 20219-23.

78. Id.

79. 619 F. Supp. at 176, 16 ELR at 20195.

80. Note, supra note 13, at 1539.

81. Nos. 84-3316, -4591 (Minn. Dist. Ct. Feb. 18, 1987).

82. Id.

83. No. CV-83-2501 (C.D. Cal. Sept. 23, 1986) (report and recommendation).

84. Id. at 3-9.

85. Id.

86. Id.

87. Id.

88. Id.

89. 14 ELR 20497 (D.N.H. Mar. 27, 1984).

90. 14 ELR at 20500.

91. 14 ELR at 20500-01.

92. Id.

93. Id.

94. 792 F.2d 372, 16 ELR 20818 (3d Cir. 1986).

95. 792 F.2d at 374, 16 ELR at 20819.

96. 575 F. Supp. 949, 14 ELR 20246 (E.D. Pa. 1983).

97. 792 F.2d at 376, 16 ELR at 20820.

98. 792 F.2d at 382, 16 ELR at 20824.

99. United States v. Union Gas Co., 792 F.2d 372, 16 ELR 20818 (3d Cir. 1986), petition for cert. filed sub nom. Union Gas Co. v. Pennsylvania, 55 U.S.L.W. 3317 (U.S. Oct. 8, 1986) (No. 86-597).

100. Briefs for Union Gas Co. and United States, Union Gas Co. v. Pennsylvania, 55 U.S.L.W. 3472 (U.S. Jan. 12, 1987) (No. 86-597).

101. CERCLA § 101(20)(D), 42 U.S.C. § 9601(20)(D), ELR STAT. 44006 (emphasis added).

102. 55 U.S.L.W. 3472 (U.S. Jan. 12, 1987).

103. United States v. Stringfellow, No. CV-83-2501 (C.D. Cal. Sept. 23, 1986) (report and recommendation).

104. 17 ELR 20539 (S.D. Fla. Dec. 12, 1986).

105. Id.

106. Id. at 20541.