NCR Corporation v. WTM I Company

In the

United States Court of Appeals

For the Seventh Circuit

____________________

Nos. 13-2447, 13-2522, 13-2568, 13-2570, 13-2572, 13-2605, 13-

2606, 13-2607, 13-2631, 13-2645, & 13-2866

NCR CORPORATION, et al.,

Plaintiffs-Appellants,

v.

GEORGE A. WHITING PAPER COMPANY, et al.,

Defendants-Appellees.

____________________

Appeals from the United States District Court

for the Eastern District of Wisconsin.

Nos. 08-cv-16 and 08-cv-895 — William C. Griesbach, Chief Judge.

____________________

ARGUED FEBRUARY 28, 2014 — DECIDED SEPTEMBER 25, 2014

____________________

Before WOOD, Chief Judge, and KANNE and TINDER, Circuit

Judges.

WOOD, Chief Judge. The invention of carbonless copy pa-

per by NCR Corporation in the mid-1950s solved a small

problem and created a large one. Though it alleviated the

messy side effects of carbon paper for those who wanted

copies in the pre-photocopy era, over the next quarter-

century it became clear that the cost of this convenience was

2 Nos. 13-2447 et al.

large-scale environmental contamination. That is because,

until the early 1970s, the substance coating the paper includ-

ed polychlorinated biphenyls (PCBs), a highly toxic pollu-

tant. In the course of producing the carbonless paper, large

quantities of PCBs were dumped into the Lower Fox River in

Wisconsin, the site of the paper’s production. (References to

the River in this opinion mean the Lower Fox, unless the

context requires otherwise.) Recyclers poured yet more PCBs

into the River. In time, the problem attracted the attention of

the federal government, which, invoking the Comprehensive

Environmental Response, Compensation, and Liability Act

(CERCLA) (popularly known as the Superfund), eventually

ordered the responsible parties to clean up the mess. See 42

U.S.C. § 9601 et seq. This case requires us to decide who

should foot the considerable bill.

Once the Environmental Protection Agency (EPA) identi-

fies the site of an environmental hazard that requires reme-

diation under CERCLA, the statute’s financial responsibility

rules are triggered. CERCLA imposes a “pay-first, split-the-

bill-later” regime. Any individual persons or corporations

meeting certain statutory criteria can be required to pay for

the cleanup. Anyone who paid can then recover contribution

from other responsible parties in accordance with that enti-

ty’s equitable share of the costs.

NCR was the exclusive manufacturer and seller of the

emulsion that gave treated paper its “carbonless-copy” char-

acter during what the parties call the Production Period

(1954 to 1971). That emulsion, unfortunately, used Aroclor

1242 as a solvent, and Aroclor 1242 is a PCB. Given its role in

the pollution, NCR has thus far picked up the lion’s share of

the cleanup tab for the River site. In this action it seeks con-

Nos. 13-2447 et al. 3

tribution from several other paper mills along the river.

Those firms were in the recycling business; they bought

NCR’s leftover scraps of carbonless copy paper, washed the

harmful chemicals off into the River, and recycled the pulp

to make new paper. Several ancillary questions and counter-

claims were raised along with NCR’s contribution claim, and

we will address each in turn. The main event, though, relates

to the equitable allocation of costs.

The district court, after holding a first phase of discovery

on the question of when each party became aware that the

primary chemical ingredient of carbonless copy paper was

harmful, held that NCR was not entitled to any equitable

contribution from the paper mills. Worse than that, from

NCR’s vantage point, the court held that the mills had meri-

torious counterclaims for cost recovery from NCR. NCR ap-

peals that decision, and the defendant recyclers cross-appeal

a handful of matters decided against them. Before address-

ing these matters, we begin with some background about the

cleanup effort.

I. Background Facts

The Lower Fox River begins at Lake Winnebago in north-

eastern Wisconsin and winds northeasterly for 39 miles until

it discharges into Green Bay, which flows into Lake Michi-

gan. For decades, the River has been to papermaking what

Pittsburgh once was to steel: the heart of the industry, and

home to the highest concentration of paper mills in the

world. See Region 5 Cleanup Sites: Background,

ENVIRONMENTAL PROTECTION AGENCY (Aug. 3, 2011),

http://www.epa.gov/region05/cleanup/foxriver/background.

htm (all websites cited last accessed Sept. 24, 2014).

4 Nos. 13-2447 et al.

In addition to their infamous smell, paper mills produce

a good deal of solid byproduct, which they long disposed of

by dumping it into the River. This had a deleterious effect on

the River and its ecosystem, and by 1970 the sorry state of

the River was visible to the naked eye.

Among the solid matter suspended in the mills’ effluent

were PCBs, which were the pollutant that attracted the atten-

tion of the EPA in the mid-1990s. PCBs are carcinogenic for

humans and animals alike, and they have harmful non-

carcinogenic effects on the immune, reproductive, neurolog-

ical, and endocrine systems, as well as the skin. See Health

Effects of PCBs, EPA (June 13, 2013), http://www.epa.

Nos. 13-2447 et al. 5

gov/waste//hazard/tsd/pcbs/pubs/effects.htm. By the time

their use was banned by the EPA in 1979, some 250,000

pounds of PCBs had been released into the River. See Lower

Fox River and Green Bay Site, EPA (Apr. 2, 2014),

http://www.epa.gov/region05/cleanup/foxriver/.

The PCBs in the River can all be traced back to NCR’s

carbonless copy paper, which it (along with other companies

with which it contracted) produced between the mid-1950s

and 1971. As the name suggests, carbonless copy paper per-

mitted a writer or typist to make instant copies of documents

without the use of carbon paper. This effect is achieved by

coating the back of a top sheet of paper with an emulsion

containing “microcapsules” of dye and solvent; the micro-

capsules burst when a user writes on the sheet and thereby

reproduce the same image on the lower sheet. A critical in-

gredient of the emulsion was Aroclor, a PCB-based chemical

sold by Monsanto. NCR manufactured the emulsion, which

it then sold to two companies (Appleton Coated Paper

Company and Combined Paper Mills), which coated the pa-

per and sold the finished product back to NCR for commer-

cial distribution. Those two companies were formally inde-

pendent from NCR until 1969 and 1970, respectively, when

they became NCR’s wholly owned subsidiaries.

The PCBs used to make carbonless copy paper ended up

in the Lower Fox River in two principal ways. First was the

straightforward one: some of the emulsion used to coat the

paper was necessarily lost in the production process and

was mixed with the wastewater that the mills released into

the River. Explaining the second way requires us to give a

bit more background about the paper industry. Producing

paper from raw materials is relatively expensive. The pro-

6 Nos. 13-2447 et al.

duction process creates a fair amount of waste, scraps, and

undersized rolls that are unusable by the original manufac-

turer; these are called “broke” in the trade. Making paper

from recycled broke is cheaper than making it from scratch,

a fact that spurred the growth of a sub-industry of “recycling

mills.” The nongovernmental defendants in this case are

such mills. These mills purchase broke from other paper

mills through middlemen and use it to make paper.

The companies that coated paper with NCR’s emulsion

also participated in the normal industry practice of selling

broke to recycling mills. Upon receipt of the broke, the recy-

cling mills would process it to separate the usable fibers

from the coating, thus removing the PCBs from the portion

of the paper that went into the new product. The waste (in-

cluding of course the PCBs) was then dumped into the River

with the mills’ wastewater.

Another problem with PCBs is that they attach readily to

solids and do not degrade. As more and more PCBs were

dumped into the River each year, they accumulated in the

riverbed. Eventually, people became aware of the dangers of

PCBs, and both private and governmental entities began to

take action. Monsanto stopped selling products containing

PCBs in August 1970, and NCR ceased using PCBs in its car-

bonless copy paper once its supplies of Aroclor ran down

the following year. The EPA issued regulations largely ban-

ning the use of PCBs in 1979. See 40 C.F.R. § 761.1 et seq.

Congress passed CERCLA in 1980 to spur the environ-

mental cleanup of sites contaminated by hazardous sub-

stances. See Pub. L. No. 96-510, 94 Stat. 2767 (1980) (codified

as amended at 42 U.S.C. § 9601 et seq.). The EPA, in coordina-

tion with the Wisconsin Department of Natural Resources

Nos. 13-2447 et al. 7

(WDNR), set its sights on the Lower Fox River as a CERCLA

cleanup target in 1998; it issued a final cleanup plan in 2002.

See United States v. NCR Corp., 688 F.3d 833, 836 (7th Cir.

2012). The plan divided the River into five “operable units,”

which is jargon for geographic sections, and ordered a com-

bination of dredging the riverbed and capping contaminated

areas so as to remove and contain the PCBs and prevent

them from reaching Lake Michigan, where it would be all

but impossible to do anything about them.

When the EPA determines that environmental remedia-

tion is required, CERCLA shifts the cost of that cleanup to

the parties responsible for creating the hazard and away

from taxpayers, who otherwise would be left to pick up the

bill. The statute identifies who is regarded as a Potentially

Responsible Party (PRP) in a cleanup action: it includes the

current owners and operators of the cleanup site; the owners

and operators at the time that the hazardous substance was

disposed; parties that “arranged for” disposal of the sub-

stance; and parties that accepted the substance for transpor-

tation to a disposal site of their choosing. CERCLA § 107(a),

42 U.S.C. § 9607(a). All PRPs are liable for costs incurred by

the state and federal governments related to the remedia-

tion. At the liability stage, no consideration is given to a par-

ty’s relative fault in contributing to the hazardous conditions

at the site; any party meeting one of the statutory definitions

is potentially liable for the full cost of cleanup.

With one important exception to which we will return,

all of the nongovernmental litigants before us are admitted

PRPs for the Lower Fox River cleanup. Many of these parties

have challenged their liability to the government in separate

litigation related to this case, but that question is not before

8 Nos. 13-2447 et al.

us here. We are concerned with separate CERCLA provi-

sions that allow a PRP that believes it has paid cleanup costs

in excess of its fair share to sue to recover contribution from

other PRPs jointly liable for cleanup at the same site. See

CERCLA § 113(f), 42 U.S.C. § 9613(f). In such an action, the

district court is directed to allocate contribution costs under

section 113(f) “using such equitable factors as the court de-

termines are appropriate.” Id. § 9613(f)(1).

After the EPA issued a unilateral administrative order in

2007 governing the cleanup of operable units 2 through 5 at

the Lower Fox River site, NCR took the lead in responding

and bore much of the cost of remediation from that point

onward. Believing that its financial burden has by now ex-

ceeded its fair share, NCR filed this suit for contribution

against the other PRPs named in the administrative order.

Over the next several years, the district court disposed of a

number of issues in the case. It held that NCR and its in-

demnitor and former subsidiary Appvion were not entitled

to any equitable contribution for the expenses they incurred

as part of the Lower Fox River cleanup. It further ruled that

the recycling mills should receive contribution from NCR for

their costs, including those incurred in the form of “natural

resources damages.”

