Environmental Law

Wisconsin District Court Resuscitates Divisibility Defense Under CERCLA?

This blog post is dedicated to the divisibility defense available under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”).

The specter CERCLA liability strikes fear in the eyes of any potentially responsible party (“PRP”). This is due, in part, to the fact that liability under CERCLA is generally joint and several. This means that a PRP can be held responsible for the entirety of the costs to clean up a site, despite other parties’ contribution to the contamination.

However, as with most everything in law, there is an exception to this general rule. The exception to the general rule regarding joint and several liability under CERCLA is the divisibility defense. Courts, however, infrequently apply this defense. To avail oneself of the defense, a party must prove that the harm is divisible. In practice, proving divisibility of harm has proved quite difficult. As such, the defense has been of limited use. However, a recent Wisconsin district court case may open the door to more frequent application of the divisibility defense.

A Wisconsin district court applied the divisibility defense to limit the liability of NCR Corporation’s to its share of contamination. United States v. NCR Corp., No. 10-C-910 (E.D. Wis. May 15, 2015). This is the first time in seven years that a court has explored the divisibility defense. The last time was in the Supreme Court case of Burlington Northern & Santa Fe Railway Co. v. US, 556 U.S. 599 (2009).

The Wisconsin case involves liability for PCB contamination in portions of the Fox River and Green Bay. The estimated cost of remediation of this contamination is in the hundreds of millions of dollars. Originally, the Wisconsin district court rejected the divisibility defense on the familiar basis that the harm was not divisible. However, on remand from the Seventh Circuit, the Court stated, “[t]he Seventh Circuit’s definition of ‘harm’ opens the door to a simple volumetric approach to divisibility.” In evaluating whether NCR could avail itself of the divisibility defense, the court set forth a two-part test. First, a PRP must show that the harm is capable of being divided. Second, a PRP must show that there is a reasonable way of apportioning damages between the parties. In evaluating whether the harm was divisible, the court focused on the “toxicity or danger to human health and the environment,” of the contaminant released by NCR, namely PCBs. The Court relied upon expert testimony to determine the upper limit of the percentage of toxicity in the river was caused by NCR’s discharges. Upon determining this upper limit, the court turned its attention to the costs associated with remediating this percentage contribution to the toxicity in the Fox River caused by NCR. Ultimately, the court concluded that 28% of the cost remediation should be apportioned to NCR.

This decision is significant to any PRP facing potential joint and several liability. Namely, these PRPs can rely upon this case to encourage courts to take a volumetric approach to divisibility of harm and apportion costs accordingly. Namely, the divisibility defense may come into more prominence, particularly for sites where the toxicity of contaminants is uniform. However, in cases where there are multiple contaminants with varying degrees of toxicity, this volumetric approach may prove more difficult with respect to application of the divisibility defense.

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