Opinion ID: 692318
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Heading: issues

Text: 12 On appeal, the CERC parties contend that the district court: (1) erred in awarding Farmland cost recovery under a theory of strict liability pursuant to Sec. 107 rather than requiring Farmland to prove causation under Sec. 113(f)(1) and erred in denying them contribution protection under Sec. 113(f)(2); (2) erred in finding that the response costs sought by Farmland were necessary and consistent with the National Contingency Plan; and (3) erred in failing to rule on the CERC parties Act-of-God and Act-of-Third-Party defenses.
13 The CERC parties contend that the district court erred in (1) awarding Farmland cost recovery under a theory of strict liability pursuant to Sec. 107 rather than requiring Farmland to prove causation under Sec. 113(f)(1), and (2) denying them contribution protection under Sec. 113(f)(2). Causation in the context of this case means whether CERC caused the increase in the expense of remediation. If it did, that would be an equitable factor for the court to consider under Sec. 113(f)(1). All concerned acknowledge that liability under Sec. 9607 is strict and causation would be irrelevant in that context. 14 Questions of law are considered by this court de novo. Estate of Holl v. Commissioner, 967 F.2d 1437, 1438 (10th Cir.1992). Because this issue on appeal turns on the correct interpretation of the relevant statutory provisions, we are not constrained by the district court's conclusions. FDIC v. Bank of Boulder, 911 F.2d 1466, 1469 (10th Cir.1990), cert. denied, 499 U.S. 904, 111 S.Ct. 1103, 113 L.Ed.2d 213 (1991). Thus, the standard of review is the same as that which would be applied by the district court in making its initial ruling. Lilly v. Fieldstone, 876 F.2d 857, 858 (10th Cir.1989).
15 In its cross-claim, Farmland sought to recover from the CERC parties a part of the cost of remediation of Unit II of the site that was allegedly caused by the CERC parties. Farmland argues that its claim is one to recover costs incurred in the removal of hazardous waste and the remediation of the site under CERCLA Sec. 107; therefore, CERC is strictly liable. 16 The CERC parties contend that the district court erred in allowing Farmland to recover under Sec. 107 since cost recovery between PRPs in these circumstances is a claim for contribution under Sec. 113(f). We agree. 17 CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), Pub.L. No. 99-499, Sec. 101 et seq., 100 Stat. 1613, 1615 (1986), provides two types of legal actions by which parties can recoup some or all of their costs associated with hazardous waste cleanup: cost recovery actions under Sec. 107(a), 42 U.S.C. Sec. 9607(a), and contribution actions under Sec. 113(f), 42 U.S.C. Sec. 9613(f). This appeal requires that we clarify the relationship between cost recovery and contribution actions; specifically, who can recover under each provision. 18 The original CERCLA legislation created the cost recovery mechanism under Sec. 107. This provision makes enumerated parties, PRPs, liable for ... all costs of removal or remedial action incurred by [government entities]; [and] any other necessary costs of response incurred by any other person consistent with the national contingency plan. 42 U.S.C. Sec. 9607(a)(4). 19 Although the broad language of CERCLA has given the courts many challenges, it is now well settled that Sec. 107 imposes strict liability on PRPs for costs associated with hazardous waste cleanup and site remediation. See Farmland Indus. v. Morrison-Quirk Grain, 987 F.2d 1335, 1339 (8th Cir.1993) (Under 42 U.S.C. Sec. 9607, liability ... for CERCLA response costs is a matter of strict liability). It is also well settled that Sec. 107 imposes joint and several liability on PRPs regardless of fault. See County Line Inv. Co. v. Tinney, 933 F.2d 1508 (10th Cir.1991); United States v. Chem-Dyne Corp., 572 F.Supp. 802, 809-11 (S.D. Ohio 1983). 20 Due to the impossibility of determining the amount of environmental harm caused by each party where wastes of varying and unknown degrees of toxicity and migratory potential have mixed, the courts have been reluctant to apportion costs between PRPs, and hence have adopted the rule that damages should be apportioned only if the defendant can demonstrate that the harm is divisible. O'Neil v. Picillo, 883 F.2d 176, 178 (1st Cir.1989) (emphasis original), cert. denied, 493 U.S. 1071, 110 S.Ct. 1115, 107 L.Ed.2d 1022 (1990); see Tinney, 933 F.2d at 1515 n. 11; Chem-Dyne, 572 F.Supp. at 810. 