Between the appeal and the cross-appeal, we have a con-

siderable array of issues before us. They include the follow-

ing: (1) whether NCR (and Appvion, which stands in the

same position as NCR for this purpose, and so unless other-

wise required we use “NCR” to refer to both) are entitled to

recover any portion of the cost of clean-up under either sec-

tion 107 or 113 of CERCLA, 42 U.S.C. §§ 9607, 9613; (2)

whether NCR has any arranger liability; (3) whether the dis-

Nos. 13-2447 et al. 9

trict court erred by awarding costs to Glatfelter without off-

setting its insurance recoveries; (4) whether NCR is liable for

natural resource damages; (5) whether the court erroneously

dismissed Glatfelter’s claims based upon discharges at Por-

tage, Wisconsin; and (6) whether the district court wrongly

dismissed Glatfelter’s common-law counterclaims as

preempted. We address the issues in that order.

II. Cost Recovery or Contribution

We begin with NCR’s assertion that it should not be re-

quired to proceed by way of a contribution action under sec-

tion 113(f) at all, but instead should be able to sue the de-

fendant mills under the more plaintiff-friendly provision for

cost recovery found at CERCLA § 107(a), 42 U.S.C. § 9607(a).

We review this question of statutory interpretation de novo.

Storie v. Randy’s Auto Sales, LLC, 589 F.3d 873, 876 (7th Cir.

2009).

A

Defining the relation between cost-recovery suits under

section 107 and contribution actions under section 113 has

proven vexing for courts. Section 107(a) is meant to support

a claim for parties to recover costs incurred during a self-

initiated environmental cleanup, while section 113(f) creates

a right to contribution for parties already subject to liability

in either a section 107 action or an action by the government

under CERCLA § 106, 42 U.S.C. § 9606. See United States v.

Atlantic Research Corp., 551 U.S. 128, 138–39 (2007). Proceed-

ing by way of section 107(a) holds advantages for a plaintiff

insofar as it can recover “any … necessary costs of response

incurred,” and defendants can assert only the statutory de-

fenses enumerated in section 107(b), such as acts of God, acts

10 Nos. 13-2447 et al.

of war, and third-party omissions. See 42 U.S.C.

§ 9607(a)(4)(B). See also California v. Neville Chem. Co., 358

F.3d 661, 672 (9th Cir. 2004). Equity plays no role in a sec-

tion 107(a) action, in contrast to a section 113(f) action, where

the entire allocation of costs is equitable, and even a defend-

ant who concedes statutory liability may argue that it should

bear none of the costs of response. The defendant in a sec-

tion 107(a) action can always bring a section 113(f) counter-

claim if the plaintiff is a PRP, but the burden of proof would

then be on the counterclaiming defendant to demonstrate an

entitlement to contribution. See Atl. Research Corp., 551 U.S.

at 140 (explaining availability of 113(f) counterclaim);

Goodrich Corp. v. Town of Middlebury, 311 F.3d 154, 168 (2d

Cir. 2002) (discussing burden of proof).

Whether a party must proceed under section 107(a)

or 113(f) depends on the procedural posture of the claim. Atl.

Research Corp., 551 U.S. at 139–40 (citing Consol. Edison Co. of

N.Y. v. UGI Utils., Inc., 423 F.3d 90, 99 (2d Cir. 2005)). If a

party already has been subjected to an action under sec-

tion 106 or 107, or has “resolved its liability to the United

States or a State for some or all of a response action or for

some or all of the costs of such action in an administrative or

judicially approved settlement,” it must proceed under sec-

tion 113(f). 42 U.S.C. §§ 9613(f)(1), (f)(3)(B); see Bernstein v.

Bankert, 733 F.3d 190, 201–02 (7th Cir. 2012). Conversely, a

party that has not been subjected to an enforcement or liabil-

ity action, and that is not party to a settlement, may proceed

under section 107(a). See Cooper Indus., Inc. v. Aviall Servs.,

Inc., 543 U.S. 157, 166–68 (2004). Section 113(f) is closed to a

litigant without a preexisting or pending liability determina-

tion against it even if it wants to proceed by that route, be-

cause that statute creates a right to contribution, and contri-

Nos. 13-2447 et al. 11

bution exists only among joint tortfeasors liable for the same

harm. See RESTATEMENT (SECOND) OF TORTS § 886A. See also

Cooper Indus., 543 U.S. at 166–68 (unavailability of sec-

tion 113(f)); Atl. Research Corp., 551 U.S. at 135–36 (availabil-

ity of section 107(a)). Thus, although a strict reading of the

phrase “necessary costs of response” in section 107(a) might

suggest that parties who pay pursuant to an enforcement

action might be able to sue under section 107(a), this court—

like our sister circuits—restricts plaintiffs to section 113 con-

tribution actions when they are available. Bernstein, 733 F.3d

at 206. See also Hobart Corp. v. Waste Mgmt. of Ohio, Inc., Nos.

13-3273, 13-3276, 2014 WL 3397147 at *7 (6th Cir. July 14,

2014) (agreeing with Bernstein that sections 107(a) and 113(f)

provide mutually exclusive remedies).

B

The question whether NCR may sue under section 107(a)

is controlled by our decision in Bernstein. In that case we

held that a settlement with the EPA “resolves” a party’s lia-

bility when the agreement, by its own terms, releases a party

from CERCLA liability in an enforcement action. Bernstein,

733 F.3d at 204–15. We contrasted two Administrative Or-

ders of Consent between the PRP and the EPA, both of

which contained explicit language stating that the PRP

would not be protected from suit by the EPA until after it

had completed its cleanup obligations under the orders. The

earlier order dealt with a project on which the PRP had

completed work. The PRP was therefore limited to a contri-

bution action under section 113(f) to recover its costs. The

later order stipulated that “nothing in this Order constitutes

a satisfaction or release from any claim or cause of action

against the Respondents,” and that “[t]hese covenants [not

12 Nos. 13-2447 et al.

to sue] are conditioned upon the complete and satisfactory

performance by Respondents of their obligations under this

Order.” Id. at 203, 207. The agreement memorialized in that

order disclaimed any admission of liability by the PRP, Id. at

204, and the terms of the agreement gave the EPA the right

to sue up until the point when the PRP completed its obliga-

tions. The PRP’s liability therefore could not be considered

“resolved” by the order for CERCLA purposes. This meant

that the order could form the basis of a section 107(a) suit

because the PRP was still in the process of complying with it.

NCR’s response costs at the River site arose under three

orders: a consent decree following a 2001 suit by the EPA

and WDNR, an Administrative Order of Consent for design

work in 2004, and a Unilateral Administrative Order for re-

medial work in 2007. The company concedes that its costs

under the 2001 consent decree must be recovered under sec-

tion 113(f), if at all. It continues, however, to assert its ability

to sue the recycling mills under section 107(a) for costs in-

curred pursuant to the 2004 and 2007 orders.

Its argument with respect to the 2007 order is easily dis-

patched. The government filed a lawsuit to enforce that or-

der in 2010. Under CERCLA’s express terms, a party may

seek contribution from any other PRP “during or following

any civil action under section 9606 [CERCLA § 106] of this

title or under section 9607(a) [CERCLA § 107(a)] of this title.”

CERCLA § 113(f)(1); 42 U.S.C. § 9613(f)(1) (emphasis added).

Thus, a section 113(f) action is available to NCR for the costs

incurred under the 2007 order. This means that section

107(a) is not available. See Bernstein, 733 F.3d at 206. We are

unpersuaded by NCR’s contention that the costs it incurred

under the order before the action was filed in October 2010

Nos. 13-2447 et al. 13

were “voluntary,” and thus not part of the costs recoverable

under section 113(f). Such slicing and dicing of costs in-

curred under the same administrative order makes little

sense when a party’s liability for all of those costs will ulti-

mately be determined in the enforcement action.

As for the 2004 Administrative Order of Consent, our

analysis again is guided by Bernstein. The question whether

NCR has resolved its liability to the government through the

consent order—and thus is limited to section 113(f)—is a

matter of contract interpretation. On that score, the consent

order here diverges in every meaningful way from the one

in Bernstein that left section 107(a) available. In Bernstein, the

covenants not to sue were “conditioned upon the complete

and satisfactory performance” of the PRP’s obligations. 733

F.3d at 203. In contrast, under the 2004 order here both the

EPA and WDNR “covenant[ed] not to sue or to take admin-

istrative action against Respondents [under CERCLA or

state law] for performance of the work.” It explicitly provid-

ed that “[t]hese covenants not to sue shall take effect upon the

Effective Date” (emphasis added); in Bernstein, the covenants

did not take effect until completion of the work.

To be sure, the NCR order also has language condition-

ing the covenants on “satisfactory performance” of NCR’s

obligations. But this means only that the federal or state

government could sue NCR if it breaches the agreement—a

standard arrangement that is consistent with the fact that

neither the EPA nor Wisconsin could sue NCR if it complied

with its obligations. The agreement resolved NCR’s liability,

and so the district court correctly held that it limited NCR to

proceeding under section 113(f). To hold otherwise would

mean that no consent order could resolve a party’s liability

14 Nos. 13-2447 et al.

until the work under it was complete. Such a rule would be

contrary both to the analysis in Bernstein and to common

sense.

C

Appvion finds itself in a materially different position

from NCR when it comes to the choice between cost recov-

ery and contribution. In fact, it appears to be in an unusual,

possibly unique, position among parties incurring costs un-

der CERCLA: it was initially identified as a PRP by the gov-

ernment and paid response costs in that capacity, but later it

was held to fall outside of CERCLA’s statutory grounds for

liability. It is now on the hook for response costs only as

NCR’s indemnitor pursuant to an agreement signed when

the companies split up. It is seeking the costs of response it

paid directly while it was regarded as a PRP.

To understand how Appvion ended up in this position, it

is helpful to look at its corporate history. It started out as

Appleton Coated Paper Company, one of the two mills that

coated copy paper with NCR’s PCB-based emulsion and

then sold the finished carbonless product back to NCR. In

1970, NCR acquired all of its stock, and it became NCR’s

wholly owned subsidiary. It then merged with another NCR

subsidiary and was renamed “Appleton Papers, Inc.,” which

merged with NCR in 1973 and became an unincorporated

division. NCR later sold the assets of that division to an out-

side corporation called Lentheric, which changed its name in

1978 to Appleton Papers Inc. (without a comma, unlike its

previous iteration). It finally became Appvion after yet one

more name change in 2013.

Nos. 13-2447 et al. 15

The 2007 Unilateral Administrative Order identified Ap-

pvion as a PRP, and the government named it as a defendant

in its 2010 enforcement action under section 106. In late 2011,

however, the district court decided that Appvion had not

assumed Appleton Coated Paper Company’s CERCLA lia-

bility when it was sold by NCR, and that the liability re-

mained with NCR as a matter of contract.

