Superfund Divisibility Defense Gets New Life

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund, is a federal law under which contaminated sites are identified and evaluated by the Environmental Protection Agency (EPA). EPA designates certain sites for cleanup and pursues potentially responsible parties (PRPs) to investigate and remediate those sites.

Liability under CERCLA is joint and several. Under such a scheme, any party that contributed “hazardous substances”, a term broadly defined in CERCLA, to a site can be held liable for the entire cleanup. Because it is fairly easy to establish a PRP’s liability, Superfund sites tend to capture a lot of PRPs. Any manufacturer that uses, produces, or disposes of hazardous substances could be at risk.

While most cases under CERCLA rest on joint and several liability, there are some defenses that, if proven, may allow a party to escape it. One of these defenses is divisibility – if a party can prove that the harm is divisible, or capable of being apportioned in some way, the party will only be held liable for its fair share of the harm. The divisibility defense has been notoriously hard to prove. It was recognized and used by the Supreme Court in 2009, but countless parties have tried to use it since – and failed – until now.

In May 2015, a federal court in Wisconsin proved that the divisibility defense is alive and well. In that case, a PRP, NCR Corporation, argued that its contribution of contamination to the Fox River was divisible and response costs should be apportioned appropriately. The court agreed, holding that NCR’s volumetric contribution of waste was a proper basis for apportioning its liability at the site. The court evaluated the range of NCR’s percentage contribution of hazardous substances to Fox River, and used that range to determine how much NCR had to pay towards the cleanup. Importantly, the court held that “it is reasonableness, not scientific precision, that governs an apportionment analysis.”

The divisibility defense will always hinge on the facts of a particular case. But the fact that it has been acknowledged and used by a federal court is good news for anyone that uses, produces, or disposes of hazardous substances. Given the complex and costly nature of CERCLA cleanups, avoidance of joint and several liability can significantly reduce a party’s exposure, and the divisibility defense is one way to get there.

The case is United States v. NCR Corp., et al., No. 10-C-910 (E.D. Wis., May 15, 2015).

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