Petition for Writ of Certiorari — Friedland v. TIC - The Industrial Industrial Co. (No. 09-551)
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IN THE ~
Supreme Court of the United States
ROBERT M. FRIEDLAND, PETITIONER
Vv.
TIC - THE INDUSTRIAL COMPANY; GEOSYNTEC
CONSULTANTS INC., F/K/A GEOSERVICES, INC.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
JOHN D. FOGNANI
Counsel of Record
FRITZ W. GANZ
TIFFANY L. GRANT
Fognani & Faught, PLLC
1700 Lincoln Street,
Suite 2222
Denver, CO 80208
303-382-6200
CURRY & TAYLOR @ (202) 393-4141
;
QUESTIONS PRESENTED
Whether the collateral source rule applies to the
Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as
amended, specifically, 42 U.S.C. § 9607(a) cost
recovery and 42 U.S.C. $ 9613(f) contribution
actions.
Whether the Tenth Circuit erred in refusing to
apportion prior settlements in order to determine
if complete common damages were present.
i?
TABLE OF CONTENTS
Pap
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RELEVANT PROVISIONS INVOLVED ...........cccccseesccesesessecseseeeeees 2
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REASONS FOR GRANTING THE PETITION........cccccsssseeeesesseseeeees 5
a. sccconeton ponscneeoncsonccesocsssooees 17
APPENDIX
Circuit Corwrt of Appeals Opinions ....cccccccccecssscssssesseessecsseees la
District Court Memrorard ivr Order......ccccccccccseccscececseceees 20a
ES 30a
Relevant Statutory Provisions..............00csecceesssssessecssscecese 3la
i
TABLE OF AUTHORITIES
Page
CASES
ATLANTIC RICHFIELD CoO. Vv. AM. AIRLINES, INC.,
836 F’. SUPP. 763 (N.D. OKLA. 1998)............cccccccceescceeeeeseeeeee 14
BOEING Co. V. CASCADE CORP., 207 F.3D 1177, 1185
TR a II cacicaicinei secunssciemssnicabacenscbinrcnsaneniiiadatibid taal atta a a 15
BOYETT V. KEENE CORP., 815 F’. SUPP. 204, 209 (E. D.
aig I ie cesictiscsitininincaiitcnieitaiiitehccibaaccbta talbott ia ace 14
CITY & COUNTY OF DENVER V. ADOLPH COORS Co.,
829 F’. SUPP. 340 (D. COLO. 1998)..................cccccesseeeee 13, 14,15
COLO. SCH. OF MINES V. AK STEEL CorRP., 2001 WL
34041780, AT *2 (D. COLO. SEPT. 26, 2001) .................065 14,16
F'MC CORP. V. DEP'T OF COMMERCE, 29 F.3D 833, 843
RINE TI, TTI csisaceaiiinadcsdiptinhabiabtniasnatediniaaedameensiaeak ualadsiinalieacateanbtinees 10
GYPSUM CARRIER, INC. Vv. HANDELSMAN, 307 F.2D
a He Cri: NID vi ccecctiestasccssnvcsescrtentstinasacistnisaaserceess 7,8
HECLA MINING Co. Vv. N. H. INS. Co., 811 P.2D 1083
IN iit ainda cele etal A 16
HESS OIL VIRGIN ISLANDS CORP. V. UOP, INC., 861
BF BEd Re Ce Gris Bie vcccesccnccsesnsesseseasenscsenvaiveseosrseee 12,13
HIDDEN LAKES DEV., LP V. ALLINA HEALTH SYS.,
2004 WL 2203406, AT *11(D. MINN. SEPT. 27, 2004).......... 14
JACKSON V. BNSF Ry. Co., 2008 WL 410591, AT *1
CE, Sa Be ics iaiescccstchsicceccoceutitansniiatiicsiicniondnececesases 7
I.A. DEP'T OF TRANSP. AND DEV. V. KAN. CITY S. RY.
COW... BEB SOB TAG, TE Cl, BED vavectecsvccossscncccaccesesecesecsesscees 8
MCDERMOTT, INC. Vv. AMCLYDE, 511 U.S. 202, 219
CE iiciseschciadihscenssccnnsiuiiiicecbicmem tinea ia 10
Mo. PACIFIC Ry. Co. V. JARRARD, 65 TEX. 560, 1886
PF ic SE Ce Fe Bai Be iaccckvcsbencccncsanscrnsonenicsiesesseccereeeces 7
OHIO AND MISS. Ry. Co. Vv. DICKERSON, 59 IND. 317,
STE Fe a es, CG OF icticnccoicc en hcvnccedcnictrinianieda tain stinncosncnvesnes 7
OWEN V. UNITED STATES, 713 F.2D 1461, 1466 (9TH
OIE BI ck aceiccceaircuaicbscidla dtaasdedecentdd ean a i aiicicinis 16
RAYTHEON AIRCRAFT CO. V. UNITED STATES, 2007
WL 4300221, *5 (D. KAN. DEC. 8, 2007) .........csecesesereceeenee 15
Hi
RUHLMANN V. SMITH, 3523 FL SUPP. 2D 356, 368 (N.D.
a cae sis 14
STANLEY V. RERTRAM-TROJAN, [INC., 868 F. SUPP.
wh csentpicdnpnnesnconnio’ 7
TECHNICAL COMPUTER SERVS., INC. V. BUCKLEY,
844 P.2D 1240, 1254 (COLO. APP. 10D2).......ccccccccocsccescscscsceeee 11
THYSSEN, INC. v. S/S EUROUNITY, 21 F.3D 538, 537-
RIES OD ir to t+ 7
TOWN OF E. TROY V. Soo LINE R.R. Co., 653 F.2D
re a in seecsnnosnevennsens 9
UNITED STATES V. ATLANTIC RESEARCH CORP., 127
Fe SRST INGE este ee ae ne 10
UNITED STATES V. BESTFOODS, 524 U.S. 51, 55-56
Tle ninonunegsniunn’ 9
UNITED STATES V. BURLINGTON N. R. R., 200 F.3D
GTB, GES CLOTH CUR. TODD) vccccscesccccccescrcosscseseccesseeess 12, 138, 14, 15
UNITED STATES V. OCCIDENTAL CHEM. CORP., 200
Fe i Oe Oe Bi iccicsicsececeenstnncdsonssssvecocsvessosesscenees 9
VITKUS V. BEATRICE Co., 127 F.3D 936, 941, 944
RII ERS PEAT cet A eC 16
WEBER V. THE MORRIS AND ESSEX R. R. CO., 36
N.J.L. 213, 1873 WL 6884 (NJ. SUP. 1878)...........0e0ecseeeeeeeees 7
YOUNG V. UNITED STATES, 394 F.3D 858, 862 (10TH
SSI Iie ea tin re A ce OI) ESCO CREE RC 9
STATUTES
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1
PETITION FOR WRIT OF CERTIORARI
Robert M. Friedland hereby petitions this Court
for a writ of certiorari to review the opinion of the
United States Court of Appeals for the Tenth Circuit.
OPINIONS BELOW
On January 18, 2008, the United States District
Court for the District of Colorado dismissed Mr.
Friedland’s claims. That opinion is unpublished and can
be found at 2008 WL 185693 and reproduced at 20a. On
May 29, 2009. The United States Court of Appeals for
the Tenth Circuit affirmed the Federal District Court
decision. That opinion is published at 566 F.3d 1203 and
reproduced at la.
JURISDICTION
The District Court had jurisdiction over Mr.
Friedland’s claims pursuant to 28 U.S.C. § 1331. The
Court of Appeals had jurisdiction to review the District
Court’s final judgment pursuant to 28 U.S.C. § 1291.
The Tenth Circuit Court of Appeals filed its opinion on
May 29, 2009; Mr. Friedland filed his Petition for
Rehearing En Banc on June 15, 2009, which the court of
appeals denied on July 28, 2009. Thus, pursuant to
Supreme Court Rule 13, this Petition is filed timely
within 90 days of the entry of final judgment. The
jurisdiction of this Court is invoked pursuant to 28
U.S.C. § 1254(1).
yA
ae
RELEVANT PROVISIONS INVOLVED
Sections 107 and 113(f) of the Comprehensive
Environmental Response, Compensation and Liability
Act of 1980, as amended (“CERCLA”), 42 U.S.C. §§
9607 and 9613(f), govern actions for cost recovery and
contribution for costs incurred as a result of the release
or threatened release of hazardous substances caused
by operations or actions of potentially responsible
parties (“PRPs”).
42 U.S.C. § 9607(a) provides, in relevant part,
that covered persons shall be liable for
all costs of removal or remedial action
incurred by the United States Government or a
State....not inconsistent with the national
contingency plan [and] any other necessary costs
of response incurred by any other person
consistent with the national contingency plan....
The amounts recoverable in an action under this
section shall include interest on the amounts
recoverable....
42 U.S.C. § 9613(f) provides that
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 action under section 9606 of
this title or under section 9607(a) of this title....
In resolving contribution claims, the court may
allocate response costs among liable parties
using such equitable factors as the court
determines are appropriate.
3
Article III, § 2, cl. 1, of the United States
Constitution provides as follows:
The judicial power shall extend to all
Cases, in Law and Equity, arising under this
Constitution, the Laws of the United States,
and Treaties made, or which shall be made,
under their Authority; to all Cases affecting
Ambassadors, other public Ministers and
Consuls; to all Cases of admiralty and maritime
Jurisdiction; to Controversies to which the
United States shall be a Party; to Controversies
between two or more States; between a State
and Citizens of another State; between Citizens
of different States; between Citizens of the same
State claiming Lands under Grants of different
States, and between a State, or the Citizens
thereof, and foreign States, Citizens or Subjects.
STATEMENT
In 1996, the United States and the State of
Colorado filed suit against Petitioner Robert M.
Friedland, styled United States of America and State of
Colorado v. Robert M. Friedland, et al., Civil Action
No. 1213 (D. Colo. filed May 23, 1996) (“Underlying
Litigation”), seeking to recover the costs under
CERCLA of responding to environmental
contamination at the Summitville Mine Superfund Site
located near Del Norte, Colorado. In 2000, Mr.
Friedland settled the CERCLA case with the United
States and the State of Colorado and entered into a
Consent Decree that resolved the Underlying
Litigation. Pursuant to the Consent Decree Mr.
Friedland paid $20,723,181 to the United States and the
4
State of Colorado in exchanye for a complete release of
the governments’ claims.
Following the entry of the Consent Decree, Mr.
Friedland sought to recoup some of the amounts puaid in
settlement of the Underlying Litigation, as well as an
amount in excess of $28,000,000 in defense costs he had
incurred in defending himself in that action and related
matters. Mr. Friedland recovered a portion of his costs
from United States Fidelity and Guaranty Company
(““USF&G”) and The Travelers Indemnity Company
and related Traveler's entities (“Travelers”) pursuant to
insurance contracts under which Mr. Friedland was a
first party insured.
This case, filed by Mr. Friedland in the United
States District Court for the District of Colorado
against Defendants-Appellees TIC-The Industrial
Company (“TIC”) and GeoSyntec Consultants Inc. f/k/a
GeoServices, Inc. (“GeoSyntec”), was a cost recovery
action pursuant to CERCLA § 107 and a contribution
action pursuant to CERCLA § 113 in which Mr.
Friedland proceeded against TIC and GeoSyntec as
potentially responsible parties (“PRPs”). This action
was filed to recover the costs Mr. Friedland incurred as
a result of the release or threatened release of
hazardous substances caused by operations or actions
TIC and GeoSyntec managed, controlled and/or
conducted at the Summitville Mine Site. The damages
at issue in this CERCLA contribution action are not
the same as the breach of contract claims and related
claims resolved by Mr. Friedland’s settlements with his
insurers, USF&G and Travelers. That
notwithstanding, TIC and GeoSyntec filed a Joint
Motion for Summary Judgment on Damages claiming
o
full credit in this case as a result of the prior insurance
recoveries by Mr. Friedland. On January 18, 2008, the
District Court granted the motion and dismissed with
prejudice Mr. Friedland’s claims for cost recovery and
contribution under CERCLA. On May 29, 2009, the
Tenth Circuit affirmed the decision below, effectively
rendering the recovery and contribution portions of
CERCLA §8§ 107 and 113 superfluous. Mr. Friedland
filed his Petition for Rehearing En Banc on June 15,
2009, which the Tenth Circuit Court of Appeals denied
on July 28, 2009. This Petition followed.
REASONS FOR GRANTING THE PETITION
The spirit and intent of the Comprehensive
Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. § 9601, et seg.
(“CERCLA”) provides that polluters pay their
respective shares of the cleanup costs. Application of
the collateral source rule in the context of cost recovery
and contribution actions under CERCLA is appropriate
and necessary to achieve that purpose.
In the event the damages sought in a cost
recovery or contribution action under CERCLA are
appropriately setoff by prior settlements with other
potentially responsible parties (“PRPs”), there must be
a determination that the damages among the claims
settled and the damages at issue in the CERCLA
action are completely common. If such a determination
is not made, or cannot be made, courts must undertake
the factual inquiry and analysis to allocate and
apportion the settlement amounts before any setoff
may reasonably be made. Any other result necessarily
6
undermines the very principle of joint and several
liability upon which CERCLA rests.
The result offered by the Tenth Circuit has a
profoundly negative impact on the ability of PRPs
under CERCLA to engage in voluntary cleanup
activities or enter into settlements with their insurers
or other PRPs. The requirement that settlement
agreements expressly allocate the settlement amount
between indemnity and defense costs will have a
chilling effect on settlement and adversely impact the
public interest in judicial economy and prompt
environmental response. The Tenth Circuit’s holding
cannot be reconciled with the express provisions or the
spirit and intent of CERCLA.