This ruling created a conceptual problem, because App-

vion already had incurred costs of compliance under the

2007 order. The district court sidestepped the question—

apparently of first impression—whether a party formerly

identified as a PRP but later found not to have that status

(and thus not to be liable under CERCLA) could recoup its

costs under section 107(a), 113(f), neither, or both. Instead,

the court found that Appvion had agreed to indemnify NCR

for CERCLA costs as part of an earlier settlement agreement

between the companies. (The existence of this agreement

was the basis for Appvion’s successful argument that it was

not directly liable in the government’s 2010 enforcement ac-

tion.) The court held that whatever costs Appvion had in-

curred could not be traced to CERCLA; they were incurred

instead pursuant to the indemnity agreement. The agree-

ment provided, the court concluded, that Appvion’s “rights,

limitations, and defenses” were the same as NCR’s. Appvion

was subrogated to NCR’s contribution claim through

CERCLA § 112(c), 42 U.S.C. § 9612(c)(2) (providing for sub-

rogation), and could recover its costs exclusively through

NCR and this subrogation arrangement.

In the run-of-the-mill case, a rule that a CERCLA indem-

nitor (here, Appvion) is limited to proceeding through its

indemnitee would be sound. The leading case in this area is

16 Nos. 13-2447 et al.

Chubb Custom Ins. Co. v. Space Systems/Loral, Inc., 710 F.3d 946

(9th Cir. 2013). There, the Ninth Circuit held that an indem-

nitor insurance company had not incurred costs “under

CERCLA” because the money it disbursed did not corre-

spond to “costs of response,” but rather to independent con-

tractual obligations based on the indemnified party’s costs of

response. Id. at 952–53. If the rule were different, the court

feared, insurers could exploit it to make an end-run around

section 113(f): they could make payments directly to jointly

liable parties instead of filtering the money through their in-

demnitees. They could then turn around and bring a sec-

tion 107(a) action against those parties because the insurer

(by hypothesis) was not a PRP. Chubb reflects the fact that an

indemnitor normally is able to satisfy the full amount of any

claim it would otherwise have brought under section 107(a)

by standing in the shoes of its indemnitee in a section 113(f)

action. Permitting it to operate outside section 113(f) would

unjustly improve its litigating position.

This case, however, does not fit the normal pattern. App-

vion was not acting as an indemnitor when it paid the re-

sponse costs it now seeks to recover; as of then, it was a PRP.

Even if it were to stand in NCR’s place, it could not hope to

recover for what it paid, because NCR would not be entitled

to contribution for response costs that it did not bear. The

indemnity agreement is a one-way street: it does not expand

NCR’s costs of response and thus allow it to sue for contri-

bution toward Appvion’s costs for paying at least part of

NCR’s contribution share.

It is conceivable that in some circumstances, an indemni-

tor-former PRP that incurs direct response costs and is later

found not liable under CERCLA may wish to recover costs

Nos. 13-2447 et al. 17

even from the party it is indemnifying. Imagine, for exam-

ple, a hypothetical situation in which Appvion paid $20 mil-

lion in response costs before it was found not to be a PRP,

and later NCR was assigned to pay $5 million in contribu-

tion to its fellow PRPs in a section 113(f) action. Appvion

would be on the hook to NCR for $5 million under the in-

demnity agreement (assuming it indemnifies at 100%). Even

though in principle it starts out wanting to recover the $20

million it paid in response costs because it was not a liable

party in the first place, in the end the sum needed to make it

whole would be $25 million—its own response costs of $20

million plus the $5 million paid under the indemnity agree-

ment. There is good reason to take the position that at least

the $20 million should be allocated equitably among the

PRPs, not irrevocably assigned to a party that was errone-

ously identified as a PRP and in that capacity complied with

the EPA’s order while contesting its liability. Principles of

contract should govern any rights between the parties under

the indemnity agreement.

It is not readily apparent which statutory mechanism is

the proper one for reimbursing the erroneously imposed

costs paid by the non-PRP. But it seems apparent that some-

thing should be available. This is true regardless of any in-

dependent indemnity agreement with another PRP, insofar

as costs that fall outside the agreement are concerned. A sec-

tion 113(f) action is a poor fit for this situation, because con-

tribution exists only among joint tortfeasors. RESTATEMENT

(SECOND) OF TORTS § 886A. A party such as Appvion that is

no longer a PRP logically cannot be a joint tortfeasor for

CERCLA purposes.

18 Nos. 13-2447 et al.

That leaves us with section 107(a). It turns out to be a rea-

sonably good fit, if one characterizes Appvion’s response

payments as constructively voluntary. When it turned out

that Appvion could not legally be bound to pay the response

costs that it had already paid under the order, the nature of

those payments had to be reconsidered. Had Appvion been

properly characterized from the start, any payments it might

have made would have been wholly voluntary. It makes

sense, we think, to apply that lack of compulsion retroactive-

ly. Under Atlantic Research Corp., Appvion is therefore enti-

tled to bring a section 107(a) action against the PRPs sharing

liability for the Lower Fox River site. See 551 U.S. at 135–36.

We stress that this action is available not because Appvion is

NCR’s indemnitor, but precisely because it was not indemni-

fying NCR when it incurred these response costs. Section

107(a) is not available for the recovery of any costs that arise

through Appvion’s indemnity agreement; we agree with the

Ninth Circuit’s holding in Chubb that the company qua in-

demnitor is limited to its indemnitee’s CERCLA remedies.

Maintaining the bright-line distinction between costs in-

curred as a former PRP and costs incurred as an indemnitor

should prevent the undesirable scenario that would permit

an indemnitor to exploit the use of direct CERCLA payments

to enhance its litigating position, while safeguarding the

rights of non-responsible parties not to have to contribute to

the costs of clean-up. Because the district court held that

Appvion could not sue under section 107(a), we must re-

verse its decision and remand for further proceedings.

III. Rights to Contribution

We now turn to two related questions on the merits:

whether the district court abused its discretion when it held

Nos. 13-2447 et al. 19

on summary judgment that NCR was not entitled to contri-

bution for any of its response costs at the Lower Fox River

site; and whether the court correctly ruled that the recycling

mills were entitled to 100% contribution from NCR for their

own costs, as they asserted in counterclaims. We discuss

these two points together, as they are just two different ways

of asking whether NCR can be held responsible for all re-

sponse costs, no matter who paid initially.

We generally review a grant of summary judgment de

novo. A party is entitled to summary judgment if, viewing

the evidence in the light most favorable to the non-moving

party, there are no genuine issues of material fact and the

moving party is entitled to judgment as a matter of law. See

Envtl. Transp. Sys., Inc. v. ENSCO, Inc., 969 F.2d 503, 507 (7th

Cir. 1992); FED. R. CIV. P. 56(a). The equitable allocation of

response costs in a CERCLA action, however, is for the dis-

trict court to decide in its discretion, and we do not start

from scratch in determining whether we would allocate eve-

ry penny in the same way. See Browning-Ferris Indus. of Ill.,

Inc. v. Ter Maat, 195 F.3d 953, 957, 959 (7th Cir. 1999) (hold-

ing that district court “did not abuse [its] discretion”). In-

stead, this court has implicitly accepted, and some of our sis-

ter circuits have more explicitly stated, that we review the

district court’s allocation for abuse of discretion, even when

the issue comes to us on appeal from summary judgment.

See ENSCO, 969 F.2d at 506, 509 (indicating district court de-

cided case on summary judgment and discussing court’s

discretion under CERCLA); United States v. R.W. Meyer, Inc.,

932 F.2d 568, 573 (6th Cir. 1991) (applying abuse of discre-

tion standard when evaluating summary judgment); see also

Goodrich Corp. v. Town of Middlebury, 311 F.3d 154, 170 (2d

Cir. 2002); Tosco Corp. v. Koch Indus., Inc., 216 F.3d 886, 894

20 Nos. 13-2447 et al.

(10th Cir. 2000); Boeing Co. v. Cascade Corp., 207 F.3d 1177,

1187 (9th Cir. 2000).

We begin with the text of section 113(f):

Any person may seek contribution from any other

person who is liable or potentially liable under sec-

tion 9607(a) [CERCLA § 107(a)] of this title, during or

following any civil action under section 9606

[CERCLA § 106] of this title or under section 9607(a)

of this title. Such claims shall be brought in accord-

ance with this section and the Federal Rules of Civil

Procedure, and shall be governed by Federal law. In

resolving contribution claims, the court may allocate

response costs among liable parties using such equi-

table factors as the court determines are appropriate.

Nothing in this subsection shall diminish the right of

any person to bring an action for contribution in the

absence of a civil action under section 9606 of this title

or section 9607 of this title.

42 U.S.C. § 9613(f) (CERCLA § 113(f)). In a contribution ac-

tion the court is not concerned with deciding whether a par-

ty is liable under CERCLA. That is a question for the en-

forcement action; the contribution action merely imports its

conclusions. Even so, meeting a statutory liability trigger

renders a party only potentially liable for contribution under

CERCLA. ENSCO, 969 F.2d at 507. It is within the district

court’s power to require all, none, or some intermediate

share of contribution from a PRP, depending on the court’s

weighing of the equities.

We have described the district court’s authority in this

area as “broad and loose.” Browning-Ferris, 195 F.3d at 957.

Nos. 13-2447 et al. 21

CERCLA not only entrusts the district court to make the ul-

timate equitable allocation of costs, but it also grants the

court the authority to decide which equitable factors will in-

form its decision in a given case. Kerr-McGee Chem. Corp. v.

Lefton Iron & Metal Co., 14 F.3d 321, 326 (7th Cir. 1994). In

that connection, “a court may consider several factors, a few

factors, or only one determining factor … depending on the

totality of circumstances presented to the court.” ENSCO,

969 F.2d at 509. The fact-intensive inquiry is “particularly

suited” to case-by-case analysis, and we have resisted at-

tempts to impose upon district courts a requirement to either

include or to ignore any particular factors in its ultimate de-

cision, even ones that might strike an unbiased observer as

salient facts. Id. Even so, we have a responsibility to do more

than rubber-stamp the district court’s decision, and so we

begin by exploring how the court arrived at its decision to

place 100% of the financial burden for cleaning up the Lower

Fox River on NCR.

A

After the court sorted out the questions of cost-recovery

and contribution, it held a scheduling conference under Rule

26(f) and asked the parties to lay out a discovery plan. NCR

and Appvion proposed that the court set a firm trial date

and permit full discovery into all relevant matters at once.

