United States v. NCR Corp.

• Decision Date: 03 August 2012
• Docket Number: No. 12–2069.,12–2069.
• Parties: UNITED STATES of America and the State of Wisconsin, Plaintiffs–Appellees, v. NCR CORPORATION, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

688 F.3d 833

75 ERC 1001

UNITED STATES of America and the State of Wisconsin, Plaintiffs–Appellees,

v.NCR CORPORATION, Defendant–Appellant.

No. 12–2069.

United States Court of Appeals,Seventh Circuit.

Argued June 4, 2012.

Decided Aug. 3, 2012.

Robert H. Oakley (argued), Attorney, Department of Justice, Environment & Natural Resources Division, Washington, DC, Cynthia R. Hirsch, Attorney, Office of the Attorney General, Wisconsin Department of Justice, Madison, WI, for Plaintiffs–Appellees.

Evan Chesler (argued), Darin P. McAtee, Attorneys, Cravath, Swaine & Moore, New York, NY, for Defendant–Appellant.

Charles C. Eblen, Attorney, Shook, Hardy & Bacon, Kansas City, MO, for Amicus Curiae.

Before KANNE, WOOD, and TINDER, Circuit Judges.

WOOD, Circuit Judge.

This case involves just one chapter in a long-running set of efforts to clean up the Fox River in Wisconsin, after years during which various companies dumped PCBs (more formally, polychlorinated biphenyls) into its waters. Since at least the late 1990s, the United States Environmental Protection Agency (EPA) and the Wisconsin Department of Natural Resources (WDNR) have been working to devise and implement an effective remedial plan for the River. One of companies that was designated as a “potentially responsible party (PRP),” and thus responsible for undertaking remedial work, was NCR Corporation. Acting pursuant to administrative orders, NCR has performed a significant amount of cleanup. It decided, however, in 2011 that it had done enough and announced that it was no longer going to comply with the relevant order. That is what prompted the present action by the United States and Wisconsin seeking a preliminary injunction compelling NCR to complete the remediation work scheduled for this year. The governing statute is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9606(a). NCR opposed the injunction, arguing that the cleanup costs were capable of apportionment, and that when so apportioned, it was clear that NCR had already performed more than its share of the work. The district court evaluated the facts otherwise and issued the preliminary injunction.

NCR is presently complying with the injunction. We expedited this appeal, however, understanding that NCR is seeking to challenge its interim obligations, which have been imposed without a full trial on the merits. For the reasons that follow, we agree with the district court that NCR has not met its burden of showing that the harm caused by pollution in the Lower Fox River is capable of apportionment. We further find no abuse of discretion in the court's decision to issue the preliminary injunction, and so we affirm its order.

I

Wisconsin is the country's leading producer of paper products, thanks to its abundance of forests and fresh water. As early as the 1890s, paper mills began operating on Wisconsin's many rivers. The densest concentration of those mills in Wisconsin—indeed, in the world—is found on the Lower Fox River, which begins at Lake Winnebago and runs for about 40 miles northeast until it discharges into Green Bay.

Paper manufacturing, unfortunately, has traditionally come at a high environmental price, in the form of serious water pollution. Wisconsin's vast industry has left the Lower Fox River heavily contaminated with PCBs. PCBs are toxic chemicals that remain highly stable in the environment for a long time and are known to cause a host of health problems, including birth defects and cancer, in both animals and humans. Many of the PCBs present in the Lower Fox River are attributable to the production of “carbonless” copy paper, which was developed by NCR in 1954. Between 1954 and 1971, NCR and other paper manufacturers produced and recycled this PCB-tainted paper, ultimately discharging an estimated 230,000 kilograms of PCBs into the Lower Fox River.

Starting in 1998, EPA and WDNR began investigating the contamination in order to develop a cleanup plan, in accordance with the EPA's power under CERCLA. See 42 U.S.C. § 9605; 40 C.F.R. § 300.430(f). After ample opportunity for public comment, EPA issued a final cleanup plan for the River in 2002. The plan proposed that cleanup of the River would proceed in several phases, beginning with the portions of the River located upstream and ending with the portions that flow into Green Bay. The plan thus divided the River into five sections, which in bureaucratese were called operable units. Anywhere that the average concentration of PCB in the River exceeds 1.0 ppm ( i.e., parts per million) requires remediation, because EPA has determined that concentrations of PCB above this amount are hazardous to human health. Depending on the particular concentration of PCBs and river dynamics, the plan called for a combination of dredging (gathering and disposing of sediments) and capping (covering contaminated sediments) at various sites in each of the River's operable units.

