Apr 4 11

Appleton II-The Saga Continues

by The Session Law Firm

We all remember the widely reported (and discussed) United States District Court for the Eastern District of Wisconsin  opinion rendered in Appleton Papers Inc. v. George A. Whiting Paper Co., No. 2:08-cv-16-WCG (E.D. Wis. Dec. 16, 2009) (hereinafter “Appleton I”). The case involved the summary disposition of a CERCLA §113 contribution claim involving what the District Court proclaimed to be the “largest [cleanup] of its kind ever undertaken anywhere in the world,” (Id. at 2) the cost of which was projected to approach at least one billion dollars (Id. at 3).

The 2009 Appleton I litigation and its outcome was unique because rather than considering  the usual so-called “equitable factors” to determine proportionate financial responsibility such as waste-in volume or  relative contaminant toxicity, the District Court focused entirely on a single marker of relative culpability i.e., the Plaintiff’s knowledge that their actions might cause environmental harm.  

The Plaintiffs in Appleton I (NCR and Appleton Papers Inc. who were found liable as successors to their respective predecessors in interest i.e., Appleton Coated Paper Company, hereinafter collectively the “Appleton I Plaintiffs”) generated and disposed of a PCB-laden waste stream associated with an emulsion used to manufacture carbonless copy paper.  The Appleton I Plaintiffs were aware that the production of carbonless copy paper, the generated PCB contaminated waste and the sale of the waste product from the paper’s production (a product known in the industry as “bloke”) to the defendant, George A Whiting (“Whiting”) would potentially cause environmental harm.  

Faced with an evidentiary record leaving little doubt about the Appleton I Plaintiff’s knowledge regarding the hazardous nature of the waste materials involved, the District Court determined that a largest percentage release of PCB contaminated material into the environment occurred at the time that the Appleton I Plaintiffs had actual knowledge that a release of the waste material could cause environmental harm.  Therefore, the District Court held that the Appleton I Plaintiffs were not entitled to contribution from Whiting because the Appleton I Plaintiffs knowingly released PCB contaminated materials with the full understanding that the releases would likely result in long-lasting harmful environmental consequences.

In February of 2011, the District Court issued an equally intriguing opinion in Appleton Papers Inc., v. Whiting Paper Co., No. 08-C-16, 41 ELR 2011 (E.D. Wis. Feb. 28, 2011) (hereinafter “Appleton II”).   Relying in large measure on the District Court’s 2009 decision, multiple defendants including Whiting Paper Co., and others (hereinafter the “OU2-OU5 Defendants”) and WTM I Company and the P.H. Glatfelter Company WTMI Co., (hereinafter “OUI Defendants”)  argued that the response costs already contributed to cleanup effort should be borne by NCR Corp. and Appleton Papers Inc., (hereinafter Appleton II Plaintiffs).  All of the Defendant’s arguments highlighted the same equitable factor that barred the Appleton I plaintiffs from obtaining contribution it, e.g., knowledge.

After reviewing the totality of the circumstances, the District Court determined that that the OU2-OU5 Defendants were entitled to full contribution from the Appleton II Plaintiffs for four of the five “operable units” situated along the Lower Fox River but, that the Appleton II Plaintiffs were not liable for the cost of cleaning up the contamination at Operable Unit I (“OU1”), and therefore were not liable to the OU1 Defendants for response costs approaching $110 million.

In reaching this conclusion, the District Court noted that the question of “site divisibility” is not properly a part of a contribution action under CERCLA §113 and that in a CERCLA §113 contribution action among PRPs, “. . . the divisibility defense has no relevance as a ‘defense’” Appleton Papers Inc., v. Whiting Paper Co., No. 08-C-16, 41 ELR 2011, 10 (E.D. Wis. Feb. 28, 2011). [1]    Instead, the District Court determined that the fact that the Appleton II Plaintiffs did not physically release toxins into OUI was an equitable factor that fit within the framework of a CERCLA §113 analysis.  The District Court further explained that it did not agree with the OUI Defendant’s contention that the CERCLA §113 proceeding was not the proper forum to address the Appleton II Plaintiff’s liability, and that the OUI Defendants had not provided “. . . any authority upon which [the District Court] could base a contribution award when none of the CERCLA §107 types of liability applied in this case” (Id. at 12).    The District Court explained that unless the OUI Defendants could later provide evidence that the Appleton II Plaintiffs were arrangers under CERCLA §107; as the District Court determined that whether the Appleton II Plaintiffs were arrangers was a question that could not be answered at that stage of the proceeding, that the Appleton II Plaintiffs were not liable for costs associated with OUI (Id. at 2).