The defendants countered with the suggestion that the court

limit initial discovery to “(1) when each party knew, or

should have known, that recycling NCR-brand carbonless

paper would result in the discharge of PCBs to a waterbody,

thereby risking environmental damage; and (2) what, if any,

action each party took upon acquiring such knowledge to

avoid the risk of further PCB contamination.” Defendants

22 Nos. 13-2447 et al.

argued that actual or constructive knowledge of the risk and

any failure to take immediate action to prevent the risk

would be the key factors in determining the equitable alloca-

tion of costs.

The court adopted the defendants’ proposal for targeted

discovery. It explained that, in the relatively wide-open

world of equitable-contribution actions, “fairness would

seem to dictate that those who were in the best position to

know about possible contamination … should bear more re-

sponsibility than parties further down the stream (so to

speak)” and that “under some circumstances, joint tortfea-

sors having substantially greater culpability can be denied

contribution altogether.” A ruling reached on this basis, the

court hoped, would obviate the need for much of the discov-

ery that NCR and Appvion were seeking.

The parties undertook discovery in accordance with this

plan, and both sides filed motions for summary judgment.

Their efforts yielded a hefty record, with some 900 exhibits,

covering expert and government reports; deposition testi-

mony; laboratory notes; corporate records; and correspond-

ence. Based on these materials, the court distilled the undis-

puted material facts.

The court began by finding that NCR used Aroclor 1242,

a solvent containing PCBs and manufactured by Monsanto,

from 1954 until it found an adequate alternative in 1971.

During this time, which it called the “production period,”

roughly 30 million pounds of the PCB-laden emulsion were

used. Though it had not yet called for discovery into the

quantities that were discarded into the River, the court noted

that the WDNR calculated that 98% of the PCBs in the Lower

Fox River entered it during the production period. WDNR

Nos. 13-2447 et al. 23

estimated that 39% of the PCBs entered the river as a result

of NCR’s own manufacturing process, and 56% entered as a

result of the recycling operations of the defendants during

the 1954 to 1971 period. The remainder, it said, was dumped

by recycling mills continuing to recycle carbonless copy pa-

per after the production period ended in 1971. These esti-

mates, however, were outside the scope of the discovery

plan, and NCR did not concede their accuracy. We therefore

disregard this data for present purposes.

The court next considered evidence about knowledge:

what did each party know about the environmental dangers

posed by PCBs, and when did it acquire this knowledge. For

this purpose, the court relied heavily on correspondence by

the British company Wiggins Teape, which was NCR’s ex-

clusive licensee for carbonless copy paper production in Eu-

rope. The Wiggins Teape documents showed that the com-

pany was aware as early as 1964 that Aroclor was toxic, and

that it knew that recycled NCR paper could not be used for

food packaging unless it was sufficiently cleansed.

There were also records of scientific tests beginning in

1965 demonstrating the toxicity of Aroclor 1242. NCR’s own

studies showed that PCBs had a “defatting effect” when they

came into contact with skin, and indicated that the company

was searching for a replacement. (In other words, PCBs are

an irritant that chemically dissolves the fats in the skin and

leaves it cracked and vulnerable to infection.) An independ-

ent study published by the Swedish scientist Soren Jensen in

1966 called PCBs “as poisonous as DDT,” and said they were

harmful to the liver and the skin. NCR scientists were aware

of this report by February 1967 at the latest.

24 Nos. 13-2447 et al.

Monsanto apparently began to worry about the envi-

ronmental effects of Aroclor in the late 1960s: on March 12,

1969, it circulated an internal memo with advice about how

to deal with customers’ concerns about Aroclor’s safety. It

essentially advocated silence, except with NCR—which by

itself comprised 40% of the market for Aroclor 1242 in 1968.

Monsanto decided to follow NCR’s approach toward the in-

creasing worries about PCBs in crafting its own response.

When Monsanto employees visited NCR headquarters in

late March 1969, NCR officials told them that it wanted to

stay informed about new developments, but it was not going

to make any changes unless another article appeared specifi-

cally naming NCR as a source of the pollution. Samples tak-

en by Monsanto in late 1969 and early 1970 showed that the

effluent from NCR’s emulsion plants had “quite high” levels

of Aroclor 1242.

Wiggins Teape documents from 1970 show that it was

becoming acutely aware of the problem and that British reg-

ulators were zeroing in on Aroclor as an environmentally

toxic substance. Nevertheless, documents from that year re-

veal that NCR pushed Wiggins Teape not to disclose that

NCR was the source of the Aroclor-coated paper. This re-

quest made Wiggins Teape executives uncomfortable. An

internal memo from the latter written on February 13, 1970,

indicated that although no study had definitely established a

causal link between PCBs and health problems at that point,

Wiggins Teape had known about potential toxicity since

1955. The memo also said that the Jensen report in 1966

awoke a “sleeping tiger.” It worried that a comparison could

be drawn between the PCB threat and the evolving public

knowledge of the health dangers of cigarettes.

Nos. 13-2447 et al. 25

Monsanto stopped selling Aroclor 1242 in 1970, explain-

ing to its customers that PCBs’ “use in synthetic resin com-

positions may be a source of … alleged environmental con-

tamination.” NCR decided to draw down its remaining stock

of Aroclor; it ceased using Aroclor to make carbonless copy

paper in April 1971. The following year, NCR circulated an

internal memorandum stating, “In the late 1960’s accumula-

tive evidence began to show that PCBs may have adverse

effects on certain forms of animal life. … The resistance to

breakdown—such as thermal and biodegradation—was

shown to lead to accumulations in the environment.”

The authenticity of these documents was not contested,

and in light of them the district court concluded that it could

draw certain inferences that could not be disputed. First, it

concluded that NCR knew that PCBs posed a risk of envi-

ronmental harm by the late 1960s. This is not to say that

NCR knew definitively that PCBs were harmful, but it was

aware that there was a danger that they were toxic to human

and animal life when released in waterways, and that they

did not break down in the environment. At the latest, said

the court, NCR knew this much when Monsanto sent its let-

ter about environmental concerns in early 1970.

The court next concluded that none of the defendants

knew about the risks of PCBs until after NCR had ceased to

produce carbonless copy paper in 1971. It noted that NCR

had produced no evidence that any defendant knew that

NCR’s paper contained PCBs at all, or that the paper could

lead to environmental damage, in the period before April

1971. In drawing this inference, the court discounted three

pieces of evidence that NCR now highlights: 1) an industry-

wide report stating that the presence of PCBs in paper prod-

26 Nos. 13-2447 et al.

ucts and mill effluents had been recognized since the late

1960s; 2) testimony from a Menasha purchasing agent that it

was instructed not to buy carbonless copy paper broke as

early as 1950 because it might contain PCBs; and 3) testimo-

ny by a Fort Howard employee that Monsanto’s decision to

stop selling Aroclor 1242 in 1970 was “well known.” The

court discounted the industry report because it was pre-

pared in 1976 and did not show that the mills were specifi-

cally alerted to PCBs in NCR’s products; it found the

Menasha agent’s testimony unhelpful because he later repu-

diated it and the plaintiffs themselves rejected it in a differ-

ent document before the court; and it found the Fort How-

ard employee’s testimony to be beside the point, because the

deponent dated the knowledge to 1974, not 1970.

In the district court’s view, the record left no doubt that

NCR and Appvion knew long before others that PCBs posed

a long-term risk to the environment. The importance of this

early knowledge, it thought, drowned out all other equitable

factors. It added that NCR actually increased its production

of PCB-laden carbonless copy paper even as its knowledge

of the risks increased in the late 1960s, and NCR’s response

to the evidence was sluggish at best. It also reasoned that

NCR was in a far better position to learn about the risks,

even if it was not fully aware of them. Finally, it found that

the equities strongly favored the defendants even in the pe-

riod from 1954 until the mid-1960s, when all parties were

ignorant of the risks posed by PCBs, because “between par-

ties who produced the product and those who merely pro-

cessed it and recycled it along with all other paper products

or water sources, these latter parties are significantly less

blameworthy.” The court recognized that this was not a

claim for indemnification by the defendants, but it felt that

Nos. 13-2447 et al. 27

such actions provided a useful analogy. The principles be-

hind indemnification—particularly when one party provides

another with a defective product—argued for denying con-

tribution to NCR.

The district court decided that no equitable adjustment

was needed for the period when the defendant recycling

plants continued to use broke from NCR’s carbonless copy

paper after the product was discontinued in April 1971, and

indeed past the point where the court concluded that all par-

ties had knowledge of the harmfulness of PCBs. There was

little that would have alerted the recyclers to the danger of

this use. In 1976, Wisconsin approved the continued use of

wastepaper containing PCB in recycling operations. See Wis.

Stat. § 144.50(3)(c) (1976). The EPA promulgated a regulation

in 1979 that allowed the continued use of PCB-containing

carbonless copy paper, 44 Fed. Reg. 31,514 (May 31, 1979),

and in 1984 it granted an express exemption for the use of

“recycled PCBs,” 49 Fed. Reg. 28,172, 28,175 (July 10, 1984).

A further amendment to allow the “safe level” of recycled

PCBs to be measured in a more flexible way (to benefit the

paper recyclers) followed in 1988, 53 Fed. Reg. 24,206 (June

27, 1988). For the interim periods when the defendants con-

tinued to recycle PCB-contaminated paper before these ex-

press authorizations, the district court used a WDNR study

to conclude that the amount of PCBs dumped into the River

during this period was less than two percent of the total (alt-

hough it did not conduct discovery on this point). It would

be a “Herculean task,” the court feared, to try to isolate and

apportion responsibility for such a small portion of the over-

all PCBs in the River. At any rate, said the court, there was

no evidence that these additional releases contributed signif-

icantly to the cleanup costs, and they did not put a dent in

28 Nos. 13-2447 et al.

NCR’s overall greater equitable responsibility for the clean-

up.

The court also pointed to policy reasons in support of its

conclusions. It worried that encouraging “manufacturers of

a toxin” to continue using it until an economically feasible

replacement can be found, and then allowing the manufac-

turer to recover contribution from “innocent processors” of

the toxin, created a moral hazard. Finally, it thought that an

approach that encourages producers of toxic materials to act

“swiftly and proactively” as soon as the data begin to sug-

gest the potential for environmental damage was more com-

patible with CERCLA.

B

NCR attacks the district court’s grant of summary judg-

ment on two fronts. Its main thrust, to which we will return

in a moment, is that it was an abuse of discretion to deter-

mine at this stage that the equities so clearly favored the de-

fendants as to make NCR responsible for 100% of the costs of

response—both its own costs and the costs initially borne by

the defendant recycling mills. It also makes the procedural

argument that the district court impermissibly resolved dis-

puted questions of fact on the way to reaching summary

judgment. We reject the latter contention. The district court

faithfully applied the appropriate standard for summary

judgment, and the conclusions it reached about the parties’

relative knowledge and awareness of the risks of PCBs were

consistent with the undisputed evidence in front of it.