I, THE TENTH CIRCUIT’S DECISION
CONFLICTS WITH THE LEGISLATIVE
INTENT OF CERCLA §§ 107 AND 113(f)
The legislative intent and purpose of CERCLA
Sections 107 and 113(f) is to ensure that polluters pay
their way. It follows that the collateral source rule,
consistently applied in tort contexts and other
statutory frameworks, be applied to actions for cost
recovery and contribution from others whose
operations or actions resulted in the release or
threatened release of hazardous substances for which
those remedial or removal costs were incurred.
A. The Collateral Source Rule _ is
Consistently Applied Outside’ the
Context of Traditional Common Law
Tort Claims
The collateral source rule holds that a wrongdoer
is not entitled to have damages for which he is liable
reduced by proof that the plaintiff has received or will
receive compensation or indemnity for the loss from an
independent source. Jackson v. BNSF Ry. Co., 2008
WL 410591, at *1 (D. Colo. Feb. 18, 2008). The
fundamental premise of the collateral source rule has
been recognized in the common law of the United
States for more than 125 years. See Mo. Pacific Ry. Co.
v. Jarrard, 65 Tex. 560, 1886 WL 4714 (Tex. Feb. 23,
1886); The Ohio and Miss. Ry. Co. v. Dickerson, 59 Ind.
317, 1877 WL 6623 (Ind. 1877); and Weber v. The Morris
and Essex R. R. Co., 36 N.J.L. 218, 1873 WL 6884 (N.J.
Sup. 1873).
Federal courts have recognized the doctrine as
“well established and generally prevailing, and have
repeatedly expressed their approval of it [and] ... have
applied it as a rule of federal law when called upon to do
so ....” Gypsum Carrier, Inc. v. Handelsman, 307 F.2d
525, 534 (9th Cir. 1962) (applying collateral source rule
in context of Jones Act litigation); Thyssen, Inc. v. S/S
Eurounity, 21 F.3d 533, 5387-38 (2nd Cir. 1994) (applying
collateral source rule in context of Carriage of Goods by
Sea Act); Jackson, 2008 WL 410591 (applying collateral
source rule in context of Federal Employer’s Liability
Act); Stanley v. Bertram-Trojan, Inc., 868 F. Supp. 541,
543 (S.D.N.Y. 1994) (applying collatera] source rule in
context of maritime law).
ra
The question [is} not whether a windfall is to be
conferred, but rather who shall receive the
benefit of a windfall which already exists. As
between the injured person and the tortfeasor,
the former’s claim is the better. This may permit
a double recovery, but it does not impose a
double burden. The tortfeasor bears only the
single burden for his wrong. That burden is
imposed by society, not only to make the plaintiff
whole, but also to deter negligence and
encourage due care.
Gypsum Carrier, Inc. v. Handelsman, 307 F.2d 525, 534
(9th Cir. 1962).
Collateral source funds that are created through the
prudence and foresight of the plaintiff should not be
turned to the benefit of a party against whom that
plaintiff has a claim for damages. /d., at 534-535.
B. The Collateral Source Rule Should
Apply to CERCLA Cost Recovery and
Contribution Actions
The application of the collateral source rule in
the context of a CERCLA § 113 contribution action is a
question of first impression in the United States
Supreme Court. The collateral source rule has,
however, been applied in comparable situations
involving the recovery of contribution damages for
environmental response costs incurred under an
analogous state environmental law. See La. Dep’t of
Transp. and Dev. v. Kan. City S. Ry. Co., 846 So.2d 734,
740 (La. 2003) (collateral source rule applies in cases
under the Louisiana Environmental Quality Act where
9
a damaged party is seeking reimbursement for
remediation expenses); Town of E. Troy v. Soo Line
R.R. Co., 653 F.2d 1128, 1132 (7th Cir. 1980) (the
collateral source rule “prefers double recovery for a
plaintiff to allowing a defendant to avoid paying for the
consequences of his or her wrongful acts”).
This philosophy is perfectly aligned with the
purpose of CERCLA. “(T]he twin aims of CERCLA
are to cleanup hazardous waste sites and impose the
costs of such cleanup on parties responsible for
the contamination.” Young v. United States, 394
F.3d 858, 862 (10th Cir. 2005) (emphasis added).
CERCLA was enacted at least in part “[s]lo, those
actually ‘responsible for any damage, environmental
harm, or injury from chemical poisons [may be tagged
with] the cost of their actions.”” United States v.
Bestfoods, 524 U.S. 51, 55-56 (1998) (quoting S. Rep. No.
96-848, pp. 6119, 18, U.S. Code Cong. & Admin. News
1980, p. 6119 (1980)). “Although [the United States
Environmental Protection Agency] has _ several
alternative strategies for achieving the statute’s
objective, each ultimately involves ‘forc[ing] polluters
to pay for costs associated with remedying their
pollution.”” United States v. Occidental Chem. Corp.,
200 F.3d 143, 147 (8rd Cir. 1999) (quoting United States
v. Alcan Aluminum Corp., 964 F.2d 252, 257-58 (3rd
Cir. 1992)).
it is further recognized that “CERCLA’s
‘essential purpose of making those responsible for
problems caused by the disposal of chemical poisons
bear the costs and responsibility for remedying the
harmful conditions they created”’ is promoted by the
collateral source doctrine. /d. (quoting FMC Corp. v.
10
Dep't of Commerce, 29 F.8d 888, 843 (3d Cir. 1994)). In
addition, the statute contains no rigid rule against
overcompensation. To the contrary, “several doctrines,
such as the collateral benefits rule, recognize that
making tortfeasors pay for the damage they cause can
be more important than preventing overcompensation.”
McDermott, Inc. v. AmClyde, 511 U.S. 202, 219 (1994).
C. The Tenth Circuit’s Decision Conflicts
with this Court’s Analysis in Atlantic
Research Corp.
This Court has recently compared the concept of
contribution under CERCLA to the traditional form of
contribution commonly applied in tort law. United
States v. Atlantic Research Corp., 127 S.Ct. 2331 (2007).
In Atlantic Research, this Court noted _ that
“{cJontribution is defined as the ‘tortfeasor’s right to
collect from others responsible for the same tort after
the tortfeasor has paid more than his or her
proportionate share, the shares being determined as a
percentage of fault.’”” Jd. at 2338 (quoting Black’s Law
Dictionary 353 (8th ed. 1999)). This Court also cites the
RESTATEMENT (SECOND) OF TORTS § 886A(2) (1979) in
its analysis of contribution under CERCLA, and
further acknowledges that “[nlothing in § 113(f)
suggests that Congress used the term ‘contribution’ in
anything other than this traditional sense.” Jd. at 2339
As demonstrated above, the Tenth Circuit’s
decision to dismiss the collateral source rule as a
creation of “tort law” is inconsistent with the findings of
this Court. The collateral source rule is consistently
applied outside of the context of tort law. See e.g.
Technical Computer Servs., Inc. v. Buckley, 844 P.2d
11
1249, 1254 (Colo. App. 1992) (“the common law
collateral source rule is equally applicable to contract
actions.”). The collateral source rule should be applied
in the context of a CERCLA contribution or recovery
action just as it is in the context of many other claims
asserted under federal law.
II. THE TENTH CIRCUIT’S FAILURE TO
APPORTION PRIOR SETTLEMENTS AS
REQUIRED BY UNITED STATES V.
BURLINGTON N. R. R. CO. RESULTED IN
RESPONDENTS OBTAINING A WINDFALL
Defendants are entitled to a credit against the
amount recovered by the plaintiff only to the extent the
damages sought are completely common with those
giving rise to and resolved by the settlement. If there
is a lack of commonality between and among the
damages settled and the damages at issue, the
settlement must be allocated and apportioned to
determine the amount of the offset, if any. Mr.
Friedland’s prior settlements with USF&G and
Travelers included claims separate and distinct from his
claims against TIC and GeoSyntec. The District Court
should have undertaken the factual inquiry and analysis
necessary to allocate and apportion the settlement
amounts to those damages, if any, that are common
with those claims in the CERCLA action against TIC
and GeoSyntec. The District Courts failure to analyze
and apportion the settlements to determine what, if any
common damages exist was improper.
12
A. Complete Common Damages are
Required for a Total Setoff of a Prior
Settlement
Prior to applying any prior settlement to setoff
damages in a pending litigation, it is essential that the
court first find common damages among the claims
settled upon and the damages at issue in the present
action. See e.g. Hess Oil Virgin Islands Corp. v. UOP,
Inc., 861 F.2d 1197 (10th Cir. 1988). In Hess, the Tenth
Circuit held that:
When a plaintiff receives an amount from a
settling party, it is generally credited against the
amount recovered by the plaintiff from a non-
settling defendant, provided both the settlement
and the judgment represent common damages.
The ‘one satisfaction’ rule is applicable only
where the defendant’s conduct resulted in a
single injury.
Hess, 861 F.2d at 1208 (emphasis added); see also
United States v. Burlington N. R. R., 200 F.3d 679, 698
(10th Cir. 1999) (citing Hess, supra). Upon finding
complete common damages among claims, the court did
not attempt to allocate the lump-sum settlements with
the settling defendants and applied the entire
settlement to the damages judgment.
A finding of “common damages” is an essential
condition of the “one satisfaction” rule applied in Hess.
Id. at 1208. Courts that have addressed whether a
setoff is appropriate first determined whether the
party seeking the setoff is liable for part or all of the
claims addressed in the prior settlement. See e.g.
13
Burlington, 200 F.3d 679; City & County of Denver v.
Adolph Coors Co., 829 F. Supp. 340 (D. Colo. 1993).
B. Mr. Friedland’s Prior Settlements
Included Claims Separate and Distinct
from Contribution Claims under
CERCLA
The common damages analysis has no application
in the present case because the prior settlements were
based on insurance contracts and not the “single
indivisible injury” contemplated in Hess. 861 F.2d at
1208. In his insurance coverage action against USF &G,
Mr. Friedland alleged and_ settled claims for
investigation, indemnity and defense costs, as well as
bad faith trade practices related to costs Mr. Friedland
incurred in responding to the Underlying Litigation. In
his insurance coverage action against Travelers, Mr.
Friedland alleged and settled claims for investigation,
indemnity and defense costs related to costs Mr.
Friedland incurred in responding to the Underlying
Litigation. The settlements resolved all of
Mr. Friedland’s claims against the named insurers and
both settlements also encompassed the value of Mr.
Friedland’s “buy-back” of his insurance coverage from
USF&G and Travelers such that neither insurer owed
any future obligations under the insurance policies at
issue. Mr. Friedland indemnified USF&G and
Travelers against any future claims or actions arising
under the policies, consideration for which was
necessarily included in the settlements.
In contrast, the present action against TIC-The
Industrial Company (“TIC”) and GeoSyntec
Consultants Inc. f/k/a GeoServices, Inc. (“GeoSyntec’”)
14
involves Mr. Friedland’s CERCLA contribution claims
for recovery of TIC and GeoSyntec’s respective shares
of the response costs that were due to the release of
hazardous substances caused by TIC and GeoSyntec’s
operations at the Summitville Mine Site. If the prior
settlement and the potential damages judgment do not
involve complete “common damages,” — i.e., TIC and
GeoSyntec could not be held liable for Mr. Friedland’s
investigation and defense costs, the value of
Mr. Friedland’s “buy-back” of his insurance coverage,
or the bad faith claims against USF&G —- a complete
setoff cannot apply. The burden of proving that a
settlement and a subsequent judgment represent
common damages, so that the respondent would receive
an impermissible double-recovery if setoff were not
allowed, rests on the party seeking the setoff credit.
Boyett v. Keene Corp., 815 F. Supp. 204, 209 (E.D. Tex.
1993); see also Ruhlmann v. Smith, 323 ¥. Supp. 2d 356,
368 (N.D. N.Y. 2004)
C. Apportionment of Mr. Friedland’s
Prior Settlements is Required to
Prevent Manifest Injustice
Courts routinely engage in allocation analyses in
CERCLA contribution actions. See e.g. Burlington,
200 F.3d at 697, 698. Courts determine whether harm
is divisible and, as in Burlington, also take on the task
of apportioning settlement amounts. /d. at 698; see also
Atlantic Richfield Co. v. Am. Airlines, Inc., 836 F.
Supp. 763 (N.D. Okla. 1993); Hidden Lakes Dev., LP v.
Allina Health Sys., 2004 WL 2203406, at *11 (D. Minn.
Sept. 27, 2004); Adolph Coors Co., 829 F. Supp. 340;
Colo. Sch. of Mines v. AK Steel Corp., 2001 WL
34041780, at *2 (D. Colo. Sept. 26, 2001). This allocation
15
necessarily involves questions of fact, such that
summary judgment is not appropriate. See Raytheon
Aircraft Co. v. United States, 2007 WL 4300221, *5 (D.
Kan. Dec. 8, 2007). At most, only a partial setoff may
apply to that portion of the settlements relating to
indemnity for response costs, but that will first require
an apportionment of the settlements, as the Tenth
Circuit properly instructs in other cases. Burlington,
200 F.3d at 698; see also Adolph Coors Co., 829 F’. Supp.
at 347.