Further, the District Court also examined the location of the site, explaining, that, “. . . no one would argue that [the Appleton II Plaintiffs] could be liable for contribution at far-distant sites for which they had no § 107 liability, and thus it is difficult to see how they could be liable merely because OU1 happens to be attached to the rest of the Lower Fox River Site” (Id. at 12).     

The Appleton cases are important to practitioners as they express the ultimate objective of the CERCLA liability scheme i.e., that the polluter pays the costs of resolving the pollution it causes.  Based on the outcomes of these two cases, it seems that a court, sitting in equity, can utilize whatever reasonable factors it has available in order to ensure that the party that caused the pollution is the party that will pay to clean up the pollution.   In doing so the court may ignore artificial constraints such as government imposed geographic contaminant zone descriptions or the identity of contaminant sources.  In 2009, the District Court utilized the equitable factor of knowledge of ultimate harm to assign liability to the Appleton I Plaintiffs  and in 2011; the Court relied upon the absence of geographic proximity of release locations to establish an  “equitable factor” to limit the reach of CERCLA §113 liability for the Appleton II Plaintiffs.  In short, if a court believes that a defendant in a contribution case has no demonstrable causal responsibility for the harm triggering the response cost claim, there can be no contribution recovery.  The fact based focus of inquiry and proof may well be the undoing of efforts to rely upon supposed technical and legal attributes of relative responsibility rather than what should be the essential inquiry at the root of the CERCLA legislative cost recovery scheme e.g., the polluter should pay for the pollution it caused to occur. 


[1] “While the ‘divisibility’ defense to joint and several liability is frequently invoked in cost recovery actions brought under § 107(a), it is not a defense to a contribution action under § 113(f).” Redwing Carriers, Inc. v.Saraland Apartments, 94 F.3d 1489, 1513 (11th Cir. 1996).

Feb 15 11

EPA’s FY 2012 Budget Proposal Represents 13%Decrease from the FY2010

by The Session Law Firm

The Obama Administration proposed a FY2012 budget of $8.973 billion for the EPA.  This budget proposal represents about a 13 percent decrease from the FY 2010 budget of $10.3 billion.

Some key 2012 budget initiatives include:

$350 million for projects strategically chosen to target the most significant threats to people’s health in the Great Lakes ecosystem, a $125 million decrease from FY 2010, the first year of the initiative.

$2.5 billion–a decrease of $947 million– combined for the Clean Water and Drinking Water State Revolving Funds (SRFs).  EPA will continue to work with states and communities to enhance their capacity to provide clean water and safe drinking water to Americans. Federal dollars provided through SRFs will help spur efficient system-wide planning and ongoing management of sustainable water infrastructure.

$1.2 billion for the Superfund program to support cleanup at hazardous waste sites that addresses human health and environmental hazards at the nation’s highest priority sites.  While EPA will be exploring efficiencies in the program, the $70 million reduction to Superfund programs will slow the pace of new projects and completion of projects.

$27.5 million increase in enforcement and compliance, allowing for critical investments to increase efficiencies and streamline enforcement by using the latest e-reporting and monitoring tools. EPA will increase oversight and inspections at high risk chemical and oil facilities in order to protect Americans’ health.    

$16.1 million more to reduce chemical risks, increase the pace of chemical hazard assessments, and provide the public with greater access to chemical information so they can make better informed decisions about their health. Learning more about these chemicals will help protect Americans from potential threats to their health.

$1.2 billion for state and tribal grants — an overall increase of $84.9 million over FY 2010. This funding will help communities take steps to meet the pollution standards EPA has developed under the Clean Air Act and the Clean Water Act.

An additional $46 million for regulatory efforts to reduce greenhouse gas (GHG) pollution and implement GHG reporting requirements under the Clean Air Act.  This includes $25 million for states and $5 million for EPA to address GHGs in Clean Air Act permitting activities.

$67.4 million to support EPA’s efforts to clean up America’s great water bodies, specifically in the Chesapeake Bay. This water body serves as an economic engine for an entire region of the country, and millions of Americans rely on it for access to clean, safe water. Investing in these waters will help local economies and protect Americans’ health.

$584 million to support research and innovation into new and emerging environmental science. This includes a $24.7 million increase to Science to Achieve Results (STAR) grants to ensure that EPA is using the best science to protect the air we breathe, the water we drink and the land we build our communities on. EPA’s research program is being restructured to ensure that scientific work is conducted more efficiently and effectively.

Read More.