NCR’s contention that the district court resolved disput-

ed questions about when the company knew about the dan-

gerousness of PCBs is based on a misunderstanding or a

Nos. 13-2447 et al. 29

mischaracterization of the conclusions that the district court

drew. If the district court had determined, without qualifica-

tion, that NCR knew how dangerous PCBs were in the mid-

1960s, NCR might have a point. NCR presented evidence

showing that it did not believe that Aroclor 1242 was toxic

because the initial evidence of toxicity related to Aroclor

products with higher amounts of chlorine. (Aroclors were

numbered based on their chlorine content; the “42” in Aro-

clor 1242 indicates that the product was 42% chlorine.) An

expert retained by NCR produced a report stating that earli-

er studies focused on higher-chlorinated Aroclors, and that

the toxicity of PCBs was “poorly known” even through the

early 1970s.

NCR also presented some evidence showing that the

company internally felt that PCBs were not an environmen-

tal risk. For example, notes taken from a meeting between

NCR and Monsanto employees showed that the parties dis-

cussed an incident of mass bird deaths in the Irish Sea in

November 1969; those notes indicate that the investigation

“cleared PCBs.” On the same document, the employee tak-

ing the notes wrote, “We think it degrades.” The record also

contains a letter sent from Monsanto to its customers in 1970

saying that Aroclors with a chlorine content below 54% “ap-

pear to present no potential problem to the environment.”

This evidence of NCR’s subjective beliefs would call into

dispute any conclusion that NCR knew for a certainty about

the impact its PCB use would have on the environment in

the mid-1960s. But the district court did not say that NCR

had such perfect knowledge. Instead, it concluded that NCR

was beginning to see the warning signs about PCBs in the

mid-1960s. This is indisputably true; Wiggins Teape docu-

30 Nos. 13-2447 et al.

ments showed awareness of PCBs’ toxicity in 1964, and NCR

had the Jensen Report by early 1967 at the latest. The court’s

point was that by the mid-1960s NCR was aware that Aro-

clor posed a risk of being harmful to the environment. Evi-

dence had begun to accumulate that PCBs might cause se-

vere damage. The recycling mills, in contrast, had not seen

that evidence, and even if they had seen it, they had no ap-

parent way of knowing that NCR’s broke contained PCBs.

Whether NCR was given different information about higher-

chlorinated Aroclors, or whether some of its fears about

PCBs were allayed during a meeting with Monsanto em-

ployees, does not change the fact that it was on alert by then.

Given the district court’s caution in drawing its factual

conclusion about NCR’s knowledge in the period between

1964 and 1971, we find nothing in the record to bring its

findings into dispute. NCR’s argument could be taken to

suggest that the district court should not have settled for

such a modest conclusion; once it chose to decide the case

based on knowledge, NCR might say, it should have pro-

ceeded (perhaps after more discovery) to resolve in full what

each party knew and when. This is just another way of put-

ting the question whether it was an abuse of discretion to

decide contribution shares based on the facts as they stood—

the issue to which we now turn.

C

The ultimate question on this part of the appeal is wheth-

er the district court abused its discretion by allocating 100%

of the Lower Fox River response costs to NCR at this junc-

ture. In the past, we have stressed that the district court’s

discretion is broad, both when it determines how much

weight to place on any given equitable factor before the

Nos. 13-2447 et al. 31

court, and also when it chooses which factors are pertinent

at all for the case before it. Firms that have failed to secure

contribution have come to us looking for greater certainty.

Some have argued that fidelity to volumetric shares is re-

quired, see Browning-Ferris, 195 F.3d at 958–59, and others

have urged that fault must play the leading role, ENSCO,

969 F.2d at 507 n.4. We have rejected these pleas for a one-

size-fits-all bright-line rule. Courts may permissibly make

the equitable allocation based on “several factors, a few fac-

tors, or only one determining factor … depending on the to-

tality of circumstances presented to the court,” as long as the

factors chosen are rational. ENSCO, 969 F.2d at 509. See also

Litgo N.J. Inc. v. Comm’r N.J. Dep’t of Envtl. Prot., 725 F.3d 369,

387 (3d Cir. 2013) (courts have “tremendous discretion”).

Yet discretion has limits. Even if some factors are not

outcome-determinative on their own, the district court’s de-

cision must reflect its consideration of the particulars of the

case, lest the outcome become too divorced from the pur-

poses underlying CERCLA. For example, in Kerr-McGee

Chemical Corp. v. Lefton Iron & Metal Co., we found an abuse

of discretion when the district court allocated cleanup costs

based on the erroneous belief that an indemnification

agreement between the parties did not apply to the costs at

issue. 14 F.3d 321, 326 (7th Cir. 1994). While acknowledging

that the indemnification agreement was “not necessarily de-

terminative” of the contribution question, we held that it

should have been considered when allocating costs and that

one party’s responsibility for producing most of the waste at

the cleanup site did not justify “ignor[ing] other relevant

considerations.” Id.

32 Nos. 13-2447 et al.

The Eighth Circuit confronted a similar problem in

K.C.1986 Ltd. P’ship v. Reade Mfg., 472 F.3d 1009 (8th Cir.

2007). The district court there had refused to consider

pretrial settlement credits obtained by one of the parties in

its contribution decision, despite CERCLA’s explicit policy

against double recovery. See 42 U.S.C. § 9614(b). Reasoning

that the district court “failed to consider a relevant factor

that should have been given significant weight,” the

appellate court found an abuse of discretion. Id. at 1017. It

explained that “[i]n determining which equitable factors are

appropriate, the policies articulated in CERCLA cannot be

ignored.” Id.

In one significant way, this case is unlike the earlier ones,

or nearly any other CERCLA contribution action. Usually, a

litigant dissatisfied with its contribution share will assert

that the district court assigned impermissible weight to cer-

tain factors based on evidence in the record, or discounted

facts that it should not have. In those situations, it is relative-

ly easy to evaluate whether the district court neglected to

consider an important factor or placed unacceptable weight

on some factors while failing to accord due respect to others.

Here, however, we are asked to decide whether the district

court is authorized to preselect the equitable factor that it be-

lieves most likely to determine the outcome, and then con-

duct limited discovery into that factor to see if it can reach an

equitable determination.

We do not dismiss phased discovery out-of-hand as an

unacceptable way to manage CERCLA contribution actions.

Questions of cause and culpability surrounding an environ-

mental cleanup can be tremendously complex, and discov-

ery into every matter that anyone deems relevant—no mat-

Nos. 13-2447 et al. 33

ter how unlikely it is to sway a court’s equitable allocation of

costs—could be prohibitively expensive and wasteful of the

time of the court and parties alike. If one factor, such as

knowledge, will so clearly overwhelm all others such that

inquiry into other matters is unnecessary, there is no reason

to force parties to bear additional costs just for the sake of

appearances.

Nonetheless, the court’s ultimate decision must reflect

CERCLA’s equitable principles. We have always drawn a

distinction between determining an action based on a single

factor, and considering only certain factors on the way to the

decision. The former practice is what ENSCO approved. See

969 F.2d at 509. The latter showed up in Kerr-McGee, in

which we reversed because the district court failed to show

its awareness of certain relevant factors before arriving at its

equitable conclusion. Similarly, in Beazer East, Inc. v. Mead

Corp., the Third Circuit found an abuse of discretion when

the district court “prioritize[d] a priori the parties’ relative

contributions of waste over their contractual intent to allo-

cate environmental liability among themselves.” 412 F.3d

429, 447 (3d Cir. 2005). These cases demonstrate that the dis-

trict court must decide what is relevant based on the record

as a whole; an allocation based on otherwise permissible fac-

tors will not be rescued if it does not explain why the court

has chosen to disregard other apparently relevant infor-

mation. Kerr-McGee, 14 F.3d at 326; cf. R.W. Meyer, 932 F.2d

at 573 (“Congress intended the court to deal with these situa-

tions by creative means, considering all the equities and bal-

ancing them in the interests of justice.”) (emphasis added).

NCR argues that the district court here made the same

error that we criticized in Kerr-McGee: that it preselected

34 Nos. 13-2447 et al.

knowledge as the determinative factor and permitted dis-

covery into only that aspect of the case, thus depriving NCR

and Appvion of the opportunity to develop evidence of oth-

er potentially relevant factors. NCR is not suggesting (or at

least it should not be suggesting) that it necessarily is enti-

tled to a different result based on the additional evidence it

would have presented. Instead, it contends that the alloca-

tion decision could not have been made based on the totality

of the circumstances because the district court did not have

the totality of the circumstances before it. At least three equi-

table factors that the court put to one side would have been

relevant to the question of cost allocation, it urges: the par-

ties’ relative volumes of PCB discharges; sources of PCBs in

the river other than carbonless copy paper; and the parties’

levels of voluntary cooperation with the government’s

cleanup effort.

We agree with NCR that these points are potentially rel-

evant to an understanding of who should contribute to the

costs of the Fox River cleanup. For us to evaluate the district

court’s allocation decision, therefore, we would need to see

either that it evaluated and rejected these considerations as

bases for allocation, or that it explained why one or more of

them were so immaterial when compared with the ones on

which it chose to rely as to make it fruitless for a party to de-

velop evidence on those points.

Unfortunately, the court did not record its thinking in

this respect. We are thus unable confidently to say that the

court chose knowledge as the deciding factor because un-

disputed facts showed that the relative volumes of dis-

charge, alternate sources, and voluntary cooperation paled

in comparison to knowledge. When explaining why it chose

Nos. 13-2447 et al. 35

to proceed solely on the basis of the parties’ knowledge of

the dangers posed by PCBs in the first instance, the court

said that its “premise was that parties who knew, or should

have known, about the dangers of PCBs should bear the

brunt, or even the entirety, of any cleanup costs resulting

from PCB contamination.” Its analysis of the parties’ relative

knowledge was thorough and thoughtful, and reasonable as

far as it went.

The problem is that the court’s reasons for rejecting con-

sideration of other factors leave us unable to say whether the

record adequately supported the court’s decision to select

knowledge as the decisive factor. All the court said was that

apportionment on factors apart from knowledge “would re-

quire additional phases of the trial” in which the parties

could prove other disputed facts like volume. It then reiter-

ated its conclusion about knowledge, both that NCR was

“not completely ignorant” of the dangers of PCBs during at

least some of the period when they were producing carbon-

less copy paper, and that it was in the “best position” to

learn of the dangers before it was fully aware. It added that

in the period before any party could have been aware of the

dangers, the equities favored the recycling mills because

NCR actually produced the product, whereas the recycling

mills “merely processed it”; it analogized the recycling mills

to “innocent end-users.” It added that NCR bore more re-

sponsibility because the “defect” in its product—the PCBs—

was the key to its profitability and not “incidental,” and that

NCR was “sluggish” in its response to the mounting data

about PCBs.