The liabilities of TIC and GeoSyntec for
CERCLA response costs due to harm caused by their
operations and activities at the Summitville Mine Site
cannot be extinguished simply because the prior
settlements between Mr. Friedland and his insurers did
not expressly allocate between response and defense
costs. The Tenth Circuit’s decision here undermines
the principles of joint and several liability inherent in
CERCLA’s critical and well-established remedial
scheme. Burlington, 200 F.3d at 696. Further, as noted
by the Ninth Circuit,
[oJne of the goals of CERCLA was to affix the
ultimate cost of cleaning up these disposal sites
to the parties responsible for the contamination.
To leave one party shouldering the entire cost of
investigation and remediation while another
rides for free frustrates this goal, rather than
ensuring that those who’ caused _ the
contamination pay their fair share of the costs
associated with the clean-up.
Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1185 (9th
Cir. 2000) (internal quotations omitted). Nothing in
16
CERCLA or Hess advocates the windfall to TIC or
GeoSyntee and penalty to Mr. Friedland that has
resulted from the full setoff and dismissal on summary
judgment.
Additionally, even if Mr. Friedland could have
extracted express allocations from his insurers, prior to
a setoff, the agreements would have been subject to a
reasonableness inquiry. See Owen v. United States, 713
F.2d 1461, 1466 (9th Cir. 1983) (the presumption that
parties have reasonably allocated a settlement amount
should be preserved for a settlement by parties with
truly adverse interests in the allocation); see also Colo.
Sch. of Mines., 2001 WL 34041780, at *2 (court
reviewed “good faith” of pending settlements between
plaintiff and settling PRPs in CERCLA contribution
action); Vitkus v. Beatrice Co., 127 F.3d 936, 941, 944
(10th Cir. 1997) (court undertook reasonableness
inquiry of insurance settlement in non-CERCLA action
to determine whether the allocation “reasonably
reflected the [insured’s] potential exposure in the
underlying litigation”).
As noted above, the Tenth Circuit erred in
determining TIC and GeoSyntec were entitled to a
setoff of Mr. Friedland’s prior settlements. The record
clearly illustrates a lack of common damages among the
amounts encompassed in Mr. Friedland’s settlements
with his insurers and the CERCLA contribution claims
against TIC and GeoSyntec. Additionally, because an
insurer’s duty to defend is broader than its duty to
indemnify, Hecla Mining Co. v. N. H. Ins. Co., 811 P.2d
1083 (Colo. 1991), the Tenth Circuit erred in refusing to
engage in settlement allocation to determine the
amount of the settlement funds received by
17
Mr. Friedland from his insurers applied to the liabilities
of TIC and GeoSyntec for CERCLA response costs.
The Tenth Circuit’s error in reaching such a conclusion
that could jeopardize CERCLA’s mandate must be
corrected to avoid future confusion in effecting
CERCLA’s fundamental purpose.
CONCLUSION
The Petition for Certiorari should be granted
because the United States Court of Appeals for the
Tenth Circuit erred in interpreting CERCLA §§ 107
and 113(f), by failing to apply the collateral source rule
and by refusing to apportion Mr. Friedland’s prior
settlements.
Respectfully submitted:
John D. Fognani
Fritz W. Ganz
Tiffany L. Grant
FOGNANI & FAUGHT, PLLC
1700 Lincoln Street
Suite 2222
Denver, CO 80203
Telephone: 303-382-6200
E-mail: fganz@fognanilaw.com
Attorneys for Petitioner
la
(any footnotes trail end of each document)
No. 08-1042
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
ROBERT M. FRIEDLAND,
Plaintiff - Appellant,
v.
TIC - THE INDUSTRIAL COMPANY;
GEOSYNTEC CONSULTANTS INC., f/k/a
Geoservices, Inc.,
Defendants - Appellees.
UNISYS CORPORATION, a Delaware corporation,
Amicus Curiae.
May 29, 2009, Filed
APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF COLORADO. (D.
Ct. No. 1:04-C V-01263-REB-KLM).
COUNSEL: Perry L. Glantz (John D. Fognani and
Fritz W. Ganz, with him on the briefs), Fognani &
Faught, PLLC, Denver, Colorado, appearing for
Appellant.
Terence M. Ridley, Wheeler Trigg Kennedy, LLP,
Denver, Colorado, and Colin C. Deihl, Faegre &
Benson, LLP, Denver, Colorado (Lamar F. Jost,
Wheeler Trigg Kennedy, LLP, Denver, Colorado;
Delmar R. Ehrich and Bruce Jones, Faegre & Benson
LLP, Denver, Colorado, with them on the brief),
appearing for appellees.
2a
Raymond B. Ludwiszewski, Peter E. Seley, and
Michael K. Murphy, Gibson, Dunn & Crutcher, LLP,
Washington, DC, filed an amicus curiae brief on behalf
of Unisys Corporation.
Before TACHA, BALDOCK, and O'BRIEN, Circuit
Judges.
OPINION
TACHA, Circuit Judge.
Plaintiff-appellant Robert M. Friedland filed this
contribution action pursuant to the Comprehensive
Environmental Response, Compensation, and Liability
Act ("CERCLA") § 113(f), 42 U.S.C. § 9613(D, against
defendants-appellees The Industrial Company ("TIC")
and GeoSyntec Consultants Inc. ("GeoSyntec"). The
district court entered summary judgment in favor of
the defendants-appellees based on its determination
that Mr. Friedland has already recouped all of his
recoverable costs from other entities and therefore has
no damages to recover in this case. Mr. Friedland
appeals. We have jurisdiction under 28 U.S.C. § 1291
and AFFIRM.
I. BACKGROUND
Mr. Friedland is a former director and president of
Summitville Consolidated Mining Company, Inc.
("SCMCI"). From about 1984 to 1992, SCMCI operated
a large gold mine facility in the Summitville Mining
District near Del Norte, Colorado ("the Summitville
mine"). TIC helped construct the Summitville mine.
GeoSyntec provided quality assurance regarding the
3a
mine's heap leaching system, a process in which a
cyanide solution is sprayed on gokl-bearing ore to
precipitate the gold.
In December 1992, SCMCI declared bankruptcy and
abandoned the mine. That same month, the United
States Environmental Protection Agency ("EPA") took
over management of the Summitville mine and
instituted response actions to address actual or
threatened releases of contaminated water from the
mine into the environment. In 1996, after an
investigation of numerous potentially responsible
parties ("PRPs"), the United States and the State of
Colorado sued Mr. Friedland under CERCLA § 107, 42
U.S.C. § 9607, to recover their response costs. As part
of that lawsuit ("the cost-recovery action"), Mr.
Friedland filed a third-party contribution complaint
under CERCLA § 113, 42 U.S.C. § 9613, against twelve
separate PRPs, including an entity called Industrial
Constructors Corp. ("ICC"). He did not name TIC or
GeoSyntec in that complaint. In December 2000, Mr.
Friedland settled the claims brought against him by the
United States and Colorado for $ 20,723,181. Mr.
Friedland spent approximately $ 28 million on legal fees
in the cost-recovery action.
Prior to that settlement, Mr. Friedland initiated at
least two lawsuits relevant to this appeal. In 1999, he
sued ICC and United States Fidelity & Guaranty
Company ("USF&G") in Montana state court. ICC had
performed work on the Summitville mine from 1987-
1990 and was contractually bound to indemnify SCMCI
against losses caused by ICC, and to reimburse SCMCI
for settlements it had to pay as a result of those losses.
USF&G had issued insurance policies covering Mr.
dit
Friedland and ICC for the contractual liabilities
undertaken by ICC. In his complaint, Mr. Friedland
contended that ICC was obligated to pay all of his costs
of defense, investigation, and leyal liabilities, including
all sums spent in settlement, in connection with the
cost-recovery action. He further claimed that USF &G
was obligated under the insurance policies it had issued
to provide a defense and indemnification for the claims
raised in the cost-recovery action.
Approximately nine months after Mr. Friedland, the
United States, and Colorado reached the $ 20,723,181
settlement agreement in the cost-recovery action, Mr.
Friedland and ICC entered into a_ confidential
settlement agreement as to Mr. Friedland's third-party
CERCLA contribution claim and to the claims he
raised in the Montana state proceeding. ICC agreed to
pay a certain sum! to Mr. Friedland and further agreed
(because ICC had filed for bankruptcy) to assign him
the rights to all insurance claims ICC might have
against USF &G. With all claims against ICC resolved,
Mr. Friedland amended his Montana state complaint to
name only USF&G as a defendant. USF&G
subsequently settled that suit for a specific dollar
amount in December 2002.’
In the second lawsuit relevant to this appeal, in June
2002 Mr. Friedland sued The Travelers Indemnity
Company ("Travelers") in Colorado state court for "a
declaration that Travelers is fully obligated to pay the
costs of investigation, defense, and liability that Mr.
Friedland has incurred in connection with the legal
actions brought against him claiming or asserting
property damage and other alleged injuries at the
Summitville Mine Site." Mr. Friedland alleged that he
da
was a named insured under a Travelers liability policy
covering sums he was legally obligated to pay because
of property damage, as well as costs he incurred to
defend himself. Mx. Friedland and Travelers settled the
suit in October 2005.
Mr. Friedland initiated this CERCLA contribution
action against TIC and GeoSyntec in June 2004. In
response to an interrogatory during discovery, Mr.
Friedland stated that he sought contribution for the $
20,723,181 he agreed to pay to settle the cost-recovery
action brought against him by the United States and
Colorado. He also stated that he had already recovered
more than that amount from other sources, including
the USF&G and Travelers settlements. As a result of
this disclosure, the defendants moved for summary
judgment, arguing that because Mr. Friedland had
already recovered from others amounts exceeding the
payment he made to the United States and Colorado,
he has no damages and no right to contribution under
CERCLA § 113(f) as a matter of law. Mr. Friedland
advanced two theories in response. He contended that
the collateral source rule prohibits crediting the
defendants in the amount of the settlement money he
received from USF &G and Travelers. Alternatively, he
urged the district court to allocate the settlement
money to his $ 28 million defense costs, rather than the
$ 20,723,181 settlement amount. In this way, Mr.
Friedland argued that he still has recoverable damages.
The district court rejected both arguments and granted
the motion. Mr. Friedland maintains the same two
positions on appeal.
Il. DISCUSSION
A. The Collateral Source Rule
Gu
Derived from the common law. the collateral source
rule posits that "|playments made to or benefits
conferred on the injured party from other sources are
not credited against the tortfeasor's liability, although
they cover all or a part of the harm for which the
tortfeasor is liable." Restatement (Second) of Torts §
920A(2) & cmt. d (1979). The rule thus permits an
injured plaintiff to recover more than the damages he
has suffered as the result of an injury:
the common law did not require setoffs against
damage awards. Rather, plaintiffs were allowed
to recover the full damages awarded against
defendants even though the plaintiffs also
received compensation from collateral sources.
This principle of double recovery, known as the
collateral source rule,’ provided _ that
compensation or indemnity received by an
injured party from a collateral source, wholly
independent of the wrongdoer and to which he
has not contributed, will not diminish the
damages otherwise recoverable from. the
wrongdoer. ... Subject to... limited exceptions,
courts would not reduce a judgment because the
plaintiff had received compensation from a
collateral source even if the result was that the
plaintiff recovered twice for a single loss.
The purpose of the collateral source rule was to
prevent the defendant from receiving credit for
such compensation and thereby reduce the
amount payable as damages to the injured party.
To the extent that either party received a
windfall, it was considered more just that the
benefit be realized by the plaintiff in the form of
7a
double recovery rather than by the tortfeasor in
the form of reduced liability.
Van Waters & Rogers, Inc. v. Keelan, 840 P.2d 1070,
1074 (Colo. 1992) (quotations and citations omitted). See
also Green v. Denver & Rio Grande W. R.R. Co., 59
F.3d 1029, 1032 (10th Cir. 1995) ("The rationale for the
rule is [that]... public policy favors giving the plaintiff
a double recovery rather than allowing a wrongdoer to
enjoy reduced liability simply because the plaintiff
received compensation from an independent source.").
Thus, courts have applied the rule when the injured
plaintiff has been compensated by, for example, social
security disability payments or unemployment
compensation, see id., or by the plaintiff's insurance. See
Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1341 (10th
Cir. 1998).
Turning to the case before us, it is far from clear that
this common-law tort principle applies to claims
brought pursuant to CERCLA, a comprehensive
federal statute that addresses. liability for
environmental cleanup costs. Indeed, the section of
CERCLA that governs contribution actions clarifies
that “[sluch claims [for contribution] . . . shall be
governed by Federal law." CERCLA § 113(f)(1), 42
U.S.C. § 9613(f)(1). But even assuming that CERCLA
generally contemplates application of the collateral
source rule, it is clearly inapplicable in the specific
context of a § 113(f) contribution action by a PRP such
as Mr. Friedland. CERCLA provides for two types of
actions to recoup environmental cleanup costs: cost-
recovery actions under § 107(a), 42 U.S.C. § 9607(a), and
contribution actions under § 133(f), 42 U.S.C. § 9613(f).
Young v. United States, 394 F.3d 858, 862 (10th Cir.
>.
Sil
2005). In a contribution action, a person who has settled
a cost-recovery claim with the government (as Mr.
Friedland has) may seek contributions from other
PRPs. Sun Co., Luc. v. Browning-Ferris, Inc., 124 F.3d
1187, 1194 (10th Cir. 1997); CERCLA § 113(f)(1), 42
U.S.C. §$ 9613(f)(1). We have explained that a claim for
contribution is a claim "by and between jointly and
severally liable parties for an appropriate division of
the payment one of them has been compelled to make ..
.." Sun Co., Inc., 124 F.3d at 1190 (quotations omitted).