Remediation is largely complete in the first three operable units. At issue in this appeal is the last section of the River, the fourth operable unit, which runs from the De Pere Dam to the mouth of Green Bay. (The fifth operable unit consists of portions of Green Bay contaminated with PCBs.) The parties further divide this fourth section into an upper and lower half, as shown in the Appendix to this opinion.

NCR admits that it is a liable party under CERCLA, because of PCB discharges from two plants located alongside the River's second operable unit. In November 2007, EPA issued a Unilateral Administrative Order pursuant to CERCLA § 106(a), 42 U.S.C. § 9606(a), directing NCR and other potentially responsible parties (a term of art under CERCLA, see 42 U.S.C. § 9607(a)) to implement the remedial plan in operable units two through five. After EPA issued this order, NCR participated in—and even led—remediation efforts in operable units two and three, at a cost of approximately $50 million. It also performed some of the work required in the fourth unit: As of the end of 2011, NCR had completed about half of the dredging required in the upper half of unit four and twenty percent of that required in its lower half.

Throughout this time, however, NCR has maintained that it should not be responsible for 100% of the remediation work and has tried to recoup some of the cleanup costs from the other potentially responsible parties. In January 2008, NCR filed a suit for contribution in equity from the other paper plants. At the end of 2009, the district court denied NCR's claim for contribution. It did so because it found as a fact that NCR, and not the companies operating the other plants, had been aware of the significant risks of PCBs at an early date but had decided “to accept the risk of potential environmental harm in exchange for the financial benefits of continued (and increasing) sales of carbonless paper.” Appleton Papers Inc. v. George A. Whiting Paper Co., No. 08–C–16, 2009 WL 5064049, at *14 (E.D.Wis. Dec. 16, 2009). In fact, the court's finding of NCR's culpability also led it to hold that NCR owed the other plants contribution for their expenses in cleaning the river. Appleton Papers Inc. v. George A. Whiting Paper Co., 776 F.Supp.2d 857, 867–70 (E.D.Wis.2011). These decisions have not yet been appealed because the district court held a trial on the issue of arranger liability and a decision is still pending.

A few weeks after the district court's second adverse ruling in the contribution case, NCR notified EPA it would no longer comply with EPA's order because it had already done more than its share of the work. NCR cut its work in half during 2011, and then it refused to commit to perform any remediation work in 2012. In response, the United States filed a motion for a preliminary injunction to require NCR to complete the scheduled work. (In fact, the United States had also filed a motion for a preliminary injunction against NCR and another company, Appleton Paper Inc. (API), in 2011, but the district court denied that motion on the ground that the government was not likely to show that API was liable. API was then dismissed as a party from the current motion for a preliminary injunction. The scope of API's liability is thus not at issue in this appeal.) Although it would also be theoretically possible for the United States to complete the work itself, using money from the Superfund account, nothing compels it to use that option rather than seeking to compel responsible parties to do the work. Should NCR be found not to be responsible for the contested work after the trial on the merits, the district court will need to consider how to make it whole. We reserve that question for another day.

NCR's principal ground for contesting the propriety of the injunction was that its liability was less than the costs it had already incurred. Citing Burlington Northern & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 129 S.Ct. 1870, 173 L.Ed.2d 812 (2009), it argued that the harm to the Fox River is divisible and thus that the remediation costs should be apportioned among all of the potentially responsible parties. The district court rejected this defense, holding that the harm to the site was not reasonably capable of apportionment, and in an order dated April 27, 2012, it issued the injunction. NCR immediately filed a notice of appeal, requesting expedited treatment and a stay of the injunction during the pendency of the appeal. This court granted expedited treatment but denied the motion for a stay. Remediation efforts are thus ongoing, in compliance with the district court's order.

II

It is important to recall, for purposes of this interlocutory appeal under 28 U.S.C. § 1292(a)(1), that our role is only to review the district court's decision for abuse of discretion. To the extent that the district court based its decision on a question of law, our review is de novo; but we give deferential review to the district court's...