As compelling a picture as this is on the knowledge issue,

it does not explain why other factors, such as cooperation in

36 Nos. 13-2447 et al.

the cleanup or relative volumes dumped, are so wholly ir-

relevant to the equitable determination that information

about them need not even be gathered or presented by the

parties. Without a more complete record, we are unable to

endorse the court’s decision to resolve the case on the basis it

chose. As a practical matter, the district court was unable to

avoid mentioning basic facts such as the relative volumes of

PCBs discharged by the parties, even though it qualified

those references with the acknowledgment that the figures

had not been subject to discovery. Other factors that NCR

proposes, such as cooperation, might have influenced the

court’s conclusions about NCR’s slow responses to data. We

hasten to say, however, that further information may just as

easily point in the other direction and have the effect of rein-

forcing the district court’s present conclusions. It is impossi-

ble to know at this juncture what the likely effect will be.

We understand that a party’s knowledge that it is either

doing something wrong or running an undue risk that it is

doing something wrong can be a compelling basis for decid-

ing who should contribute to the costs of clean-up. But we

do not want, either advertently or inadvertently, to privilege

that factor above all others. Knowledge may be the point

that tips the scale, but only after other plausible relevant fac-

tors have been considered and either added to the balance or

discarded as inappropriate for the case at hand.

We also note that some of the reasons the court gave for

allocating all of the costs to NCR do not appear to be con-

sistent with its stated rationale, particularly for the period of

“general ignorance” preceding the existence of any serious

evidence about the dangers of PCBs. Regardless of whether

NCR produced the carbonless copy paper and the defendant

Nos. 13-2447 et al. 37

mills merely recycled it, the fact remains that it was used in

in all of their businesses. At least for that period, the court

gave no reason to fault one party more than another for pro-

ducing something that it did not realize was environmental-

ly toxic. The court also did not explain why it was important

whether the harmful material was essential or collateral to

the product’s main purpose.

We do not lightly impose the burden on either the parties

or the court of additional complex and time-consuming dis-

covery, and we appreciate the effort that the district court

has made to manage this case. Nonetheless, in the equitable

realm where CERCLA contribution actions exist, we must

remain vigilant to ensure that the financial responsibility for

this huge project is properly allocated. On the summary

judgment record before us, we cannot be sure either that the

court did, or that it did not, adequately consider all of the

circumstances before making its decision. We therefore va-

cate the judgment of the district court denying any contribu-

tion to NCR and imposing the response costs of the recycling

mills on NCR, and remand so that the district court can de-

cide which factors will guide its decision on the basis of a

more complete record.

IV. NCR’s Arranger Liability

Next, we address an argument made on cross-appeal by

P.H. Glatfelter Company and WTM I Company (collectively

“Glatfelter”) that the district court, despite its allocation of

all response costs for operable units 2 through 5 to NCR,

subjected NCR to less liability than it deserved. Glatfelter as-

serts that NCR should have been held liable under CERCLA

as an entity that “arranged for disposal” of a toxic substance

(PCBs) based on its corporate predecessor’s sale of broke to

38 Nos. 13-2447 et al.

recycling mills. See CERCLA § 107(a)(3), 42 U.S.C.

§ 9607(a)(3). While this matter would be largely academic if

only operable units 2 through 5 were at stake, a finding ad-

verse to NCR on so-called “arranger liability” would also

make it liable for response costs at operable unit 1, which is

the designation for Little Lake Butte des Morts. This would

increase NCR’s exposure in contribution.

Glatfelter’s case for NCR’s arranger liability centers on

the actions of NCR’s corporate predecessor Appleton Coated

Paper Company, which was one of the mills that coated car-

bonless copy paper with NCR’s emulsion during the pro-

duction period. Recall from the discussion of Appvion’s

CERCLA § 107 claim that Appleton Coated was eventually

subsumed within NCR, and that its CERCLA liability con-

tractually remained with NCR when its assets were sold to

the corporation now known as Appvion. See supra at 14. Re-

call further that one way the carbonless coating mills made

money during the production period was to sell their broke

to the recycling mills for reprocessing. See discussion begin-

ning supra at 5. The theory advanced by Glatfelter is that

Appleton Coated was “arranging for disposal” of its PCBs

when it sold the broke to the recycling mills, and therefore

that NCR remains responsible for the site where those PCBs

ended up.

The district court held a trial on this point and made sev-

eral findings of fact. Even though Appleton Coated tried to

minimize its broke creation because its sale price did not

outweigh the cost of materials and labor, the broke was val-

uable and recorded as an asset on the company’s balance

sheet. Selling broke, the court concluded, allowed Appleton

Coated to “mitigate losses” from its production of carbonless

Nos. 13-2447 et al. 39

copy paper; the court rejected the idea that the broke was an

independent product for sale. The broke had value to the re-

cycling mills, which is why they were willing to pay for it;

the alternative would have been for Appleton Coated to pay

for disposal or recycling. Appleton Coated invested a con-

siderable amount of money in recovering the broke, grading

it, sorting it, storing it, and baling it. The broke was then sold

to the recycling mills in a competitive market. After using it,

the mills would direct as they saw fit disposal of their waste

from reprocessing the broke.

Though the recycling mills attempted to prove that Ap-

pleton Coated knew that NCR’s PCB emulsion would end

up in the River as a result of its broke sales, the district court

found the evidence insufficient to conclude that any indi-

vidual employee at Appleton Paper fully knew what the

mills were doing with the non-fibrous components of broke.

This is not to say Appleton Coated was ignorant of the gen-

eral recycling process; it realized that some byproduct

would end up in the River. Nevertheless, the evidence did

not show that Appleton Coated was aware of how much by-

product would be flushed into the River and the extent to

which it would be treated before it was discharged. The

court characterized Appleton Coated as “indifferent” to

what happened to its broke after it was sold.

What qualifies as “arranging for disposal” under

CERCLA § 107 is clear at the margins but murky in the mid-

dle. At one end of the spectrum are parties that “enter into a

transaction for the sole purpose of discarding a used and no

longer useful hazardous substance.” Burlington Northern &

Santa Fe Ry. Co. v. United States, 556 U.S. 599, 610 (2009).

Those entities are clearly covered by the statute. At the other

40 Nos. 13-2447 et al.

end, a party cannot be held liable “merely for selling a new

and useful product if the purchaser of that product later, and

unbeknownst to the seller, disposed of the product in a way

that led to contamination.” Id. Between these two extremes is

a gray area, where liability becomes a “fact-intensive in-

quiry” that goes beyond the formalities of whether the

transaction is termed a “disposal” or “sale” and looks to

whether Congress meant to cover the transaction when it

enacted CERCLA. Id.

In Burlington Northern, the Supreme Court held that Shell

Oil Company could not be held liable as an arranger when it

contracted for the shipment of a hazardous chemical with

knowledge that some of it was likely to leak en route. Id. at

604. Mere knowledge of potential spills was not enough to

show that Shell “planned for” disposal of the chemical. The

Court explained that arranger liability will not follow when

the disposal is the “peripheral result of the legitimate sale of

an unused, useful product.” Id. at 612.

By contrast, the First Circuit’s decision in United States v.

General Electric Co., 670 F.3d 377 (1st Cir. 2012), illustrates a

situation where a nominal “sale” qualified as the kind of

disposal that triggers arranger liability. There, General Elec-

tric sold drums of “scrap” material containing PCBs that it

could not use in electric capacitators. It charged a bargain

price to a local “chemical scrapper” who put them to use for

his “industrial needs.” Id. at 380. Although the scrapper later

informed General Electric that the quality of the material

was declining and that they should come retrieve some of

the drums, the drums remained unused on the site for years

and began to leak. Id. at 381. The court reasoned that materi-

al stored in 55-gallon drums that the company tried to un-

Nos. 13-2447 et al. 41

load in any way it could (including transfers to local land-

fills, sales to local governments for use as a dust suppres-

sant, giving it away to employees, and discharging it into the

Hudson River) was waste for disposal, regardless of whether

the scrapper paid a nominal fee. Id. at 385. The court af-

firmed the factual finding that “any profit it derived from

selling scrap [chemicals] … was subordinate and incidental

to the immediate benefit of being rid of an overstock of un-

usable chemicals.” Id.

The district court here arrived at a different conclusion: it

found that Appleton Coated’s main purpose in selling broke

was not to get rid of it, but instead to place it on a competi-

tive market and recoup some of its costs of production. This

is a factual finding, and thus one that we would disturb only

if it were clearly erroneous. It is not. The district court ex-

plained that Appleton Coated invested significant resources

in recapturing broke, and that it would have disposed of the

broke quite differently if there were not such a healthy mar-

ket for it. The court also observed that the mill was not sell-

ing containers of concentrated PCBs in an attempt to get rid

of them, but instead was selling a product (broke) that is not

inherently hazardous, and often comes without PCBs at all.

This distinguishes broke from the drums of chemicals at is-

sue in General Electric.

Glatfelter argues that arranger liability should follow be-

cause Appleton Coated knew that the recycling mills would

separate the paper fibers in the broke from the PCBs, and

that the mills would then dump the PCBs into the River. It

would be enough, it contends, that the production mills took

“intentional steps” to discard the broke given their

knowledge that it would end up in the River. Glatfelter urg-

42 Nos. 13-2447 et al.

es in particular that the district court’s finding that Appleton

Coated was at most indifferent to the final destination of the

PCBs, and that there was no particular knowledge of their

fate, set too high a bar, and that “generalized knowledge”

that the recycling mills would dispose of them in some way

would suffice.

Glatfelter’s two-step rule to finding arranger liability,

under which all that would have to be shown is intentionally

getting rid of a product and knowing that some part of it

will be disposed later, would sweep almost any entity that

ever touches the product under arranger liability. Even the

original producer would fall under this definition, as Mon-

santo intentionally sold Aroclor to NCR and must have

known that some portion of it would end up being discard-

ed. NCR’s sale of carbonless copy paper on the consumer

market might also qualify as “arranging for disposal” under

this theory, because eventually all consumer paper ends up

being disposed of somewhere. This would expand arranger

liability well past the limit established in Burlington Northern.

Perhaps, however, Glatfelter is willing to accept a nar-

rower rule, under which the putative arranger must be

someone other than the manufacturer of the product. But

again, Burlington Northern establishes that not all parties fit-

ting that bill will qualify as arrangers. A company using

hazardous materials to manufacture a “new and useful

product” that it then sells on the open market, even with

knowledge that some of that product will be discarded, is

not an arranger, although it might be liable under another

provision of CERCLA.

Even selling with perfect knowledge that the buyer will

dispose of the materials at some point in the future cannot

Nos. 13-2447 et al. 43

on its own qualify as arranging for disposal. In order to de-

cide if someone is an arranger, it is also important to look at

the party’s intent. It is more likely to be an arranger if it was

simply trying to dispose of the materials, or if it was com-

pelled to get rid of them. Although getting the broke out of

its factory was surely useful at some level to Appleton Coat-

ed, getting rid of inventory is useful to every seller of a

product. The simple fact, based on the district court’s find-

ings, is that Appleton Coated was not just trying to find a

way to dispose of trash when it sold its broke, nor did it

need to find a way to bring it to an ultimate destination. It

prepared and sold broke because broke was a valuable input

for the recycling mills.