Thus, a CERCLA contribution action is not a personal
injury action by an innocent plaintiff. Instead, it is a
claim between two or more culpable tortfeasors, and
the policy underlying the collateral source rule--to
provide the innocent party with the benefit of any
windfall--is simply not advanced in such cases.
At least one other federal court has reached the same
conclusion on materially indistinguishable facts. In
Basic Management Inc. v. United States, 569 F. Supp.
2d 1106 (D. Nev. 2008), the plaintiffs filed a CERCLA
contribution claim after they agreed to pay $ 22 million
in cleanup costs to the state of Nevada. The plaintiffs’
insurance policies, however, covered near'ly all of those
costs, leaving the plaintiffs with only a relatively small
amount of out-of-pocket expenses. /d. at 1112.
Nonetheless, the plaintiffs argued that the collateral
source rule precluded the defendants from offsetting
their CERCLA liability in the amount of the insurance
proceeds. Jd. at 1123. The court’ disagreed.
Distinguishing tort cases in which the collateral source
rule applies, the court explained that "CERCLA
contribution actions are not injury actions in which the
injured party is seeking compensation for damages to
9a
be made whole again." Jd. at 1123-24. The court went
on:
In other words, Plaintiffs have not been
damaged and are not "entitied" to money as a
damaged party; but rather, Plaintiffs can only
receive reimbursement for the costs they
expended beyond their share of actual
responsibility for the environmental damage.
There is an actual dollar amount associated with
those costs, and in this case, almost all of those
costs have been paid directly by Plaintiffs’
insurers, and without further right of
subrogation in the insurers. In other words, no
party or potential party here has incurred a cost
as a PRP for which they could _ seek
"contribution" from another PRP. Allowing
Plaintiffs to recover those costs "again" from
Defendants would in essence allow Plaintiffs to
profit from their own and prior contamination of
the site simply because they are in the
subsequent chain of title. The purpose of the
Contribution element of CERCLA was to
reallocate the remedial cost to those who were
ultimately responsible for the pollution, not to
provide a windfall recovery for parties who
happen to be in the chain of title.
Id. at 1124. Thus, the court refused to apply the
collateral source rule. /d. at 1125."
Moreover, permitting a CERCLA contribution-action
plaintiff to recoup more than the response costs he paid
out of pocket flies in the face of CERCLA's mandate to
apportion those costs equitably among liable parties.
10a
See CERCLA § 113(f)(1), 42 U.S.C. § 9613(Q1) ("In
resolving contribution claims, the court may allocate
response costs among liable parties using such
equitable factors as the court determines are
appropriate."). Every federal court that has addressed
the issue has reached the same conclusion, either with
or without reference to the collateral source rule. See,
é.g., K.C.1986 Ltd. P'ship v. Reade Mfg., 472 F.3d 1009,
1018 (8th Cir. 2007) ("Because the settlement credits
[from other PRPs to the plaintiff] present a significant
allocation factor funder § 9613(f)(1)] ... the district
court should have exercised its discretion to consider
them when calculating the amount of the judgment.");
Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1189 (9th
Cir. 2000) ("[Olne equitable factor is preventing
someone from recovering for the same harm twice.");
Basic Mgmt. Inc., 569 F. Supp. 2d at 1125 (refusing to
apply the collateral source rule because "[eJquity and
common sense . . . dictate that Plaintiffs cannot recover
the remediation costs paid for by their insurance
policies."); Vine St., LLC v. Keeling, 460 F. Supp. 2d
728, 765 (E.D. Tex. 2006) (refusing to apply the
collateral source rule, reasoning that because "the
Court has a broad duty to consider facts bearing on the
proper equitable allocation of response costs, the
monies [the plaintiff] has already recovered are
relevant."); United States v. Davis, 31 F. Supp. 2d 45, 64
(D.R.I. 1998) ("There is nothing ‘equitable’ about [the]
kind of an allocation" that permits the plaintiff "to
recover a portion of the costs for which it already has
been or will be compensated."); Raytheon Aircraft Co.
v. United States, 2007 U.S. Dist. LEXIS 89671, 2007
WL 4300221, at *3 (D. Kan. Dec. 5, 2007) (following
K.C.1986, Boeing, Davis, and Vine Street and refusing
to apply the collateral source rule).'
lla
The two primary cases Mr. Friedland cites in support of
his argument do not undermine this conclusion. In
Louisiana Department of Transportation v. Kansas
City Southern Railway, 846 So.2d 734 (La. 2003), the
Louisiana Department of ‘Transportation and
Development ("DOTD") cleaned up a site that had been
polluted by Kansas City Southern Railway. The federal
government reimbursed the DOTD for approximately
90% of the remediation costs it incurred cleaning the
site. Id. at 736. Thereafter, DOTD sued Kansas City
Southern Railway under the Louisiana Environmental
Quality Act ("LEQA") to recover the entire cleanup
cost. Jd. Emphasizing the policy behind the collateral
source rule, id. at 740-44, the Louisiana Supreme Court
held that the rule permitted DOTD to seek the entire
cleanup cost from Kansas City Southern Railway
rather than only the 10% it had not recouped from the
federal government: "We . . . hold that the collateral
source rule applies in cases arising under the LEQA, at
least where a damaged party is seeking reimbursement
only for remediation expenses." Id. at 740 (emphasis
added).
Similarly, in Town of East Troy v. Soo Line Railroad,
653 F.2d 1123 (7th Cir. 1980), the town of East Troy
cleaned up ground water that had been polluted by Soo
Line Railroad Company. The town paid for the cleanup
costs with federal grant money. /d. at 1126. Thereafter,
the town sued Soo Line under a Wisconsin nuisance
statute to recover the full amount of the town's cleanup
costs. Jd. The Seventh Circuit affirmed the district
court's conclusion that under Wisconsin law, the
collateral source rule permitted the town to seek the
entire amount of the cleanup. /d. at 1132.
l2a
Louisiana Department of Transportation and Town of
East Troy are distinguishable in at least two significant
respects. First, the plaintiffs in those cases were
innocent parties, not PRPs seeking contribution from
other PRPs. Indeed, the court in Lowmisiana
Department of Transportation specifically limited its
holding to cases in which the plaintiff is the injured
party seeking reimbursement for remediation costs.
Second, the causes of action in both cases arose under
state law, not CERCLA. As we explained, CERCLA
contribution actions are governed by federal law and
permit the district court to consider equitable factors in
allocating response costs. Those factors include a prior
payment to the contribution plaintiff. Thus, we disagree
with Myr. Friedland that these cases have any bearing
on the issue before us and hold that the district court
did not err in refusing to apply the collateral source
rule in this CERCLA contribution action.
B. Common Damages and Settlement Allocation
Relying on Hess Oil Virgin Islands Corp. v. UOP, Inc.,
861 F.2d 1197 (10th Cir. 1988) and United States v.
Burlington Northern Railroad, 200 F.3d 679 (10th Cir.
1999), Mr. Friedland argues that the district court
erred in reducing his damages by the full amount of the
USF&G and Travelers settlements because those
settlements clo not represent damages in common with
the ones at issue in this case. We disagree.
In Hess Oil, Hess Oil sued UOP and other defendants
after a fire caused several million dollars in damage to
one of Hess Oil's refineries. 861 F.2d at 1199.
Defendants other than UOP settled with Hess Oil for $
1.5 million. /d. at 1207. After a jury verdict against
l3a
UOP, the district court credited it with the $ 1.5 million
settlement and required it to pay only the remaining
balance on Hess Oil's damages. /d. at 1199, 1206-07. We
rejected Hess Oil's argument on appeal that UOP was
not entitled to a credit. Jd. at 1209. We reasoned that
under the “one satisfaction rule," when the conduct of
multiple defendants results in a single injury with
common damages, and one of the defendants settles
with the plaintiff, the amount of the settlement is
credited against the amount that may be recovered
from the non-settling defendants. Jd. at 1208. We found
a single injury and common damages in that case
because the settlement agreement referred to all
damages and all causes of action; it did not expressly
apportion damages to specific claims. /d.
We reinforced this proposition in Burlington Northern.
The United States sued a wood treatment facility, BIC,
to recover cleanup costs on a 64-acre tract of land.
Burlington Northern, 200 F.3d at 681, 683. During the
suit, the United States learned that another company, a
predecessor of Burlington Northern Railroad, had
owned 17.5 acres of the tract during the time of the
polluting activities. Jd. at 687. Thus, the United States
added Burlington as a defendant. /d. Thereafter, the
court entered summary judgment against the first
defendant, BIC, concluding that it was liable for all
response costs for the entire 64-acre tract. /d. After a
bench trial on Burlington's liability, the court found
Burlington liable only for the costs to clean up the 17.5-
acre portion of the tract. /d. at 687-88, 695-96. It
reasoned that there were two separate and distinct
areas of contamination in the tract, and that Burlington
only owned one of those areas. After the judgment, BIC
settled with the United States for $ 10.7 million. 7d. at
lta
696. Although the settlement agreement lid not
llocate cleanup costs between the two distinct polluted
areas, the district court ruled that the harm was
divisible (that is, not common to both defendants) and
thus Hess Oil was distinguishable. /d. at 698. The court
accordingly credited Burlington's liability with only a
portion--rather then the full amount--of the $ 10.7
million that the United States had received from BIC.
Thus, under Hess Oil and Burlington Northern, if Mr.
Friedland's injury and the damages he alleges in this
lawsuit are the same as those addressed by the USF &G
and Travelers settlements, then the defendants are
entitled to a full credit in the amount of the
settlements.” We agree with the district court that this
is the case. Mr. Friedland admitted as much in his
responses to the defendants’ interrogatories. When
asked to "[ildentify Your costs, damages, injuries or
expenses arising from or caused by the Cost Recovery
Action for which You seek contribution in the lawsuit,"
Mr. Friedland responded:
The "costs, damages, injuries or expenses caused
by the Cost Recovery Action" for which Plaintiff
seeks contribution in this lawsuit are the
amounts he paid to settle the CERCLA claims
against him by the State of Colorado and the
United States, i¢., $ 20,288,081, and the
additional response costs Plaintiff incurred when
he paid $ 435,100 for the Conceptual
Remediation Plan [for a total of $ 20,723,181}.
And when the defendants asked Mr. Friedland to
identify all payments he had received related to his
"costs, damages, injuries or expenses arising from or
loa
caused by the Cost Recovery Action for which You
seek contribution in the lawsuit,'--costs which Mr.
Friedland himself had admitted extended only to the
$ 20,723,181 settlement amount-he disclosed that he
had received the USF&G and Travelers settlements.
He further characterized those settlements as resolving
his "claims for damages he sustained in the Cost
Recovery Action," which we interpret as referencing
the $ 20,723,181 settlement figure. (Emphasis added.)
Thus, by Mr. Friedland's own admissions, the USF&G
and Travelers settlements remedied the $ 20,723,181 he
incurred in settling the cost-recovery action with the
United States and Colorado, and this contribution
action reasserts the same injury and resultant damages.
In an apparent attempt to create divisible harm where
it otherwise does not exist, Mr. Friedland also
contended in his interrogatory responses that a
substantial portion of the amounts recovered in the
USF &G and Travelers settlements were attributable to
his $ 28 million in defense costs and not to the $
20,723,181 settlement amount. The USF&G and
Travelers settlement agreements, however, do not
expressly or impliedly allocate the settlement money
toward amounts Mr. Friedland paid in settling the
underlying litigation on the one hand and for legal
defense costs on the other. In Hess Oil, we held that the
plaintiff's failure to allocate costs in this manner was
fatal to its contention that the defendant was not
entitled to a credit in the settlement amount. Hess Oil,
861 F.2d at 1209 ("If [Hess Oil] wanted to have any
particular application of its settlement with the settling
defendants [allocated] towards UOP's liability, it should
have specifically stipulated in the settlement
LGu
documents what allocations of damages were applicable
to each cause of action.").
In the district court, Mr. Friedland's expert witness
submitted an opinion concerning which portions of the
USF&G and Travelers settlements were puid to
indemnify him and which portions were paid for
defense costs. Mr. Friedland argues that the court
rejected that testimony without first performing the
"gatekeeping" function required by Daubert v. Merrell
Dow Pharmaceuticals, 509 U.S. 579, 113 S. Ct. 2786,
125 L. Ed. 2d 469 (1993). See Goebel v. Denver & Rio
Grande W. R.R., 215 F.3d 1083, 1087 (10th Cir. 2000)
("[The] gatekeeper function requires the judge to assess
the reasoning and methodology underlying the expert's
opinion, and determine whether it is scientifically valid
and applicable to a particular set of facts." (citing
Daubert, 509 U.S. at 592)). We disagree. It is apparent
from the district court's order that it did not refuse to
consider the expert opinion based on deficiencies in the
expert's qualifications or methodology. Rather, the
court simply explained that "[gliven the silence of the
settlement agreements regarding allocation, this
testimony is far too speculative to be admissible and
consequently, does not create a genuine issue of
material fact for trial." Friedland v. The Indus. Co.,
2008 U.S. Dist. LEXIS 4076, 2008 WL 185693, at *2 n.4
(D. Colo. Jan. 18, 2008). This was not an abuse of
discretion. See Eastridge Dev. Co. v. Halpert Assocs.,
Ine., 853 F.2d 772, 782-83 (10th Cir. 1988) (trial court
did not abuse its discretion in excluding expert
testimony regarding the allocation of settlement money
to particular claims when the settlement agreement did
not contain an express allocation; proposed testimony
was "tentative and speculative").
l7a
Finally, Mr. Friedland suggests that the district court's
conclusion rested on the erroneous view that USF&G
and Travelers are joint tortfeasors. The district court
pointed out that attorneys' fees are not recoverable in
CERCLA contribution actions, see 42 U.S.C. §
9607(a)(4); Key Tronic Corp. v. United States, 511 U.S.
