Federal Appeals Court to Company: Continue Clean-Up of Fox River

By Joe Forward, Legal Writer, State Bar of Wisconsin

Aug. 6, 2012 – A Wisconsin corporation partially responsible for polluting Wisconsin’s Fox River was under remediation orders but stopped the clean-up effort. Recently, the U.S. Court of Appeals for the Seventh Circuit told the company to continue remediation efforts.

Under authority granted by the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Environmental Protection Agency (EPA) in 2007 ordered NCR Corporation (NCR) and other “potentially responsible parties” to implement a remediation plan to clean up portions of the river from Lake Winnebago to Green Bay.

Years of paper mill activity along the Lower Fox River, home to a dense population of paper mills, led to heavy PCB (polychlorinated biphenyl) contamination, which can and do cause a number of health problems in humans. NCR developed the “carbonless” paper attributable to PCBs. NCR and other paper manufacturers discharged PCBs for a 16-year period through 1971.

In 2002, the EPA developed a clean-up plan identifying potentially responsible parties like NCR to conduct remediation efforts through dredging and other measures. NCR spent nearly $50 million to remediate sections of the river, and sought clean-up costs from other parties.

In 2008, NCR lost a suit for contribution in equity because the federal district court found that NCR, and not the other companies, continued to produce carbonless paper knowing the risks of PCB contamination. It later ruled that NCR actually owed the other companies money.

NCR notified EPR it would no longer comply with the 2007 order, arguing that it had done its share of remediation. The United States sought an injunction to compel continued clean-up, and the U.S. District Court for the Eastern District of Wisconsin granted the injunction.

In United States v. NCR Corporation, No. 12-2069 (Aug. 3, 2012), a three-judge panel for the Seventh Circuit Court of Appeals upheld the injunction, rejecting NCR’s assertion that the contamination is divisible among the parties and clean-up costs should be apportioned.

Under the Restatement (Second) of Torts and Burlington Northern & Santa Fee Ry. Co. v. United States, 556 U.S. 599 (2009), parties can be liable for a portion of harm if there is a “reasonable basis for division” of the harm which has occurred in CERCLA cases.

According to the panel, courts must first determine whether harm can be divided, and the party seeking apportionment bears the burden to show a reasonable basis for division. If the harm is “capable of apportionment,” the fact-finder must decide how to apportion the damages.

The appeals court upheld the district court’s conclusion that “NCR has not met its burden of showing that the harm in this case is capable of apportionment,” but reached that conclusion “by taking a slightly different approach,” Judge Diane Wood noted for the three-judge panel.

It noted that apportionment is improper where multiple causes, standing alone, would be sufficient to cause the harm. “We are convinced that the facts in this case are an example of just this kind of multiple sufficient causes of an environmental harm,” Judge Wood wrote.

The panel explained that NCR’s discharge of PCBs alone, without discharges from other parties, would require remediation to avoid a danger to human life. “NCR did not put forth any evidence to refute the government’s contention that NCR’s contributions of PCB would, alone, require approximately the same remedial measures,” Judge Wood explained.

The injunction was necessary, the panel noted, because clean-up delays could cause irreparable damage if PCBs spread to nearby bodies of water, such as Green Bay and Lake Michigan.

Although the panel affirmed the district court’s order compelling NCR to continue clean-up efforts, it noted that NCR can still explore other avenues for contribution or cost recovery.

“For now, we conclude that it is an open question whether, and if at all to what extent, NCR might be able in future legal proceedings to recoup any costs it should not have paid,” wrote Judge Wood after highlighting other CERCLA cases on cost contribution and recovery.