O'Neil v. Picillo

• Decision Date: 27 February 1989
• Docket Number: No. 88-1551,88-1551
• Parties: , 58 USLW 2163, 20 Envtl. L. Rep. 20,115 James E. O'NEIL, In His Capacity As Attorney General For The State Of Rhode Island, Plaintiff, Appellee, v. Warren V. PICILLO, Sr., et al., Defendants, Appellees. Appeal of AMERICAN CYANAMID COMPANY and Rohm & Haas Company, Defendants, Appellants. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 176

883 F.2d 176

30 ERC 1137, 58 USLW 2163, 20 Envtl.

L. Rep. 20,115

James E. O'NEIL, In His Capacity As Attorney General For The

State Of Rhode Island, Plaintiff, Appellee, v. Warren V. PICILLO, Sr., et al., Defendants, Appellees.

Appeal of AMERICAN CYANAMID COMPANY and Rohm & Haas Company,

Defendants, Appellants.

No. 88-1551.

United States Court of Appeals, First Circuit.

Heard Feb. 27, 1989.

Decided Aug. 21, 1989.

Deming E. Sherman, with whom Mark A. Pogue, Edwards & Angell, Providence, R.I., Ellen Friedell, and Margaret R. Tribble, Wayne, N.J., were on briefs for appellants.

Gary Powers, Sp. Asst. Atty. Gen., Environmental Advocate, with whom James E. O'Neil, Atty. Gen., Providence, R.I., was on briefs for appellee James E. O'Neil, in his capacity as Atty. Gen. for the State of Rhode Island.

William G. Ballaine, with whom Maria J. Litman and Siff, Rosen & Parker, P.C., New York City, were on brief for appellees Daniel Capuano, Jack Capuano, Estate of Anthony Capuano, United Sanitation, Inc., Sanitary Landfill, Inc. and A. Capuano Brothers.

Roger J. Marzulla, Asst. Atty. Gen., Carrick Brooke-Davidson, Jacques B. Gelin and Anne S. Almy, Dept. of Justice, Washington, D.C., on brief for the U.S., amicus curiae.

Before CAMPBELL, Chief Judge, COFFIN, Senior Circuit Judge, and FUSTE, ^* District Judge.

COFFIN, Senior Circuit Judge.

In July of 1977, the Picillos agreed to allow part of their pig farm in Coventry, Rhode Island to be used as a disposal site for drummed and bulk waste. That decision proved to be disastrous. Thousands of barrels of hazardous waste were dumped on the farm, culminating later that year in a monstrous fire ripping through the site. In 1979, the state and the Environmental Protection Agency (EPA) jointly undertook to clean up the area. What they found, in the words of the district court, were massive trenches and pits "filled with free-flowing, multi-colored, pungent liquid wastes" and thousands of "dented and corroded drums containing a veritable potpourri of toxic fluids." O'Neil v. Picillo, 682 F.Supp. 706, 709, 725 (D.R.I.1988).

This case involves the State of Rhode Island's attempt to recover the clean-up costs it incurred between 1979 and 1982 and to hold responsible parties liable for all future costs associated with the site. ¹ The state's complaint originally named thirty-five defendants, all but five of whom eventually entered into settlements totalling $5.8 million, the money to be shared by the state and EPA. After a month-long bench trial, the district court, in a thorough and well reasoned opinion, found three of the remaining five companies jointly and severally liable under section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Sec. 9601 et seq. ("CERCLA") for all of the State's past clean-up costs not covered by settlement agreements, as well as for all costs that may become necessary in the future. The other two defendants obtained judgments in their favor, the court concluding that the state had failed to prove that the waste attributed to those companies was "hazardous," as that term is defined under the Act.

Two of the three companies held liable at trial, American Cyanamid and Rohm and Haas, have taken this appeal. Both are so-called "generators" of waste, as opposed to transporters or site owners. See Sec. 107(a)(3), 42 U.S.C. Sec. 9607. Neither takes issue with the district court's finding that some of their waste made its way to the Picillo site. Rather, they contend that their contribution to the disaster was insubstantial and that it was, therefore, unfair to hold them jointly and severally liable for all of the state's past expenses not covered by settlements. They further contend that it was error to hold them liable for all future remedial work because the state has not demonstrated that such work ever will be necessary. With far less vigor, they also raise a series of equitable defenses, claiming that their liability should be reduced, either in whole or part, because (1) much of the damage to the site resulted from the government's sloppy handling of barrels; (2) the government's clean-up procedures were not cost-efficient as required by the Act, see Sec. 107(a); and (3) their waste ended up at the site through the acts of wholly unrelated third parties, see Sec. 107(b)(3). Finally, they argue that the Act should not be applied retroactively and that it was inappropriate for the district court to award the government prejudgment interest in this case. After a careful review of the record, we conclude that none of these arguments suffices to warrant reversal of the judgment below.