809, 817-19, 114 S. Ct. 1960, 128 L. Ed. 2d 797 (1994),
and that settling parties should therefore make any
variance from the statute absolutely clear. We agree
that this statement is misplaced, as Mr. Friedland did
not sue USF&G and Travelers under CERCLA. A
review of the entire order, however, clarifies that this
lone misstatement was harmless. The district court had
already determined that Mr. Friedland's "claims are not
divisible, and the general rule of [Hess Oil], permitting
defendants full credit for the amount of any settlement,
applies in the absence of an express allocation in the
settlement agreements themselves." Friedland, 2008
U.S. Dist. LEXIS 4076, 2008 WL 185693, at *2. As we
explained, that conclusion is correct, and any further
commentary was simply superfluous.
III. CONCLUSION
The district court correctly concluded that the
collateral source rule does not apply in this CERCLA
contribution action. The court also properly determined
that the alleged injury and damages in this lawsuit are
the same as those addressed in the USF&G and
Travelers settlements. We therefore AFFIRM the
entry of summary judgment against Mr. Friedland. We
GRANT the appellees' motion to file their response
brief under seal and Mr. Friedland's motion to file his
reply brief under seal.
LNa
Footnote(s)
1The amount of this sum is subject to a confidentiality
agreement and was filed under seal with this court.
2As with the ICC settlement, the amount of the
USF&G settlement is subject to a confidentiality
agreement and was filed under seal with this court.
3We are unaware of any court that has applied the
collateral source rule to a claim for contribution, even
outside the CERCLA context.
4Mr. Friedland argues that Raytheon Aircraft and Vine
Street fail to distinguish between payments from
insurance policies and private settlements from other
PRPs. Although Mr. Friedland is correct that the
source of the payment is relevant to whether the
collateral source rule applies, the source of the payment
is not relevant in the context of § 9613(f)(1)'s instruction
to allocate response costs equitably. What matters is
that the contribution plaintiff has recovered some or all
of its response costs; the identity of the entity
providing the recovery is irrelevant
5We recognize that Hess Oil and Burlington present a
different procedural posture than the one we face in
this appeal. Those cases involved a single lawsuit
against multiple defendants, whereas Mr. Friedland
recovered in two previous suits against two different
defendants and now seeks contribution against other
defendants. We consider this distinction immaterial.
Hess Oil and Burlington Northern center on the
plaintiffs right to recover only to the extent of his
damages, which is the sole issue in this appeal and
19a
which can arise in a_= variety of procedural
circumstances.
20a
United States District Court,
D. Colorado.
Robert M. FRIEDLAND, Plaintiff,
Vv.
TIC-THE INDUSTRIAL COMPANY; and Geosyntec
Consultants Inc., f/k/a Geoservices, Inc., Defendants.
Civil Action No. 04-cv-01263-REB-KLM.
Jan. 18, 2008.
Perry L. Glantz, Fognani & Faught, PLLC, Denver,
CO, for Plaintiff.
Colin Christopher Deihl, Faegre & Benson, LLP,
Steven Matthew Kelso, Terence M. Ridley, Marian Lee,
Wheeler Trigg Kennedy, LLP, Denver, CO, Delmar R.
Ehrich, Faegre & Benson, Minneapolis, MN, Paul J.
Sanner, Hanson, Bridgett, Marcus, Vlahos & Rudy,
LLP, San Francisco, CA, for Defendants.
ORDER GRANTING DEFENDANTS' JOINT
MOTION FOR SUMMARY JUDGMENT ON
DAMAGES
BLACKBURN, Judge.
The matter before me is Defendants’ Joint Motion for
Summary Judgment on Damages [# 153], filed
October 30, 2006. I grant the motion.
I. JURISDICTION
I have subject matter jurisdiction pursuant to 28 U.S.C.
Z2la
§ 1331 (federal question).
II. STANDARD OF REVIEW
Summary judgment is proper when there is no genuine
issue as to any material fact and the movant is entitled
to judgment as a matter of law. FED.R.CIV. P. 56(c);
Celotex Corp. v. Catrett, 477 U .S. 317, 322, 106 S.Ct.
2548, 2552, 91 L.Ed.2d 265 (1986). A dispute is
“genuine” if the issue could be resolved in favor of
either party. Matsushita Electric Industrial Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348,
1356, 89 L.Ed.2d 538 (1986); Farthing v. City of
Shawnee, 39 F.3d 1131, 1135 (10th Cir.1994). A fact is
“material” if it might reasonably affect the outcome of
the case. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986);
Farthing, 39 F.3d at 1134.
A party which does not have the burden of proof at trial
must show the absence of a genuine fact issue. Concrete
Works, Inc. v. City & County of Denver, 36 F.3d 1513,
1517 (10th Cir.1994), cert. denied, 115 S.Ct. 1815 (19985).
Once the motion has been properly supported, the
burden shifts to the nonmovant to show, by tendering
depositions, affidavits, and other competent evidence,
that summary judgment is not proper. /d. at 1518. All
the evidence must be viewed in the light most favorable
to the party opposing the motion. Simms v. Oklahoma
ex rel Department of Mental Health and Substance
Abuse Services, 165 F.3d 1321, 13826 (10th Cir.), cert.
denied, 120 S.Ct. 53 (1999).
III. ANALYSIS
22u
Plaintiff, « former director and officer of the
Summitville Consolidated Mining Company, was sued
in a cost recovery action related to cleanup of the
Summitville Mine Superfund Site. That cost recovery
action, United States v. Friedland, Civil Action No. 96-
ev-01213-EWN-OES (D.Colo.), ultimately was resolved
by consent decree, pursuant to which plaintiff agreed to
pay $20,723,181 in recovery costs.
While that case was still pending, plaintiff and others
filed suit in Montana state court against Industrial
Constructors Corp. (“ICC”) and its insurer, United
States Guaranty and Fidelity Corp. (“USF & G”),
among others, seeking indemnification pursuant to a
contract for work performed by ICC at the site. Not
long after the cost recovery action was resolved, the
plaintiffs in the Montana suit settled their claims
against ICC. As part of that agreement, ICC assigned
its claims against its insurers, including USF & G, to
plaintiff. Plaintiff subsequently settled the assigned
claims against USF & G. In 2002, plaintiff initiated
another action, under his employer's liability insurance
policy, against The Travelers Indemnity Company and
related entities (“Travelers”) in Colorado state district
court. That case also was ultimately settled.'*' It is
undisputed that as a result of the USF & G and
Travelers settlements, plaintiff has recovered more
than he agreed to pay in recovery costs.***
In the instant suit, plaintiff seeks contribution from
defendants pursuant to the Comprehensive
Environmental Response, Compensation and Liability
Act (“CERCLA”), 42 U.S.C. $§ 9613(MC1) & (f(3)(B).
CERCLA provides, in relevant part, that the
settlement of claims for contribution thereunder “does
23a
not discharge any of the other potentially liable persons
.... but it reduces the potential liability of the others by
the amount of the settlement.” Jd. § 9613(f)(2). See also
United States v. Burlington Northern Railroad Co., 200
F.3d 679, 697 (10th Cir.1999). Defendants now move for
summary judgment arguing that, having received via
settlement more than he was ordered to pay in
damages, plaintiff is entitled to no further recovery.
Plaintiff does not dispute that defendants are entitled
to credit for some portion of the settlements, counters
that the amounts he recovered should be allocated
between response costs and legal defense costs and
that, given such allocation, he still has compensable
damages as against these defendants.
The parties agree that neither the Travelers nor the
USF & G settlement makes any express or implied
allocation between indemnification for amounts plaintiff
agreed to pay in the cost recovery action, on the one
hand, and legal defense costs, on the other. Generally, a
party can insist on a particular allocation of settlement
proceeds as against a non-settling party only if it is
“specifically stated in the settlement documents what
allocations of damages were applicable to each cause of
action.” Hess Oil Virgin Island Corp. v. UOP, Inc., 861
F.2d 1197, 1209 (10th Cir.1988). In the absence of such
specific language, the non-settling party is entitled to
full credit for the entire amount of the settlement. /d.
On the other hand, if the harm to which the settlement
is directed is divisible, settlement amounts may be
allocated accordingly even in the absence of specific
language in the settlement agreement. Burlington
Northern, 200 F.3d at 698. See generally,
RESTATEMENT (SECOND) OF TORTS § 438A
(“Damages for harm are to be apportioned among two
24a
or more causes where: (a) there are distinct harms, or
(b) there is a reasonable basis for determining the
contribution of each cause to a single harm. Damages
for any other harm cannot be apportioned among two or
more causes.”).
There is absolutely no indication that the settlement
amounts plaintiff received are attributable to divisible
harms in the sense contemplated by Burlington
Northern.*™ Plaintiff argues that the case parallels
Burlington Northern because his pleadings in the
Travelers and USF & G lawsuits made separate claims
for indemnification of response costs and recovery of
defense costs. Plaintiff cites no authority and does not
further expound or expatiate this “just so” argument,
but it fails as a matter of simple logic. Without question,
plaintiff's claim for defense costs arose proximately and
directly from his liability for response costs. The two
could not have been other than _ inextricably
intertwined. Thus, plaintiff's claims are not divisible,
and the general rule of Hess Oil Virgin Island Corp.,
permitting defendants full credit for the amount of any
settlement, applies in the absence of an express
allocation in the settlement agreements themselves. *4
My conclusion in this regard is bolstered by the
recognition that contribution under CERCLA is
available only for “necessary costs of response,” see 42
U.S.C. § 9607(a)(4), and not for attorney fees or costs
associated with defending the original litigation, see
Key Tronic Corp. v. United States, 511 U.S. 809, 817-19,
114 S.Ct. 1960, 1966-67, 128 L.Ed.2d 797 (1994);
Atlantic Richfield Co. v. American Airlines, Inc., 98
F.3d 564, 571 (10th Cir.1996)."** Of course, a party may
settle on terms other than those permitted by statute.
25a
Nevertheless, when the statute sued under expressly
excludes recovery of defense costs, a settling party
would be well-advised to ensure that his settlement
agreement makes the intended variance from the
statute absolutely pellucid.'**
Plaintiff argues in the alternative that the collateral
source rule prohibits me from crediting defendants with
any insurance payments received by him. I
wholeheartedly disagree. CERCLA contribution
actions such as this one are governed by federal law. 42
U.S.C. § 9613((1). Despite the fact that the collateral
source rule has been applied under federal law in other
contexts, see Stanley v. Bertram-Trojan, Inc., 868
F.Supp. 541, 543 (S.D.N .Y.1994), it has never been
applied in the context of a CERCLA action, see
Raytheon Aircraft Co. v. United States, 2007 WL
4300221 at *4 (D.Kan. Dec. 8, 2007) (slip op.) (citing
Vine Street, LLC v. Keeling ex. rel. Estate of Keeling,
460 F.Supp.2d 728, 765 (E.D.Tex.2006)). Nor is it likely
that it will be, considering that the collateral source
rule derives from tort law, whereas CERCLA does not.
See Young v. United States, 394 F.3d 858, 862 (10th
Cir.2005) (“CERCLA is not a genera! vehicle for toxic
tort claims.”).
In sum, plaintiff has not shown a genuine issue of
material fact for trial with respect to damages. The
settlement agreements into which plaintiff entered are
attributable to common, indivisible harms and contain
no express allocation as between recovery costs and
defense costs. Accordingly, defendants are entitled to
full credit for the amount of the settlements. Because
those settlements collectively account for more than
plaintiff agreed to pay out in recovery costs, he has no
262
compensable damayes to recover as against these
defendants.
THEREFORE, IT IS ORDERED as follows:
1. That Defendants' Joint Motion for Summary
Judgment on Damages [# 153], filed October 30, 2006,
is GRANTED;
2. That plaintiff's claims against defendants for
contribution are DISMISSED WITH PREJUDICE;
3. That judgment SHALL ENTER in favor of
defendants, TIC-The Industrial Company = and
GeoSyntec Consultants, Inc., f/k/a Geoservices, Inc.,
and against plaintiff, Robert M. Friedland, as to all
claims and causes of action asserted herein;
4. That all other pending motions in this lawsuit are
DENIED AS MOOT, including, but not limited to,
(a) Defendant GeoSyntec's Motion for Summary
Judgment [# 41], filed November 18, 2005;
(b) Defendant TIC-The Industrial Company's Motion
for Summary Judgment [# 62], filed February 8,
2006;
(c) GeoSyntec's Motion To Strike Certain Exhibits
To Plaintiffs Response in Opposition to Motion for
Summary Judgment [# 76], filed February 22, 2006;
(d) Notice of Errata and Motion To Substitute New
Exhibit 10 to Plaintiff's Brief in Response to
GeoSyntec's Motion for Summary Judgment [# 86],
filed March 13, 2006;
(e) Robert M. Friedland's Motion To Supplement the
Record Regarding Defendant GeoSyntec
Consultants Inc.'s Motion for Summary Judgment
{# 148], filed October 27, 2006;
(f) Robert M. Friedland's Motion To Supplement the
Record Regarding Defendant TIC-The Industrial
Company's Motion for Summary Judgment [# 149],
filed October 27, 2006;
(g) Plaintiff Robert Friedland's Motion for Summary
Judgment Regarding Plaintiffs CERCLA
Liability [# 150], filed October 30, 2007;
(h) Plaintiff Robert Friedland's Motion and
Memorandum for Partial Summary Judgment that
Mr. Friedland's CERCLA Response Costs for
Government Directed Remediation Were
Consistent with the National Contingency Plan [#
152], filed October 30, 2006;
(1) Defendant TIC-The Industrial Company's Motion
To Remove Confidential Designation from
Travelers and USF & G Settlement Agreements
(Filed Under Seal) [# 200], filed January 3, 2007; and
(j) Defendant TIC-The Industrial Company's
Unopposed Motion To Submit Response to
Plaintiffs Supplemental Authority [# 298], filed
December 19, 2007;
5. That the Trial Preparation Conference set for Friday,
September 26, 2008, at 9:00 a.m., as well as the trial,
282
currently set to commence on Monday, September 29,
2008, are VACATED; and
6. That defendants are AWARDED their costs to be
taxed by the Clerk of the Court pursuant to
Fed.R.Civ.P. 54(d)(1) and D.C.COLO.LCivR 54.1.
