Allocation of Contribution in Pollution Cases – Part I
For nearly three decades, parties responsible for
cleanup of polluted sites have struggled to develop a fair and
technically defensible way to allocate liability and damages among
themselves. In a typical multi-party site involving litigation
regarding cost recovery under CERCLA, potentially responsible
parties (PRPs) each hire experts to evaluate the available technical
data and opine on the portion of pollution that was caused by each
contributor. The methodologies employed by these experts can vary
significantly and often times represent a best-guess in the absence
of adequate data or technical analysis. The results may be viewed by
other PRPs as merely a position statement by the expert, intended to
benefit only the clients of that expert, rather than a reasonable
and supportable evaluation of the available data and site
information. The courts have historically provided little help in
establishing universally acceptable and reasonable guidelines for
allocation of liability and damages among parties. As for Federal or
state environmental regulators, they have relied on the joint and
several liability approach to push aside the issue of allocation
altogether and let the PRPs battle it out in the courts.
In 2009, two court decisions provided guidance regarding allocation
that may have far-reaching impacts on the methods for allocating
liability and damages. First, In March 2009, in an insurance
coverage case, the California Supreme Court issued its ruling
regarding the State of California v. Allstate Insurance Co. matter,
referred to as Stringfellow I in this article. Among several issues
addressed in that decision, the approach to “divisibility” is likely
to have significant implications on how parties evaluate their
potential allocated shares of liability and damages. As with many
environmental issues, both legal and technical analyses come into
play. In addition, the terminology and definitions presented in
Stringfellow 1 give rise to additional legal and technical
considerations. It is likely that the technical implications of the
Stringfellow 1 terminology and definitions will become more fully
understood and developed by precedent in the near-term.
The second ruling came in May of 2009 from the United States Supreme
Court in the Burlington Northern & Santa Fe Railway et al. v. United
Stated et al. (BNSF Case). In that ruling, the Supreme Court held
that the District Court’s analysis of the divisibility of harm and
the method of apportionment were reasonable and acceptable. The
District Court had apportioned one PRP’s share of the site cleanup
liability based on three factors. The apportionment calculation used
by the District Court included three variables: 1) the percentage of
the total area of the facility owned by the RP, 2) the duration of
business operations divided by the PRP’s lease term, and 3) the
number of chemicals that had been spilled on the PRP’s subject
property. The Supreme Court upholding this crude allocation method
has raised several key issues. From a technical and engineering
perspective, perhaps the most significant issue is that the ruling
sets the stage for courts to begin using a broad range of allocation
methods. These could range from simple approaches that could include
subjective criteria, to science-based approaches that use objective
criteria to converge on a more supportable result. This circumstance
will have a significant impact on the range of liability and damage
percentages that are presented to PRPs for settlement consideration,
or that may be imposed by judgment.
The technical evaluation of contribution to an environmental
pollution situation is based on Environmental Forensics (see
additional article in this newsletter), and Engineering Cost
Analysis. Environmental Forensics addresses the sources and
mechanisms of chemical releases, transport and fate in the
environment. Engineering Cost Analysis examines the investigation
and remediation costs (both past and future), and other cost
categories that may be appropriate for allocation.
In our next newsletter, I will examine various issues and approaches
that may be employed to evaluate and arrive at reasonable allocation
schemes. The selection of an appropriate methodology will ultimately
always be dependent on the site-specific facts and available data.
For more information, please contact
Alborz Wozniak at
(925) 403-6200.