21 Where defendants bear the burden of proving divisibility, responsible parties rarely escape joint and several liability. O'Neil, 883 F.2d at 178-79. Therefore, CERCLA, as originally enacted, left a PRP faced with the prospect of being singled out as the defendant in a cost recovery action without any apparent means of fairly apportioning CERCLA costs awarded against it to other PRPs. The courts responded to this inequity by recognizing an implicit federal right to contribution where PRPs have been subject to joint and several liability and have incurred response costs in excess of their pro rata share. See Tinney, 933 F.2d at 1515; O'Neil, 883 F.2d at 179; Mardan Corp. v. C.G.C. Music Ltd., 804 F.2d 1454, 1457 n. 3 (9th Cir.1986) (district courts have interpreted Sec. 107 of CERCLA to impose, as a matter of federal law, joint and several liability for indivisible injuries with a correlative right of contribution) (citations omitted). 22 With the enactment of SARA in 1986, Congress codified this implied right of contribution by amending CERCLA Sec. 113 to expressly recognize a right of contribution. United Technologies Corp. v. Browning-Ferris Indus., Inc., 33 F.3d 96, 98 (1st Cir.1994); see 42 U.S.C. Sec. 9613(f)(2). A principal objective of the new contribution section was to clarif[y] and confirm[ ] the right of a person held jointly and severally liable under CERCLA to seek contribution from other potentially liable parties, when the person believes that it has assumed a share of the cleanup or cost that may be greater than its equitable share under the circumstances. S.Rep. No. 11, 99th Cong., 1st Sess. 44 (1985), reprinted in 2 Legislative History of Superfund Amendments and Reauthorization Act of 1986, 636, Sp. Print 101-120 (101st Cong., 2d Sess.) (1990). 4 Section 113(f) provides: 23
24 Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) [107(a) ] of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rule of Civil Procedure, and shall be governed by Federal law. 25
26 A person who has resolved its liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement. 27 42 U.S.C. Sec. 9613(f)(1)-(2). 28 To resolve contribution claims, Sec. 113(f)(1) continues, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate. 42 U.S.C. Sec. 9613(f)(1). In any given case, a court may consider several factors, a few factors, or only one determining factor, ... depending on the totality of the circumstances presented to the court. Environmental Transp. Sys., Inc. v. ENSCO, Inc., 969 F.2d 503, 509 (7th Cir.1992). 5 Of course, the burden of proof is on the ... party seeking apportionment to establish that it should be granted. H.R.Rep. No. 99-253 (III), 99th Cong. 1st Sess. 19 (1986), reprinted in 1986 U.S.C.C.A.N. 2835, 3038, 3042; see United States v. R.W. Meyer, Inc., 889 F.2d 1497, 1507-08 (6th Cir.1989) (a party is entitled to relief against the other defendant to the extent that it can demonstrate the divisibility of the harm and that it paid more than its fair share), cert. denied, 494 U.S. 1057, 110 S.Ct. 1527, 108 L.Ed.2d 767 (1990). 29 In our case, Farmland's claim against the CERC parties must be classified as one for contribution. There is no disagreement that both parties are PRPs by virtue of their past or present ownership of the site; therefore, any claim that would reapportion costs between these parties is the quintessential claim for contribution. See Restatement (Second) of Torts Sec. 886A (1979); Amoco Oil Co. v. Borden Inc., 889 F.2d 664, 672 (5th Cir.1989) ([w]hen one liable party sues another to recover its equitable share of the response costs, the action is one for contribution, which is specifically recognized under CERCLA Sec. 9613(f)). Furthermore, were PRPs such as Farmland allowed to recover expenditures incurred in cleanup and remediation from other PRPs under Sec. 107's strict liability scheme, Sec. 113(f) would be rendered meaningless. 30 Whatever label Farmland may wish to use, its claim remains one by and between jointly and severally liable parties for an appropriate division of the payment one of them has been compelled to make. Accordingly, we hold, as a matter of law, that Farmland's claim is controlled by Sec. 113(f) and that the district court erred in proceeding under Sec. 107.