Footnotes
FN1. In addition, plaintiff has settled with a number of
other defendants for activities related to the
Summitville Mine.
F'N2. It is not necessary for purposes of resolving the
present motion to reveal the exact dollar amounts of
either of these settlements. Nor is the mere fact of the
existence of a settlement confidential under either
agreement. For these reasons, Defendant TIC-The
Industrial Company's Motion To Remove
Confidential Designation from Travelers and USF &
G Settlement Agreements (Filed Under Seal) [# 196],
filed January 2, 2007, will be denied as moot.
FN3. In Burlington Northern, the court considered a
non-settling CERCLA defendant's right to credit for
the settlement of a co-defendant in regard to the Rocky
Mountain Arsenal Superfund Site. The site was
comprised of two distinct parcels: a pond impoundment
on the western portion of the site, as to which
defendants were found jointly and severally liable; and
a plant impoundment at the eastern portion of the site,
as to which only the settling defendant was found liable
for recovery costs. Burlington Northern, 200 F.3d at
696. The Tenth Circuit affirmed the district court's
conclusion that the harms caused by the two defendants
29a
were clivisible between the two separate sites, and that
credit for the settlement could be apportioned
accordingly, even absent specific language in the
settlement agreement to that effect. See id. at 697-98.
F'N4. The expert report of Garth Allen, submitted by
plaintiff in support of his position that the settlement
funds may be allocated between indemnification and
defense costs, does not change this result. Given the
silence of the settlement agreements regarding
allocation, this testimony is far too speculative to be
admissible and consequently, does not create a genuine
issue of material fact for trial.
F'N5. There is a limited exception to this rule, which
allows recovery of attorney fees incurred in identifying
other potentially responsible parties, but there is no
indication that this exception is implicated in this case.
See Atlantic Richfield Co., 98 F.3d at 571.
FN6. Plaintiff's argument that any allocation he might
have bargained for would have been meaningless, since
the settling defendants had no vested interest in how
the settlement monies were allocated and would have
agreed to any allocation he suggested (PIf. Resp. Br. at
16-17), is logically unsound. As _ plaintiff himself
recognizes, settlement agreement allocations are
subject to judicial scrutiny. See Vitkus v. Beatrice Co.,
127 F.3d 936, 944 (10th Cir.1997). Thus, contrary to
plaintiffs argument, it is, in fact, quite likely that
settling defendants, interested in preserving the
integrity of their settlements, will not blithely agree to
any allocation proposed by plaintiffs without regard to
reasonableness. See id.
30a
Filed: 7/28/09
No. 08-1042
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
ROBERT M. FRIEDLAND,
Plaintiff - Appellant,
v.
TIC - THE INDUSTRIAL COMPANY;
GEOSYNTEC CONSULTANTS INC., f/k/a
Geoser'vices, Inc.,
Defendants - Appellees.
UNISYS CORPORATION, a Delaware corporation,
Amicus Curiae.
ORDER
Before TACHA, BALDOCK, and O'BRIEN, Circuit
Judges.
Appellant’s petition for rehearing is denied.
The petition for rehearing en banc was transmitted to
all of the judges of the court who are in regular active
service. As no member of the panel and no judge in
regular active service on the court requested that the
court be polled, that petition is also denied.
3la
USCA Title 42. The Public Health and Welfare
Chapter 103. Comprehensive Environmental
Response, Compensation, and Liability
Subchapter I. Hazardous Substances Releases,
Liability, Compensation
§ 9607. Liability
(a) Covered persons; scope; recoverable costs and
damages; interest rate; “comparable maturity” date
Notwithstanding any other provision or rule of law, and
subject only to the defenses set forth in subsection (b)
of this section--
(1) the owner and operator of a vessel or a facility,
(2) any person who at the time of disposal of any
hazardous substance owned or operated any facility at
which such hazardous substances were disposed of,
(3) any person who by contract, agreement, or
otherwise arranged for disposal or treatment, or
arranged with a transporter for transport for disposal
or treatment, of hazardous substances owned or
possessed by such person, by any other party or
entity, at any facility or incineration vessel owned or
operated by another party or entity and containing
such hazardous substances, and
(4) any person who accepts or accepted any hazardous
substances for transport to disposal or treatment
facilities, incineration vessels or sites selected by such
person, from which there is a release, or a threatened
release which causes the incurrence of response costs,
of a hazardous substance, shall be liable for--
32a
(A) all costs of removal or remedial action incurred
by the United States Government or u State or an
Indian tribe not inconsistent with the national
contingency plan;
(B) any other necessary costs of response incurred
by any other person consistent with the national
contingency plan;
(C) damages for injury to, destruction of, or loss of
natural resources, including the reasonable costs of
assessing such injury, destruction, or loss resulting
from such a release; and
(D) the costs of any health assessment or health
effects study carried out under section 9604(i) of this
title.
The amounts recoverable in an action under this
section shall include interest on the amounts
recoverable under subparagraphs (A) through (D).
Such interest shall accrue from the later of (i) the
date payment of a specified amount is demanded in
writing, or (ii) the date of the expenditure
concerned. The rate of interest on the outstanding
unpaid balance of the amounts recoverable under
this section shall be the same rate as is specified for
interest on investments of the Hazardous Substance
Superfund established under subchapter A _ of
chapter 98 of Title 26. For purposes of applying such
amendments to interest under this subsection, the
term “comparable maturity” shall be determined
with reference to the date on which interest
accruing under this subsection commences.
53a
(b) Defenses
There shall be no liability under subsection (a) of this
section for a person otherwise liable who can establish
by a preponclerance of the evidence that the release or
threat of release of a hazardous substance and the
dlamages resulting therefrom were caused solely by--
(1) an act of God;
(2) an act of war;
(3) an act or omission of a third party other than an
employee or agent of the defendant, or than one
whose act or omission occurs in connection with a
contractual relationship, existing directly or
indirectly, with the defendant (except where the sole
contractual arrangement arises from a_ published
tariff and acceptance for carriaye by a common carrier
by rail), if the defendant establishes by a
preponderance of the evidence that (a) he exercised
due care with respect to the hazardous substance
concerned, taking into consideration the
characteristics of such hazardous substance, in light of
all relevant facts and circumstances, and (b) he took
precautions against foreseeable acts or omissions of
any such third party and the consequences that could
foreseeably result from such acts or omissions; or
(4) any combination of the foregoing paragraphs.
(c) Determination of amounts
(1) Except as provided in paragraph (2) of this
subsection, the liability under this section of an owner
da
or operator or other responsible person for each release
of a hazardous substance or incident involviny release
of a hazardous substance shall not exceed--
(A) for any vessel, other than an incineration vessel,
which carries any hazardous substance as cargo or
residue, $300 per gross ton, or $5,000,000, whichever
is greater;
(B) for any other vessel, other than an incineration
vessel, $300 per gross ton, or $500,000, whichever is
greater’
(C) for any motor vehicle, aircraft, hazardous liquid
pipeline facility (as defined in section 60101(a) of Title
49), or rolling stock, $50,000,000 or such lesser amount
as the President shall establish by regulation, but in
no event less than $5,000,000 (or, for releases of
hazardous’ substances as_ defined in_ section
9601(14)(A) of this title into the navigable waters,
$8,000,000). Such regulations shall take into account
the size, type, location, storage, and handling capacity
and other matters relating to the likelihood of release
in each such class and to the economic impact of such
limits on each such class; or
(D) for any incineration vessel or any facility other
than those specified in subparagraph (C) of this
paragraph, the total of all costs of response plus
$50,000,000 for any damages under this subchapter.
(2) Notwithstanding the limitations in paragraph (1) of
this subsection, the liability of an owner or operator or
other responsible person under this section shall be the
full and total costs of response and damages, if (A)(i)
Boa
the release or threat of release of a hazardous
substance was the result of willful misconduct or willful
negligence within the privity or knowledge of such
person, or (ii) the primary cause of the release was a
violation (within the privity or knowledge of such
person) of applicable safety, construction, or operating
standards or regulations; or (B) such person fails or
refuses to provide all reasonable cooperation and
assistance requested by a responsible public official in
connection with response activities under the national
contingency plan with respect to regulated carriers
subject to the provisions of Title 49 or vessels subject to
the provisions of Title 33, 46, or 46 Appendix,
subparagraph (A)(ii) of this paragraph shall be deemed
to refer to Federal standards or regulations.
(3) If any person who is liable for a release or threat of
release of a hazardous substance fails without sufficient
cause to properly provide removal or remedial sction
upon order of the President pursuant to section 9604 or
9606 of this title, such person may be liable to the
United States for punitive damages in an amount at
least equal to, and not more than three times, the
amount of any costs incurred by the Fund as a result of
such failure to take proper action. The President is
authorized to commence a civil action against any such
person to recover the punitive damages, which shall be
in addition to any costs recovered from such person
pursuant to section 9612(c) of this title. Any moneys
received by the United States pursuant to this
subsection shall be deposited in the Fund.
(1) Rendering care or advice
(1) In general
36a
Except as provided in paragraph (2), no person shall
be liable under this subchapter for costs or damayes
as a result of actions taken or omitted in the course of
rendering care, assistance, or advice in accordance
with the National Contingency Plan (“NCP”) or at the
direction of an onscene coordinator appointed under
such plan, with respect to an incident creating a
danger to public health or welfare or the environment
as a result of any releases of a hazardous substance or
the threat thereof. This paragraph shall not preclude
liability for costs or damages as the result of
negligence on the part of such person.
(2) State and local governments
No State or local government shall be lable under
this subchapter for costs or damages as a result of
actions taken in response to an emergency created by
the release or threatened release of a hazardous
substance generated by or from a facility owned by
another person. This paragraph shall not preclude
liability for costs or damages as a result of gross
negligence or intentional misconduct by the State or
local government. For the purpose of the preceding
sentence, reckless, willful, or wanton misconduct shall
constitute gross negligence.
(3) Savings provision
This subsection shall not alter the liability of any
person covered by the provisions of paragraph (1), (2),
(3), or (4) of subsection (a) of this section with respect
to the release or threatened release concerned.
(e) Indemnification, hold harmless, etc., agreements or
37a
conveyances; subrogation rights
(1) No indemnification, hold harmless, or similar
agreement or conveyance shall be effective to transfer
from the owner or operator of any vessel or facility or
from any person who may be liable for a release or
threat of release under this section, to any other person
the liability imposed under this section. Nothing in this
subsection shall bar any agreement to insure, hold
harmless, or indemnify a party to such agreement for
any liability under this section.
(2) Nothing in this subchapter, including the provisions
of paragraph (1) of this subsection, shall bar a cause of
action that an owner or operator or any other person
subject to liability under this section, or a guarantor,
has or would have, by reason of subrogation or
otherwise against any person.
(f) Natural resources liability; designation of public
trustees of natural resources
(1) Natural resources liability
In the case of an injury to, destruction of, or loss of
natural resources under subparagraph (C) of
subsection (a) of this section liability shall be to the
United States Government and to any State for
natural resources within the State or belonging to,
managed by, controlled by, or appertaining to such
State and to any Indian tribe for natural resources
belonging to, managed by, controlled by, or
appertaining to such tribe, or held in trust for the
benefit of such tribe, or belonging to a member of
such tribe if such resources are subject to a trust
38a
restriction on alienation: Provided, homwerer, That no
liability to the United States or State or Indian tribe
shall be imposed under subparagraph (C) of
subsection (a) of this section, where the party sought
to be charyed has demonstrated that the damages to
natural resources complained of were specifically
identified as an _ irreversible and_ irretrievable
commitment of natural resources in an environmental
impact statement, or other comparable environment
analysis, and the decision to grant a permit or license
authorizes such commitment of natural resources, and
the facility or project was otherwise operating within
the terms of its permit or license, so long as, in the
case of damages to an Indian tribe occurring pursuant
to a Federal permit or license, the issuance of that
permit or license was not inconsistent with the
fiduciary duty of the United States with respect to
such Indian tribe. The President, or the authorized
representative of any State, shall act on behalf of the
public as trustee of such natural resources to recover
for such damages. Sums recovered by the United
States Government as trustee under this subsection
shall be retained by the trustee, without further
appropriation, for use only to restore, replace, or
acquire the equivalent of such natural resources.
Sums recovered by a State as trustee under this
subsection shall be available for use only to restore,
replace, or acquire the equivalent of such natural
resources by the State. The measure of damages in
any action under subparagraph (C) of subsection (a) of
this section shall not be limited by the sums which can
be used to restore or replace such resources. There
shall be no double recovery under this chapter for
natural resource damages, including the costs of
damage assessment or restoration, rehabilitation, or
39a
acquisition for the same release and natural resource.