We need not spend time outlining the general factual and statutory background of this case. As we noted above, the district court's opinion is thorough and we see no reason to repeat what was said there. See 682 F.Supp. 706. Nor do we think it necessary to respond in detail to all of appellants' claims, as we could add little to the district court's reasoning or existing case law. We therefore confine our discussion to appellants' arguments concerning the unfairness of holding them jointly and severally liable for the government's past and future clean-up costs. ²

Joint and Several Liability

Statutory Background

It is by now well settled that Congress intended that the federal courts develop a uniform approach governing the use of joint and several liability in CERCLA actions. The rule adopted by the majority of courts, and the one we adopt, is based on the Restatement (Second) of Torts: damages should be apportioned only if the defendant can demonstrate that the harm is divisible. See, e.g., United States v. Chem-Dyne Corp., 572 F.Supp. 802, 809-11 (S.D.Ohio 1983); United States v. Monsanto Co., 858 F.2d 160, 171-73 (4th Cir.1988); United States v. Bliss, 667 F.Supp. 1298, 1312-13 (E.D.Mo.1987).

The practical effect of placing the burden on defendants has been that responsible parties rarely escape joint and several liability courts regularly finding that where wastes of varying (and unknown) degrees of toxicity and migratory potential commingle, it simply is impossible to determine the amount of environmental harm caused by each party. See, e.g., United States v. Chem-Dyne, 572 F.Supp. at 811; Monsanto, 858 F.2d at 172-73. It has not gone unnoticed that holding defendants jointly and severally liable in such situations may often result in defendants paying for more than their share of the harm. Cf. United States v. Monsanto, 858 F.2d at 173. Nevertheless, courts have continued to impose joint and several liability on a regular basis, reasoning that where all of the contributing causes cannot fairly be traced, Congress intended for those proven at least partially culpable to bear the cost of the uncertainty. See, e.g., United States v. Chem-Dyne, 572 F.Supp. at 809-810.

In enacting the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Congress had occasion to examine this case law. Rather than add a provision dealing explicitly with joint and several liability, it chose to leave the issue with the courts, to be resolved as it had been--on a case by case basis according to the predominant "divisibility" rule first enunciated by the Chem-Dyne court. See, e.g., United States v. Monsanto, 858 F.2d at 171 n. 23 (Chem-Dyne decision endorsed by Congress); Cf. Garber, Federal Common Law of Contribution Under the 1986 CERCLA Amendments, 14 Eco.L.Q. 365, 374-75 (1987). Congress did, however, add two important provisions designed to mitigate the harshness of joint and several liability. First, the 1986 Amendments direct the EPA to offer early settlements to defendants who the Agency believes are responsible for only a small portion of the harm, so-called de minimis settlements. See Sec. 122(g). ³ Second, the Amendments provide for a statutory cause of action in contribution, codifying what most courts had concluded was implicit in the 1980 Act. See Sec. 113(f)(1). Under this section, courts "may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." We note that appellants already have initiated a contribution action against seven parties before the same district court judge who heard this case.

While a right of contribution undoubtedly softens the blow where parties cannot prove that the harm is divisible, it is not a complete panacea since it frequently will be difficult for defendants to locate a sufficient number of additional, solvent parties. Moreover, there are significant transaction costs involved in bringing other responsible parties to court. If it were possible to locate all responsible parties and to do so with little cost, the issue of joint and several liability obviously would be of only marginal significance. We, therefore, must examine carefully appellants' claim that they have met their burden of showing that the harm in this case is divisible. ⁴

Divisibility

The district court issued two rulings on joint and several liability. First, the court held appellants jointly and severally liable for all of the state's past costs not covered by settlements, roughly $1.4 million including prejudgment interest. According to appellants, this money was spent exclusively on "removal" costs or "surface cleanup" (e.g., sampling the waste, contacting responsible parties, and ultimately, removing the barrels and contaminated soil), and not on remedying the alleged damage to groundwater and other natural resources ("remedial" costs). ⁵ Second, the district court held appellants jointly and severally liable for all future removal costs to be incurred by the state, as well as for all cost-efficient remedial action the state (and EPA) may deem necessary after conducting further tests. The parties discuss the two holdings separately and we shall do likewise.

I. Past Costs

Appellants begin by stressing that the state's past costs involved...