When two companies contribute to groundwater pollution, one company cannot avoid cleanup costs by arguing that the other company would have spent money on the cleanup anyway, the U.S. Ninth Circuit Court of Appeals has ruled. The decision came in an Oregon case interpreting the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), better known as the Superfund law.
To let one company avoid cleanup costs "would encourage parties to avoid investigating and cleaning up contamination to which others as well as themselves contributed," the court ruled. "A party that had discharged into a mixed plume could wait for another discharger to incur the costs of investigation, and have a fair chance of leaving the other polluter stuck with the entire bill."
The court also ruled it is acceptable to apportion cleanup costs — when two companies are responsible — based on the amount of each parties' contamination.
The case stemmed from two industrial properties in Portland, Oregon. Boeing Company had a 151-acre airplane part factory, and Cascade Corp. made lift truck attachments on a 6-acre parcel about 200 feet away. In the mid-1980s, both companies became aware of groundwater pollution from chlorine-based solvents that both companies used and disposed of on their sites, and the companies worked together on a state-supervised cleanup.
Of three aquifers below the sites, one had been polluted by both companies. Boeing sued Cascade, seeking a contribution from Cascade and a declaratory judgement allocating future expenses. U.S. District Court Judge Malcolm Marsh ruled for Boeing. Because even a Cascade consultant testified that the company created 70% of the plume of contamination, Judge Marsh ordered Cascade to pay 70% of cleanup costs.
On appeal, Cascade argued that it should not be liable because Boeing would have incurred the cleanup costs even if Cascade had not contributed pollution to the aquifer. Cascade argued that it could be held liable only if its release of contaminants forced the cleanup.
But a unanimous three-judge panel of the Ninth Circuit rejected Cascade's argument. "One of he goals of CERCLA was to ‘affix the ultimate cost of cleaning up these disposal sites to the parties responsible for the contamination.' To leave one party shouldering the entire cost of investigation and remediation while another rides for free frustrates this goal, rather than ensuring that those who caused the contamination pay their fair share of the costs associated with clean-up," Judge Andrew Kleinfeld wrote.
As for allocating the costs, the court made clear that the trial judge had great discretion. In a Fifth Circuit opinion, In re Bell Petroleum Servs., Inc., 3 F3d 889 (1993), the court held that "volume may be a reasonable means of apportioning liability." The Ninth Circuit called Judge Marsh's 70:30 decision "among the reasonable conclusions supported by the evidence."
The court also ruled that a declaratory judgement, which in this case apportions responsibility for past and future cleanup costs, is appropriate. The Superfund law does not address declaratory judgements in cases where two parties are responsible for the pollution. But, wrote Kleinfeld, "CERCLA was intended to encourage quick response and to place the costs on those responsible. Declaratory relief serves these purposes because all parties, like those in this case, will know their share of costs before they are incurred. The more liability can be limited and quantified, the more practical it is for a party to budget and borrow to finance it."
Boeing Company v. Cascade Corporation, Nos. 96-35246, 96-35304, 00 C.D.O.S. 2321, filed Marsh 24, 2000.
For Boeing: David Bledsoe and Mark Schneider, Perkins, Coe, (503) 727-2000.
For Cascade: George McKallip, (503) 228-6191.
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