There shall be no recovery under the authority of
subparagraph (C) of subsection (a) of this section
where such damages and the release of a hazardous
substance from which such damages resulted have
occurred wholly before December 11, 1980.
(2) Designation of Federal and State officials
(A) Federal
The President shall designate in the National
Contingency Plan published under section 9605 of
this title the Federal officials who shall act on behalf
of the public as trustees for natural resources under
this chapter and section 1321 of Title 33. Such
officials shall assess damages for injury to,
destruction of, or loss of natural resources for
purposes of this chapter and such section 1321 of
Title 33 for those resources under their trusteeship
and may, upon request of and reimbursement from a
State and at the Federal officials' discretion, assess
damages for those natural resources under the
State's trusteeship.
(B) State
The Governor of each State shall designate State
officials who may act on behalf of the public as
trustees for natural resources under this chapter
and section 1321 of Title 33 and shall notify the
President of such designations. Such State officials
shall assess damages to natural resources for the
purposes of this chapter and such section 1321 of
Title 33 for those natural resources under their
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trusteeship.
(C) Rebuttable presumption
Any determination or assessment of damages to
natural resources for the purposes of this chapter
and section 1321 of Title 33 made by a Federal or
State trustee in accordance with the regulations
promulgated under section 9651(c) of this title shall
have the force and effect of «a rebuttable
presumption on behalf of the trustee in any
administrative or judicial proceeding under this
chapter or section 1321 of Title 33.
(g) Federal agencies
For provisions relating to Federal agencies, see section
9620 of this title.
(h) Owner or operator of vessel
The owner or operator of a vessel shall be liable in
accordance with this section, under maritime tort law,
and as provided under section 9614 of this title
notwithstanding any provision of the Act of March 3,
1851 (46 U.S.C. 183ff) or the absence of any physical
damage to the proprietary interest of the claimant.
(i) Application of a registered pesticide product
No person (including the United States or any State or
Indian tribe) may recover under the authority of this
section for any response costs or damages resulting
from the application of a pesticide product registered
under the Federal Insecticide, Fungicide, and
dla
Rodenticide Act [7 U.S.C.A. § 1386 et seq.]. Nothing in
this paragraph shall affect or modify in any way the
obligations or liability of any person under any other
provision of State or Federal law, including common
law, for damages, injury, or loss resulting from a
release of any hazardous substance or for removal or
remedial action or the costs of removal or remedial
action of such hazardous substance.
(j) Obligations or liability pursuant to federally
permitted release
Recovery by any person (including the United States or
any State or Indian tribe) for response costs or
damages resulting from a federally permitted release
shall be pursuant to existing law in lieu of this section.
Nothing in this paragraph shall affect or modify in any
way the obligations or liability of any person under any
other provision of State or Federal law, including
common law, for damages, injury, or loss resulting from
a release of any hazardous substance or for removal or
remedial action or the costs of removal or remedial
action of such hazardous substance. In addition, costs of
response incurred by the Federal Government in
connection with a discharge specified in section
9601(10)(B) or (C) of this title shall be recoverable in an
action brought under section 1319(b) of Title 33.
(k) Transfer to, and assumption by, Post-Closure
Liability Fund of liability of owner or operator of
hazardous waste disposal facility in receipt of permit
under applicable solid waste disposal law; time, criteria
applicable, procedures, etc.; monitoring costs; reports
(1) The liability established by this section or any other
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law for the owner or operator of a hazardous waste
disposal facility which has received a permit under
subtitle C of the Solid Waste Disposal Act [42 U.S.C.A.
§ 6921 et seq.], shall be transferred to and assumed by
the Post-closure Liability Fund established by section
9641 of this title when--
(A) such facility and the owner and operator thereof
has complied with the requirements of subtitle C of
the Solid Waste Disposal Act [42 U.S.C.A. § 6921 et
seq.] and regulations issued thereunder, which may
affect the performance of such facility after closure;
and
(B) such facility has been closed in accordance with
such regulations and the conditions of such permit,
and such facility and the surrounding area have been
monitored as required by such regulations and permit
conditions for a period not to exceed five years after
closure to demonstrate that there is no substantial
likelihood that any migration offsite or release from
confinement of any hazardous substance or other risk
to public health or welfare will occur.
(2) Such transfer of liability shall be effective ninety
days after the owner or operator of such facility notifies
the Administrator of the Environmental Protection
Agency (and the State where it has an authorized
program under section 3006(b) of the Solid Waste
Disposal Act [42 U.S.C.A. § 6926(b) ] ) that the
conditions imposed by this subsection have been
satisfied. If within such ninety-day period the
Administrator of the Environmental Protection Agency
or such State determines that any such facility has not
complied with all the conditions imposed by this
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subsection or that insufficient information has been
provided to demonstrate such compliance, the
Administrator or such State shall so notify the owner
and operator of such facility and the administrator of
the Fund established by section 9641 of this title, and
the owner and operator of such facility shall continue to
be liable with respect to such facility under this section
and other law until such time as the Administrator and
such State determines that such facility has complied
with all conditions imposed by this subsection. A
determination by the Administrator or such State that
a facility has not complied with all conditions imposed
by this subsection or that insufficient information has
been supplied to demonstrate compliance, shall be a
final administrative action for purposes of judicial
review. A request for additional information shall state
in specific terms the data required.
(3) In addition to the assumption of liability of owners
and operators under paragraph (1) of this subsection,
the Post-closure Liability Fund established by section
9641 of this title may be used to pay costs of monitoring
and care and maintenance of a site incurred by other
persons after the period of monitoring required by
regulations under subtitle C of the Solid Waste
Disposal Act [42 U.S.C.A. § 6921 et seq.] for hazardous
waste disposal facilities meeting the conditions of
paragraph (1) of this subsection.
(4)(A) Not later than one year after December 11, 1980,
the Secretary of the Treasury shall conduct a study and
shall submit a report thereon to the Congress on the
feasibility of establishing or qualifying an optional
system of private insurance for postclosure financial
responsibility for hazardous waste disposal facilities to
44a
which this subsection applies. Such study shall include a
specification of adequate and realistic minimum
standards to assure that any such privately placed
insurance will carry out the purposes of this subsection
in a reliable, enforceable, and practical manner. Such a
study shall include an examination of the public and
private incentives, programs, and actions necessary to
make privately placed insurance a _ practical and
effective option to the financing system for the Post-
closure Liability Fund provided in subchapter II of this
chapter.
(B) Not later than eighteen months after December 11,
1980, and after a public hearing, the President shall by
rule determine whether or not it is feasible to establish
or qualify an optional system of private insurance for
postclosure financial responsibility for hazardous waste
disposal facilities to which this subsection applies. If the
President determines the establishment or qualification
of such a system would be infeasible, he shall promptly
publish an explanation of the reasons for such a
determination. If the President determines the
establishment or qualification of such a system would
be feasible, he shall promptly publish notice of such
determination. Not later than six months after an
affirmative determination under the preceding
sentence and after a public hearing, the President shall
by rule promulgate adequate and realistic minimum
standards which must be met by any such privately
placed insurance, taking into account the purposes of
this chapter and this subsection. Such rules shall also
specify reasonably expeditious procedures by which
privately placed insurance plans can qualify as meeting
such minimum standards.
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(C) In the event any privately placed insurance plan
qualifies under subparagraph (B), any person enrolled
in, and complying with the terms of, such plan shall be
excluded from the provisions of paragraphs (1), (2), and
(3) of this subsection and exempt from the
requirements to pay any tax or fee to the Post-closure
Liability Fund under subchapter II of this chapter.
(D) The President may issue such rules and take such
other actions as are necessary to effectuate the
purposes of this paragraph.
(5) Suspension of liability transfer
Notwithstanding paragraphs (1), (2), (3), and (4) of this
subsection and subsection (j) of section 9611 of this title,
no liability shall be transferred to or assumed by the
Post-Closure Liability Trust Fund established by
section 9641 of this title prior to completion of the study
required under paragraph (6) of this subsection,
transmission of a report of such study to both Houses of
Congress, and authorization of such a transfer or
assumption by Act of Congress following receipt of such
study and report.
(6) Study of options for post-closure program
(A) Study
The Comptroller General shall conduct a study of
options for a program for the management of the
liabilities associated with hazardous waste treatment,
storage, and disposal sites after their closure which
complements the policies set forth in the Hazardous
and Solid Waste Amendments of 1984 and assures the
Ae
protection of human health and the environment.
(B) Proyram elements
The program referred to in subparagraph (A) shall be
designed to assure each of the following:
(i) Incentives are created and maintained for the
safe management and disposal of hazardous wastes
so as to assure protection of human health and the
environment.
(ii) Members of the public will have reasonable
confidence that hazardous wastes will be managed
and disposed of safely and that resources will be
available to address any problems that may arise
and to cover costs of long-term monitoring, care, and
maintenance of such sites.
(iii) Persons who are or seek to become owners and
operators of hazardous waste disposal facilities will
be able to manage their potential future liabilities
and to attract the investment capital necessary to
build, operate, and close such facilities in a manner
which assures protection of human health and the
environment.
(C) Assessments
The study under this paragraph shall include
assessments of treatment, storage, and disposal
facilities which have been or are likely to be issued a
permit under section 3005 of the Solid Waste Disposal
Act [42 U.S.C.A. § 6925] and the likelihood of future
insolvency on the part of owners and operators of
47a
such facilities. Separate assessments shall be mace for
different classes of facilities and for different classes
of land disposal facilities and shall include but not be
limited to--
(i) the current and future financial capabilities of
facility owners and operators;
(ii) the current and future costs associated with
facilities, including the costs of routine monitoring
and maintenance, compliance monitoring, corrective
action, natural resource damages, and liability for
damages to third parties; and
(iii) the availability of mechanisms by which owners
and operators of such facilities can assure that
current and future costs, including post-closure
costs, will be financed.
(D) Procedures
In carrying out the responsibilities of this paragraph,
the Comptroller General shall consult with the
Administrator, the Secretary of Commerce, the
Secretary of the Treasury, and the heads of other
appropriate Federal agencies.
(FE) Consideration of options
In conducting the study under this paragraph, the
Comptroller General shall consider’ various
mechanisms and combinations of mechanisms to
complement the policies set forth in the Hazardous
and Solid Waste Amendments of 1984 to serve the
purposes set forth in subparagraph (B) and to assure
45a
that the current and future costs associated with
hazardous waste facilities, including post-closure
costs, will be adequately financed and, to the greatest
extent possible, borne by the owners and operators of
such facilities. Mechanisms to be considered include,
but are not limited to--
(i) revisions to closure, post-closure, and financial
responsibility requirements under subtitles C and I
of the Solid Waste Disposal Act [42 U.S.C.A. §§ 6921
et seq. and 6991 et seq. ];
(ii) voluntary risk pooling by owners and operator's;
(iii) legislation to require risk pooling Ly owners and
operators;
(iv) modification of the Post-Closure Liability Trust
Fund previously established by section 9641 of this
title, and the conditions for transfer of liability
under this subsection, including limiting the transfer
of some or all liability under this subsection only in
the case of insolvency of owners and operator's;
(v) private insurance;
(vi) insurance provided by the Federal Government;
(vii) coinsurance, reinsurance, or pooled-risk
insurance, whether provided by the private sector
or provided or assisted by the Federal Government;
and
(viii) creation of a new program to be administered
by a new or existing Federal agency or by a
49xn
federally chartered corporation.
(F) Recommendations
The Comptroller General shall consider options for
funding any program under this section and shall, to
the extent necessary, make recommendations to the
appropriate committees of Congress for additional
authority to implement such program.
(1) Federal lien
(1) In general
All costs and damages for which a person is liable to
the United States under subsection (a) of this section
(other than the owner or operator of a vessel under
paragraph (1) of subsection (a) of this section) shall
constitute a lien in favor of the United States upon all
real property and rights to such property which--
(A) belong to such person; and
(B) are subject to or affected by a removal or
remedial action.
(2) Duration
The lien imposed by this subsection shall arise at the
later of the following:
(A) The time costs are first incurred by the United
States with respect to a response action under this
chapter.
Ot
(B) The time that the person referred to in
paragraph (1) is provided (by certified or registered
mail) written notice of potential liability.
Such lien shall continue until the liability for the
costs (or a judgment against the person arising out
of such liability) is satisfied or becomes
unenforceable through operation of the statute of
limitations provided in section 9613 of this title.
(3) Notice and validity
The lien imposed by this subsection shall be subject to
the rights of any purchaser, holder of a security
interest, or judgment lien creditor whose interest is
perfected under applicable State law before notice of
the lien has been filed in the appropriate office within
the State (or county or other governmental
subdivision), as designated by State law, in which the
real property subject to the lien is located. Any such
purchaser, holder of a security interest, or judgment
lien creditor shall be afforded the same protections
against the lien imposed by this subsection as are
afforded under State law against a judgment lien
which arises out of an unsecured obligation and which
arises as of the time of the filing of the notice of the
lien imposed by this subsection. If the State has not
by law designated one office for the receipt of such
notices of liens, the notice shall be filed in the office of
the clerk of the United States district court for the
district in which the real property is located. For
purposes of this subsection, the terms “purchaser”
and “security interest” shall have the definitions
provided under section 6323(h) of Title 26.
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(4) Action in rem
The costs constituting the lien may be recovered in an
action in rem in the United States district court for
the district in which the removal or remedial action is
occurring or has occurred. Nothing in this subsection
shall affect the right of the United States to bring an
action against any person to recover all costs and
damages for which such person is liable under
subsection (a) of this section.