31 The CERC parties claim that they are immune from contribution claims under Sec. 113(f)(1) because they settled their liability with the United States in a judicially approved consent decree pursuant to Sec. 113(f)(2). 32 Farmland argues that the CERC parties are not entitled to contribution protection because (1) the Consent Decree relates only to response costs incurred by the United States which are not the same matters addressed by Farmland's claim, and (2) the $100,000 payment due under the Consent Decree has not been made. 33 The CERC parties contend that (1) Farmland's settlement reduced the amount the United States could legally seek to recover from other parties to the extent that the CERC parties were only liable for any unrecovered response costs of the United States, and (2) unless and until the government decides to rescind its settlement agreement with a private party, a third party has no grounds or authority to invalidate it. 34 Section 113(f) of CERCLA authorizes claims for contribution between PRPs subject to the limitations set forth in paragraph (2). See 42 U.S.C. Sec. 113(f)(2), infra. Thus, a PRP who has entered into a judicially approved settlement with the United States may not be held liable for contribution to another PRP if the contribution claim concerns matters addressed in the settlement.
35 We turn now to whether the contribution sought by Farmland against the CERC parties is for matters addressed in the Consent Decree entered into between the EPA and the CERC parties. The district court did not reach this issue of law, having erroneously concluded that ... Farmland's response costs were consistent with the NCP and therefore recoverable under Sec. 9607(a). (Appellants' Appendix, Tab 16, pp. 270-71). Previously we have noted that the district court found that there was a genuine issue of material fact as to the scope of the contribution protection afforded by the EPA-CERC parties' Consent Decree. (Appellants' Appendix, Vol. I, Tab 9, p. 236). 36 The statute is silent on how we are to determine what particular matters a consent decree addresses. Some courts have used balancing tests. See Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 766 (7th Cir.1994) (Ultimately, the 'matters addressed' by a consent decree must be assessed in a manner consistent with both the reasonable expectations of the signatories and the equitable apportionment of costs that Congress has envisioned.); United States v. Union Gas Co., 743 F.Supp. 1144, 1152 (E.D.Pa.1990) (Courts must strike a balance between the policy behind CERCLA's contribution provisions and the policy behind the act as a whole.). Other courts have concluded that Sec. 113(f)(2) was intended to encourage settlement while providing settling PRPs with a measure of finality in return for their willingness to settle. See United States v. SCA Services of Indiana, 827 F.Supp. 526, 533 (N.D.Ind.1993) (in order to further CERCLA's settlement-favoring policy, the court finds that the non-settlors are barred from making claims for contribution against the settlors.); United States v. ASARCO, Inc., 814 F.Supp. 951, 957 (D.Colo.1993) (a cash settlement with the government and approval by the court resolves that party's liability to the United States and, therefore, entitles that party to contribution protection); Avnet, Inc. v. Allied-Signal, Inc. 825 F.Supp. 1132, 1139 (D.R.I.1992) (Contribution claims against ... [settlors] ... are strictly prohibited by the plain language of the contribution protection provisions of CERCLA.). 37 The CERC-EPA Consent Decree arguably covers two matters addressed, rather than one: (1) reimbursement of unrecovered response costs of the government (p VI); and (2) a covenant by the government not to sue the CERC parties for any claim asserted in the complaint regarding the whole site. (p VI.A). 6 We have not been presented with an explanation of the failure to draft around the matters addressed problem presented by the CERC-EPA Consent Decree. 38