Once the recycling mills obtained Appleton Coated’s

broke, what happened to the PCBs embedded in the broke

was completely out of the seller’s hands. The recycling mills

could have dumped the byproduct of their broke processing

in the River, sold it again to another entity, contracted with a

disposal company to get rid of it, or brought it to a landfill

themselves. Whatever the buyers did with this byproduct,

Appleton Coated neither contracted with them to take that

step, nor did it have any control over what the recycling

mills ultimately did. This lack of control is a good reason to

find Appleton Coated was not arranging for disposal

(though we do not mean to suggest that an ostrich approach

would work). See United States v. Shell Oil Co., 294 F.3d 1045,

1055 (9th Cir. 2002) (“[C]ontrol is a crucial element of the de-

termination of whether a party is an arranger under

§ 9607(a)(3).”). Compare Catellus Dev. Corp. v. United States,

34 F.3d 748, 750–52 (9th Cir. 1994) (finding arranger liability

when auto parts store sold used batteries to “cracking plant”

for disposal even though plant extracted lead from batteries,

44 Nos. 13-2447 et al.

while rejecting idea that all byproduct sales are disposal),

with Shell Oil, 294 F.3d at 1055 (distinguishing Catellus be-

cause party had no “direct involvement in arrangements for

the disposal of waste”).

It is true that broke is not a “new and useful product” as

described in Burlington Northern. 556 U.S. at 610 (emphasis

added). It is useful, but not new. Sales of a new and useful

product, however, were meant to represent one end of a con-

tinuum. Other sales can still qualify, particularly when they

are for more than token amounts and take place on a com-

petitive market. And unlike the products in both Burlington

Northern and General Electric, the “product” at issue here was

not the harmful chemicals themselves, but a useful input

that also contained the hazardous material. Purchasing this

product was essential to the recycling mills’ business opera-

tions, and they must take the bitter with the sweet of operat-

ing in that market. We therefore affirm the district court’s

holding regarding NCR’s arranger liability.

V. Insurance Offsets

We turn next to the question whether the district court

should have offset against NCR’s contribution certain liabil-

ity insurance proceeds that Glatfelter obtained. NCR objects

to the district court’s ruling that its contribution liability

should not be reduced by those amounts. Evaluation of its

claim requires us to decide two related matters: whether the

collateral source rule applies in CERCLA contribution ac-

tions, and if not, whether any amount of Glatfelter’s insur-

ance settlement should have been offset against NCR’s re-

quired contribution.

Nos. 13-2447 et al. 45

We agree with the district court that the collateral source

rule does not apply in CERCLA § 113(f) contribution actions,

and so in principle courts may take insurance payments into

account when deciding contribution shares. As the Tenth

Circuit explained in Friedland v. TIC-The Industrial Co., 566

F.3d 1203 (10th Cir. 2009), the collateral source rule is meant

to prevent a defendant from receiving the benefit of insur-

ance compensation paid to an (innocent) injured third party.

Id. at 1206–07; see also RESTATEMENT (SECOND) OF TORTS

§ 920A(2) & cmt. d. Contribution actions under CERCLA

§ 107 are a mechanism for allocating costs among joint tort-

feasors and are governed wholly by equity. Equity would

not be served by requiring a district court to remain blind to

alternate sources of recovery for one tortfeasor and the pos-

sibility of its recouping more than 100% of its share. Cf.

K.C.1986 Ltd. P’ship v. Reade Mfg., 472 F.3d 1009, 1018 (8th

Cir. 2007) (district court should have considered settlement

credits when calculating amount of judgment); Boeing Co. v.

Cascade Corp., 207 F.3d 1177, 1190 (9th Cir. 2000) (district

court properly tried to eliminate double reimbursement for

same expense).

The question before us is thus narrow: whether the dis-

trict court properly treated the insurance settlements in this

case. We look for guidance to Friedland’s second holding,

that when a party enters into a settlement with its insurer

that does not break down the amount of the settlement that

covers its costs in common with other PRPs and the amount

that covers individual costs (such as defense costs), that par-

ty cannot later assert that the settlement is dedicated wholly

to its individual costs and thereby avoid having it credited

against a counterparty’s contribution share. 566 F.3d at 1210

46 Nos. 13-2447 et al.

(citing Hess Oil V.I. Corp. v. UOP, Inc., 861 F.2d 1197, 1209

(10th Cir. 1988)).

The district court rejected as inequitable a reading of

Friedland that would require all proceeds from an undiffer-

entiated insurance settlement to cover common liability

costs. Even NCR’s expert agreed that at least some of Glat-

felter’s settlement was for defense costs, which are not sub-

ject to recovery in contribution. Some differentiation, it held,

is thus necessary. Noting that an after-the-fact attempt to

earmark the settlement funds would be too speculative, the

court looked back to Glatfelter’s original insurance contract

with its carrier. This contract included coverage for both di-

rect liability and defense costs, although only the liability

portion was capped at a certain amount of money. For the

purpose of evaluating the claim before it, the court then

made the assumption—favorable to NCR—that as much of

the settlement as could be attributed to common liability

should be, in order to avoid any gamesmanship by Glat-

felter. Thus, to calculate how much Glatfelter stood to recov-

er, it started by taking the full amount of Glatfelter’s insur-

ance settlement and subtracting that portion in excess of the

contract’s liability maximum. Adding that figure to the con-

tribution amount Glatfelter sought from NCR, it found that

the combined amount of liability insurance and contribution

would not cover Glatfelter’s full liability, so there was no

danger that Glatfelter would recover more than 100% of its

share. Accordingly, it held that Glatfelter’s insurance pro-

ceeds should not be offset against its contribution claim.

We find the district court’s reasoning sound. Contribu-

tion actions are governed by equity, and the disposition of

insurance settlements to a PRP is one aspect of that equitable

Nos. 13-2447 et al. 47

determination. Friedland affirms that any level of double re-

covery is inequitable in CERCLA contribution actions, and

that ignoring insurance settlements when it would lead to

double recovery is inconsistent with the statute’s purpose. It

does not otherwise establish a bright-line rule for how a

court should treat insurance settlements. Under different cir-

cumstances, the treatment of Glatfelter’s insurance proceeds

might have been inequitable: if, for instance, Glatfelter had

negotiated an enormous insurance settlement, but had stra-

tegically allocated all of it to defense costs in the settlement

agreement and put up a smokescreen of “bargaining away”

its liability coverage. The governing rule is equity, and the

way equity was achieved in Friedland may prove unsuitable

to other cases. The district court’s determination here that it

was not inequitable to leave the insurance proceeds with

Glatfelter was not an abuse of discretion.

One final question is whether the district court abused its

discretion by treating Glatfelter’s liability for operable units

1 through 5 as an undivided cost, or if it was required to seg-

regate the unit 1 costs and give NCR credit for the costs at-

tributable to units 2 through 5. We are satisfied that because

the amount of Glatfelter’s insurance settlement does not cre-

ate a risk that it would be made more than whole if it re-

ceives its demanded contribution share, there was no harm

in the district court’s decision to consider all of Glatfelter’s

Fox River liability as a whole. We therefore affirm the dis-

trict court’s decision not to credit Glatfelter’s insurance set-

tlement against NCR’s contribution share.

VI. Natural Resource Damages

NCR appeals from the district court’s holding that the

defendant recycling mills can recover all of their payments

48 Nos. 13-2447 et al.

for natural resource damages in contribution from NCR. To

the extent contribution for natural resource damages might

be affected by our holding in Part III above regarding the

equitable allocation of costs, the district court is free to re-

consider this matter on remand. But NCR also urges that the

district court committed legal error by holding that NCR

could be responsible for the natural resource damages at all.

We review that determination de novo.

Among the damages that parties can be required to pay

under CERCLA § 107(a) as part of an environmental reme-

diation effort are “damages for injury to, destruction of, or

loss of natural resources … resulting from [the] release” of a

hazardous substance. 42 U.S.C. § 9607(a)(4)(C). Private par-

ties lack standing to bring natural resource damages claims

under section 107; such actions can be initiated only by the

federal government or a state or tribal government for lands

in that government’s possession or control, or held in public

trust. See 42 U.S.C § 9607(f)(1); Nat’l Ass’n of Mfrs. v. U.S.

Dep’t of the Interior, 134 F.3d 1095, 1113 (D.C. Cir. 1998) (“It is

true that CERCLA does not permit private parties to seek

recovery for damages to natural resources held in trust by

the federal, state or tribal governments … .”). The upshot of

the government’s enforcement efforts in our case is that the

defendants have had natural resource damages assessed

against them, while NCR has not. But the question whether

a party may initiate a section 107(a) action for natural re-

source damages is separate from the question whether a par-

ty subject to a section 107(a) action can then bring a sec-

tion 113(f) action for contribution based on its liability for

natural resource damages. The district court held that

CERCLA § 113(f) makes contribution available for natural

resource damages, and NCR does not challenge that decision

Nos. 13-2447 et al. 49

on appeal. We would agree with it at any rate; section 113(f)

makes contribution available based on a party’s being liable

under section 107(a); it does not make contribution contin-

gent on the type of section 107 damages at issue. See 42

U.S.C. § 9613(f) (“Any person may seek contribution from

any other person who is liable or potentially liable under

section 9607(a) of this title, during or following any civil ac-

tion under section 9606 of this title or under section 9607(a)

of this title.”) (emphasis added). The statute’s later reference

to equitable allocation of “response costs” cannot reasonably

be read as limiting this blanket authorization. Though sec-

tion 107(a)(4) makes some explicit references to “response

costs,” those references are non-exclusive, and all of the

types of damages listed at section 107(a)(4) reasonably can

be understood as “response costs” for the purposes of sec-

tion 113(f).

Even so, NCR argues that the availability of section 113(f)

contribution for natural resource damages must be limited

by the language of section 107(a)(4)(C), which makes a party

liable for “damages for injury to, destruction of, or loss of

natural resources … resulting from such a release.” 42 U.S.C.

§ 9607(a)(4)(C) (emphasis added). According to NCR, the

phrase “resulting from” establishes a causation requirement

that must be proven before a party can be required to pay

any natural resource damages. It claims the district court ig-

nored this requirement and therefore improperly relieved

the defendants of their burden of proof.

NCR’s argument falters insofar as it blends the standard

for establishing liability for natural resource damages under

section 107(a) with the standard for obtaining contribution

under section 113(f). Indeed, discussion of section 113(f) is

50 Nos. 13-2447 et al.

noticeably absent from NCR’s brief. In its version of the stat-

ute, it is only when two parties have been held liable for

causing the same natural resource damages through their

independent actions that contribution between the two

could come into play.