Feb 15 11

EPA Announces Availability of Policy Assessment for the Review of the Secondary National Ambient Air Quality Standards for Oxides of Nitrogen and Sulfur

by The Session Law Firm

The Office of Air Quality Planning and Standards (OAQPS) of EPA is announcing the availability of a document titled, Policy Assessment for the Review of the Secondary National Ambient Air Quality Standards for Oxides of Nitrogen and Sulfur (Policy Assessment).  The Policy Assessment contains staff analyses of the scientific bases for alternative policy options for consideration by the Agency prior to rulemaking.

Under section 108(a) of the Clean Air Act (CAA), the Administrator identifies and lists certain pollutants which “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare.”   The EPA then issues air quality criteria for these listed pollutants, which are commonly referred to as “criteria pollutants.”  The air quality criteria are to accurately reflect the latest scientific knowledge useful in indicating the kind and extent of  all identifiable effects on public health or welfare which may be expected from the presence of [a] pollutant in the ambient air, in varying quantities.”  Under section 109 of the CAA, EPA establishes primary (health-based) and secondary (welfare-based) national ambient  air quality standards (NAAQS) for pollutants for which air quality  criteria are issued. Section 109(d) of the CAA requires periodic review  and, if appropriate, revision of existing air quality criteria. The  revised air quality criteria reflect advances in scientific knowledge on the effects of the pollutant on public health or welfare. The EPA is also required to periodically review and revise the NAAQS, if  appropriate, based on the revised criteria.  Read More.

Feb 14 11

EPA Releases More Electric Utility Plans to Improve Safety of Coal Ash Impoundments

by The Session Law Firm

EPA released action plans developed by 15 electric utility facilities with coal ash impoundments, describing the measures the facilities are taking to make their impoundments safer. The action plans are a response to EPA’s final assessment reports on the structural integrity of these impoundments that the agency made public last May.

Since May 2009, EPA has been conducting on-site assessments of coal ash impoundments and ponds at electric utilities. EPA provides copies of the structural integrity assessment reports to each facility, and requests the facilities implement the reports’ recommendations and provide their plans for taking action. The action plans released today address recommendations from assessments of 37 impoundments at 15 facilities. Many of these facilities have already begun implementing EPA’s recommendations.

In addition to the action plans, EPA is also releasing assessment reports on the structural integrity of an additional 69 coal ash impoundments at 20 facilities across the country. Of these units, 35 were given a “poor” rating and none of the units received an “unsatisfactory” rating, which is the lowest possible EPA rating. The poor ratings were given because these units lacked some of the necessary engineering documentation required in the assessments, and not because the units are unsafe.  Based on analysis from the engineers who conducted the assessments, the ratings for these units are likely to improve once the proper documentation is submitted.

The assessment reports have been completed by firms, under contract to EPA, who are experts in the field of dam integrity, and reflect the best professional judgment of those engineering firms. A draft of these reports has been reviewed by the facilities and the states for factual accuracy. The comments on the draft reports are also posted on EPA’s website. EPA is continuing to review the reports and technical recommendations, and is working with the facilities to ensure that the recommendations are implemented in a timely manner. Should facilities fail to take sufficient measures, EPA will take additional action, if the circumstances warrant. EPA will continue to provide additional information to the public on the impoundments and facilities as it becomes available.

Last year, EPA completed comprehensive assessments for 60 impoundments that were considered to have a high risk of causing harm if the impoundment were to fail. The agency is now in the process of evaluating the remaining impoundments and will continue to make its assessments and the facility action plans available to the public.

EPA is also in the process of developing the first-ever national rules to ensure the safe disposal and management of coal ash from coal-fired power plants. The proposed regulations will ensure stronger oversight of the structural integrity of impoundments, and protection of human health and the environment. The agency is evaluating more than 400,000 public comments on the proposed rule, which was released in May 2010.  Read More.

Feb 2 11

EPA To Develop Regulation for Perchlorate and Toxic Chemicals in Drinking Water

by The Session Law Firm

Today, the EPA announced it’s decision to move forward with the development of a regulation for perchlorate, while also continuing to take steps to ensure the quality of the water they drink. The decision to undertake a first-ever national standard for perchlorate reverses a decision made by the previous administration and comes after Administrator Jackson ordered EPA scientists to undertake a thorough review of the emerging science of perchlorate.  Read More.

In a separate action, the agency is also moving towards establishing a drinking water standard to address a group of up to 16 toxic chemicals that may pose risks to human health. As part of the Drinking Water Strategy laid out by Administrator Jackson in 2010, EPA committed to addressing contaminants as a group rather than one at a time.  Read More.