But this is not what CERCLA says. A party may seek

contribution “from any other person who is liable or poten-

tially liable under section 9607(a) … .” CERCLA § 113(f), 42

U.S.C. § 9613(f). Section 107(a)(4)(A)-(D) explains the types

of damages for which a PRP may be liable, and section 113(f)

does not discriminate among the types of damages eligible

for contribution. The district court correctly limited the “di-

rect causation” requirement of section 107(a)(4)(C) to the

first part of a two-step inquiry: first, determine whether a

party is liable for natural resource damages under sec-

tion 107(a), and second, determine whether it is equitably

entitled to contribution for those costs from another party

liable under section 107(a).

NCR’s argument might have merit if the question were

whether NCR should be held directly liable to the govern-

ment for natural resource damages under section 107(a). In-

deed, the two cases to which NCR refers demonstrate that

the causation requirement is all about whether a party is lia-

ble for natural resource damages under section 107; neither

mentions section 113(f). See Dedham Water Co. v. Cumberland

Farms Dairy, Inc., 889 F.2d 1146, 1153–54 & n.7 (1st Cir. 1989);

Idaho v. Bunker Hill Co., 635 F. Supp. 665, 674–75 (D. Idaho

1986). Here, the causation requirement of section

107(a)(4)(C) was satisfied when the defendants were found

liable for natural resource damages. As liable parties under

section 107, they could then seek contribution from NCR, a

Nos. 13-2447 et al. 51

fellow PRP. This is enough to demonstrate that the district

court was correct when it held that the defendants could

seek contribution for natural resource damages from NCR.

NCR also argues that the district court erred by failing to

give it the chance to present the “defense” that the defend-

ants cannot “recover” for natural resource damages that oc-

curred prior to CERCLA’s enactment in December 1980. See

42 U.S.C. § 9607(f)(1). Again, though, NCR mischaracterizes

the defendants’ position as “recovery,” when in fact it is the

government that has recovered against the defendants. The

defendants merely present claims for contribution. Under

the statute, the government could not have recovered for

natural resource damages incurred before December 1980, so

the defendants have no way to ask for contribution for those

costs either—they cannot seek contribution for damages that

they never paid.

The district court was correct in its treatment of these le-

gal questions regarding NCR’s liability for natural resource

damages in contribution, and so we affirm its holdings on

those points.

VII. Discharges at Portage, Wisconsin

We now turn to Glatfelter’s argument that the district

court improperly granted summary judgment in favor of

NCR on the question whether discharges at a facility in Por-

tage, Wisconsin, should subject NCR to liability for response

costs at operable unit 1. Portage is 90 miles upstream of the

Fox River site. Glatfelter’s theory is that the discharges there

flow to unit 1 and thus should make NCR liable in contribu-

tion.

52 Nos. 13-2447 et al.

This claim was the subject of some procedural confusion

in the district court. Glatfelter pleaded its contribution coun-

terclaim regarding the Portage facility against NCR, and in a

February 28, 2011, order granting summary judgment in part

and denying it in part, the district court held that NCR had

no CERCLA liability for operable unit 1. It did not mention

the Portage-discharge theory explicitly. Later, in response to

a motion for summary judgment by Appvion after it was

found not to be a PRP in the enforcement action, Glatfelter

argued (among other things) that Appvion’s summary

judgment motion did not address the allegation that dis-

charges at Portage could lead to liability; the district court

rejected this theory and granted summary judgment against

Glatfelter on October 4, 2012.

The confusion surrounding the Portage theory is entirely

of Glatfelter’s making. While its appellate brief claims that

the district court erred by addressing an unpleaded Portage-

based claim against Appvion and ignoring its actual claim

against NCR, it was Glatfelter itself that raised the Portage

claim in response to Appvion’s motion for summary judg-

ment in an attempt to keep Appvion in the case. (Appvion

took over the Portage plant from NCR in 1978.) The district

court naturally responded to the claim Glatfelter was mak-

ing in its reply to Appvion’s summary judgment motion,

and not to a claim against NCR that Glatfelter was not press-

ing. The judge did not err by understanding Glatfelter’s ar-

gument to be that the Portage claim was about Appvion’s

liability.

At any rate, the court held in 2011 that NCR was not

liable for operable unit 1, and in 2012 that Appvion was not

either. Although Glatfelter asserted to the court that the

Nos. 13-2447 et al. 53

Portage claim was still live when it responded to the

plaintiffs’ summary judgment motion on the state-law

counterclaims in 2012, that assertion is difficult to square

with the finding in NCR’s favor in 2011, especially if we

credit Glatfelter’s current position that this claim was not

pleaded against Appvion at all. That Glatfelter ignored the

claim for years is reason enough to affirm the district court’s

decision that Glatfelter waited too long to preserve its rights.

But the district court also addressed this claim on the merits.

Even if neither party explicitly moves for summary

judgment on the issue, the district court may enter summary

judgment on its own motion. See FED. R. CIV. P. 56(f).

Glatfelter addressed NCR’s and Appvion’s liability at

operable unit 1 both before the February 2011 summary

judgment order and in its brief before the October 2012

order. The matter could not have been a surprise.

All things considered, it was self-evident that Glatfelter’s

Portage theory had little merit, and Glatfelter itself admitted

to the court that it was pressing it without much conviction.

The district court dealt with it appropriately. We therefore

affirm the dismissal of Glatfelter’s Portage claim.

VIII. Preemption of Common-Law Counterclaims

Several defendants pleaded state-law counterclaims of

negligence, strict liability, and creation of a public nuisance

against NCR in response to its contribution action. The dis-

trict court held that these counterclaims were preempted by

CERCLA because they would effectively reapportion

CERCLA costs in a manner contrary to CERCLA itself. On

cross-appeal, the defendants challenge this ruling.

54 Nos. 13-2447 et al.

State law is implicitly preempted when it “interferes with

or is contrary to federal law.” Free v. Bland, 369 U.S. 663, 666

(1962). Such interference exists, among other circumstances,

“where state law stands as an obstacle to the accomplish-

ment and execution of the full purposes and objectives of

Congress.” Freightliner Corp. v. Myrick, 514 U.S. 280, 287

(1995) (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941))

(internal quotation marks omitted).

We have already dealt with an argument almost exactly

like the one in this case. See PMC, Inc. v. Sherwin-Williams

Co., 151 F.3d 610 (7th Cir. 1998). There, the district court al-

lowed PMC to collect contribution under Illinois’s contribu-

tion statute even though it was not available under

CERCLA, and we reversed. PMC’s use of the state statute,

we explained, was an attempt to evade CERCLA’s contribu-

tion mechanisms. Allowing state law to defeat the statute

would “nullify the sanction that Congress had imposed for

the kind of CERCLA violation that PMC committed.” Id. at

618. As for CERCLA’s savings clause stating that the statute

does not “affect or modify in any way the obligations or lia-

bilities of any person under other Federal or State law, in-

cluding common law, with respect to releases of hazardous

substances or other pollutants or contaminants,” 42 U.S.C.

§ 9652(d), we explained that this clause was meant to protect

victims of toxic wastes, not joint tortfeasors against one an-

other. PMC, Inc., 151 F.3d at 617.

Like PMC, Glatfelter and WTM are not “victim[s] of tox-

ic-waste contamination in any realistic sense.” Id. Their

common-law theories all present the same theory of causa-

tion at bottom: NCR’s common-law torts caused the coun-

terclaiming defendants to incur CERCLA liability, and there-

Nos. 13-2447 et al. 55

fore they are entitled to damages from NCR. But CERCLA

was written to ensure that parties like the defendants would

be liable so that someone would be available to pay for the

environmental cleanup. The situation the defendants de-

scribe is the exact scenario that CERCLA § 113(f) is meant to

cover, when “the less guilty of two tortfeasors” is trying to

recover against the other. PMC, Inc., 151 F.3d at 618. We will

not use state law effectively to undo CERCLA’s remedial de-

sign—a design meant to protect the environment, not parties

that dumped hazardous waste for years. The two regimes

cannot coexist while remaining faithful to Congress’s explicit

purposes, and thus the common-law counterclaims must be

preempted. The district court is affirmed on this point.

IX. The Government’s Appeal of Appvion’s § 107

Liability

We write briefly on one final matter. The United States

urges us to reconsider in this action whether the district

court correctly held that Appvion is not a PRP at the Fox

River site. Though the government recognizes that this

judgment was made in the enforcement action, and that nei-

ther NCR nor Appvion raised any claims against the United

States in this case, it suggests that a ruling affirming the dis-

trict court’s treatment of Appvion could be used to estop the

government collaterally in the enforcement action, or to es-

tablish the law of the circuit.

It is hard to see why the government would be collateral-

ly estopped from appealing Appvion’s liability in the en-

forcement action based on our decision in this contribution

case. One of the requirements for collateral estoppel to apply

is that “the issue must have been actually litigated.” H-D

Mich., Inc. v. Top Quality Serv., Inc., 496 F.3d 755, 760 (7th Cir.

56 Nos. 13-2447 et al.

2007). The question of Appvion’s direct liability has not been

litigated in this appeal. It would be beyond the scope of this

appeal for one of the parties against whom Appvion actually

raised claims to revisit the matter of Appvion’s liability here;

that is a question for the related enforcement action. There is

no reason why the government should be allowed to press

arguments that the other parties cannot.

Even if there were a real risk of collateral estoppel

applying, the correct place to address that risk is in the

enforcement action. Standing to appeal does not extend to

every party that might feel the secondary effects of a case.

The cases the government cites that supposedly support its

ability to press its claim all relate to the question whether a

prevailing party has sufficient interest in an appeal. See

EEOC v. Chicago Club, 86 F.3d 1423, 1431 (7th Cir. 1996);

LaBuhn v. Bulkmatic Transport Co., 865 F.2d 119, 133 (7th Cir.

1988). The government is neither a winner nor loser against

Appvion in this contribution action; it is a nullity. We will

leave the question of Appvion’s CERCLA liability for the

enforcement action.

X. Conclusion

We REVERSE the district court’s judgment with regard to

Appvion’s ability to bring suit under CERCLA § 107(a). We

VACATE the decision to hold NCR responsible for all of the

response costs at operable units 2 through 5 in contribution.

We AFFIRM the following decisions: that NCR may proceed

only under CERCLA § 113(f); that NCR is not liable as an

arranger; that Glatfelter’s insurance settlement may not be

offset against NCR’s contribution share; that NCR can be re-

quired to contribute for natural resource damages; that Glat-

felter’s counterclaim based on the discharges at Portage

Nos. 13-2447 et al. 57

should be dismissed; and that the defendants’ state-law

counterclaims are preempted. This case is REMANDED for

proceedings consistent with this opinion.