(m) Maritime lien
All costs and damages for which the owner or operator
of a vessel is liable under subsection (a)(1) of this
section with respect to a release or threatened release
from such vessel shall constitute a maritime lien in
favor of the United States on such vessel. Such costs
may be recovered in an action in rem in the district
court of the United States for the district in which the
vessel may be found. Nothing in this subsection shall
affect the right of the United States to bring an action
against the owner or operator of such vessel] in any
court of competent jurisdiction to recover such costs.
(n) Liability of fiduciaries
(1) In general
The liability of a fiduciary under any provision of this
chapter for the release or threatened release of a
hazardous substance at, from, or in connection with a
vessel or facility held in a fiduciary capacity shall not
exceed the assets held in the fiduciary capacity.
a2a
(2) Exclusion
Paragraph (1) does not apply to the extent that a
person is liable under this chapter independently of
the person's ownership of a vessel or facility as a
fiduciary or actions taken in a fiduciary capacity.
(3) Limitation
Paragraphs (1) and (4) do not limit the liability
pertaining to a release or threatened release of a
hazardous substance if negligence of a fiduciary
causes or contributes to the release or threatened
release.
(4) Safe harbor
A fiduciary shall not be liable in its personal capacity
under this chapter for--
(A) undertaking or directing another person to
undertake a response action under subsection (d)(1)
of this section or under the direction of an on scene
coordinator designated under the National
Contingency Plan;
(B) undertaking or directing another person to
undertake any other lawful means of addressing a
hazardous substance in connection with the vessel
or facility;
(C) terminating the fiduciary relationship;
(D) including in the terms of the _ fiduciary
agreement a covenant, warranty, or other term or
53a
condition that relates to compliance with an
environmental law, or monitoring, modifying or
enforcing the term or condition;
(E) monitoring or undertaking 1 or more inspections
of the vessel or facility;
(F) providing financial or other advice or counseling
to other parties to the fiduciary relationship,
including the settlor or beneficiary;
(G) restructuring, renegotiating, or otherwise
altering the terms and conditions of the fiduciary
relationship;
(H) administering, as a fiduciary, a vessel or facility
that was contaminated before the fiduciary
relationship began; or
(I) declining to take any of the actions described in
subparagraphs (B) through (H).
(5) Definitions
As used in this chapter:
(A) Fiduciary
The term “fiduciary”--
(i) means a person acting for the benefit of another
party as a bona fide--
(I) trustee;
dda
(II) executor’
(III) administrator;
(IV) custodian;
(V) guardian of estates or guardian ad litem;
(VI) receiver;
(VII) conservator;
(VIII) committee of estates of incapacitated
persons;
(IX) personal representative;
(X) trustee (including a successor to a trustee)
under an indenture agreement, trust agreement,
lease, or similar financing agreement, for debt
securities, certificates of interest or certificates
of participation in debt securities, or other forms
of indebtedness as to which the trustee is not, in
the capacity of trustee, the lender; or
(XI) representative in any other capacity that
the Administrator, after providing public notice,
determines to be similar to the capacities
described in subclauses (1) through (X); and
(ii) does not include--
(I) a person that is acting as a fiduciary with
respect to a trust or other fiduciary estate that
was organized for the primary purpose of, or is
vva
engaged in, actively carrying on a trade or
business for profit, unless the trust or other
fiduciary estate was created as part of, or to
facilitate, 1 or more estate plans or because of
the incapacity of a natural person; or
(II) a person that acquires ownership or control
of a vessel or facility with the objective purpose
of avoiding liability of the person or of any other
person.
(B) Fiduciary capacity
The term “fiduciary capacity” means the capacity of
a person in holding title to a vessel or facility, or
otherwise having control of or an interest in the
vessel or facility, pursuant to the exercise of the
responsibilities of the person as a fiduciary.
(6) Savings clause
Nothing in this subsection--
(A) affects the rights or immunities or other
defenses that are available under this chapter or
other law that is applicable to a person subject to
this subsection; or
(B) creates any liability for a person or a private
right of action against a fiduciary or any other
person.
(7) No effect on certain persons
Nothing in this subsection applies to a person if the
DG6a
person--
(A)Gi) acts in a capacity other than that of a
fiduciary or in a beneficiary capacity; and
(ii) in that capacity, directly or indirectly benefits
from a trust or fiduciary relationship; or
(B)() is a beneficiary and a fiduciary with respect to
the same fiduciary estate; and
(ii) as a fiduciary, receives benefits that exceed
customary or reasonable compensation, and
incidental benefits, permitted under other
applicable law.
(8) Limitation
This subsection does not preclude a claim under this
chapter against--
(A) the assets of the estate or trust administered by
the fiduciary; or
(B) a nonemployee agent or independent contractor
retained by a fiduciary.
(o) De micromis exemption
(1) In general
Except as provided in paragraph (2), a person shall
not be liable, with respect to response costs at a
facility on the National Priorities List, under this
chapter if liability is based solely on paragraph (3) or
ata
(4) of subsection (a), and the person, except as
provided in paragraph (4) of this subsection, can
demonstrate that--
(A) the total amount of the material containing
hazardous substances that the person arranged for
disposal or treatment of, arranged with a
transporter for transport for disposal or treatment
of, or accepted for transport for disposal or
treatment, at the facility was less than 110 gallons of
liquid materials or less than 200 pounds of solid
materials (or such greater or lesser amounts as the
Administrator may determine by regulation); and
(B) all or part of the disposal, treatment, or
transport concerned occurred before April 1, 2001.
(2) Exceptions
Paragraph (1) shall not apply in a case in which--
(A) the President determines that--
(i) the materials containing hazardous substances
referred to in paragraph (1) have contributed
significantly or could contribute significantly,
either individually or in the aggregate, to the cost
of the response action or natural resource
restoration with respect to the facility; or
(ii) the person has failed to comply with an
information request or administrative subpoena
issued by the President under this chapter or has
impeded or is impeding, thre agh action or inaction,
the performance of a response action or natural
bSa
resource restoration with respect to the facility; or
(B) a person has been convicted of a criminal
violation for the conduct to which the exemption
would apply, and that conviction has not been
vitiated on appeal or otherwise.
(3) No judicial review
A determination by the President under paragraph
(2)(A) shall not be subject to judicial review.
(4) NonGovernmental third-party contribution actions
In the case of a contribution action, with respect to
response costs at a facility on the National Priorities
List, brought by a party, other than a Federal, State,
or local government, under this chapter, the burden of
proof shall be on the party bringing the action to
demonstrate that the conditions described in
paragraph (1)(A) and (B) of this subsection are not
met.
(p) Municipal solid waste exemption
(1) In general
Except as provided in paragraph (2) of this
subsection, a person shall not be liable, with respect
to response costs at a facility on the National
Priorities List, under paragraph (3) of subsection (a)
of this section for municipal solid waste disposed of at
a facility if the person, except as provided in
paragraph (5) of this subsection, can demonstrate that
the person is--
o9a
(A) an owner, operator, or lessee of residential
property from which all of the person's municipal
solid waste was generated with respect to the
facility:
(B) a business entity (including a parent, subsidiary,
or affiliate of the entity) that, during its 3 taxable
years preceding the date of transmittal of written
notification from the President of its potential
liability under this section, employed on average not
more than 100 full-time individuals, or the
equivalent thereof, and that is a small business
concern (within the meaning of the Small Business
Act (15 U.S.C. 621 et seq.)) from which was
generated all of the municipal solid waste
attributable to the entity with respect to the facility;
or
(C) an organization described in section 501(c)(3) of
Title 26 and exempt from tax under section 501(a) of
Title 26 that, during its taxable year preceding the
date of transmittal of written notification from the
President of its potential liability under this section,
employed not more than 100 paid individuals at the
location from which was generated all of the
municipal solid waste attributable to the
organization with respect to the facility.
For purposes of this subsection, the term “affiliate” has
the meaning of that term provided in the definition of
“small business concern” in regulations promulgated by
the Small Business Administration in accordance with
the Small Business Act (15 U.S.C. 631 et seq.).
(2) Exception
60a
Paragraph (1) shall not apply in a case in which the
President determines that--
(A) the municipal solid waste referred to in
paragraph (1) has contributed significantly or could
contribute significantly, either individually or in the
aggregate, to the cost of the response action or
natural resource restoration with respect to the
facility;
(B) the person has failed to comply with an
information request or administrative subpoena
issued by the President under this chapter; or
(C) the person has impeded or is impeding, through
action or inaction, the performance of a response
action or natural resource restoration with respect
to the facility
(3) No judicial review
A determination by the President under paragraph
(2) shall not be subject to judicial review.
(4) Definition of municipal solid waste
(A) In general
For purposes of this subsection, the term “municipal
solid waste” means waste material--
(i) generated by a household (including a single or
multifamily residence); and
(ii) generated by a commercial, industrial, or
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institutional entity, to the extent that the waste
material--
(I) is essentially the same as waste normally
generated by a household;
(II) is collected and disposed of with other
municipal solid waste as part of normal municipal
solid waste collection services; and
(III) contains a relative quantity of hazardous
substances no greater than the relative quantity
of hazardous substances contained in waste
material generated by a typical single-family
household.
(B) Examples
Examples of municipal solid waste under
subparagraph (A) include food and yard waste,
paper, clothing, appliances, consumer product
packaging, disposable diapers, office supplies,
cosmetics, glass and metal food containers,
elementary or secondary school science laboratory
waste, and household hazardous waste.
(C) Exclusions
The term “municipal solid waste” cloes not include--
(i) combustion ash generated by resource recovery
facilities or municipal incinerators; or
(ii) waste material from manufacturing or
processing operations (including pollution control
O22
operations) that is not essentially the same as
waste normally generated by households.
(5) Burden of proof
In the case of an action, with respect to response costs
at a facility on the National Priorities List, brought
under this section or section 9613 of this title by--
(A) a party, other than a Federal, State, or local
government, with respect to municipal solid waste
disposed of on or after April 1, 2001; or
(B) any party with respect to municipal solid waste
disposed of before April 1, 2001, the burden of proof
shall be on the party bringing the action to
demonstrate that the conditions described in
paragraphs (1) and (4) for exemption for entities and
organizations described in paragraph (1)(B) and (C)
are not met.
(6) Certain actions not permitted
No contribution action may be brought by a party,
other than a Federal, State, or local government,
under this chapter with respect to circumstances
described in paragraph (1)(A).
(7) Costs and fees
A nongovernmental entity that commences, after the
date of the enactment of this subsection, a
contribution action under this chapter shall be liable
to the defendant for all reasonable costs cof defending
the action, including all reasonable attorney's fees and
G3a
expert witness fees, if the defendant is not liable for
contribution based on an exemption under this
subsection or subsection (0) of this section.
(q) Contiguous properties
(1) Not considered to be an owner or operator
(A) In general
A person that owns real property that is contiguous
to or otherwise similarly situated with respect to,
and that is or may be contaminated by a release or
threatened release of a hazardous substance from,
real property that is not owned by that person shall
not be considered to be an owner or operator of a
vessel or facility under paragraph (1) or (2) of
subsection (a) solely by reason of the contamination
if--
(i) the person did not cause, contribute, or consent
to the release or threatened release;
(ii) the person is not--
(I) potentially liable, or affiliated with any other
person that is potentially liable, for response
costs at a facility through any direct or indirect
familial relationship or any _ contractual,
corporate, or financial relationship (other than a
contractual, corporate, or financial relationship
that is created by a contract for the sale of goods
or services); or
(II) the result of a reorganization of a business
(da
entity that was potentially liable;
(iii) the person takes reasonable steps to--
(1) stop any continuiny release;
(II) prevent any threatened future release; and
(III) prevent or limit human, environmental, or
natural resource exposure to any hazardous
substance released on or from property owned
by that person;
(iv) the person provides full cooperation,
assistance, and access to persons that are
authorized to conduct response actions or natural
resource restoration at the vessel or facility from
which there has been a release or threatened
release (including the cooperation and access
necessary for the installation, integrity, operation,
and maintenance of any complete or partial
response action or natural resource restoration at
the vessel or facility);
(v) the per'son--
(I) is in compliance with any land use restrictions
established or relied on in connection with the
response action at the facility; and
(II) dees not impede the effectiveness or
integrity of any institutional control employed in
connection with a response action;
(vi) the person is in compliance with any request
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for information or administrative subpoena issued
by the President under this chapter;
(vii) the person provides all legally required
notices with respect to the discovery or release of
any hazardous substances at the facility; and
(viii) At the time at which the person acquired the
property, the person
(I) conducted all appropriate inquiry within the
meaning of section 9601(35)(B) of this title with
respect to the property; and
(II) did not know or have reason to know that
the property was or could be contaminated by a
release or threatened release of one or more
hazardous substances from other real property
not owned or operated by the person.
(B) Demonstration
To qualify as a person described in subparagraph
(A), a person must establish by a preponderance of
the evidence that the conditions in clauses (i)
through (viii) of subparagraph (A) have been met.
(C) Bona ficle prospective purchaser
Any person that does not qualify as a person
described in this paragraph because the person had,
or had reason to have, knowledge specified in
subparagraph (A)(vili) at the time of acquisition of
the real property may qualify as a bona fide
prospective purchaser under section 9601(40) of this
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title if the person is otherwise described in that
section.
(D) Ground water
With respect to a hazardous substance from one or
more sources that are not on the property of a
person that is a contiguous property owner that
enters ground water beneath the property of the
person solely as a result of subsurface migration in
an aquifer, subparagraph (A)(iii) shall not require
the person to conduct ground water investigations
or to install ground water remediation systems,
except in accordance with the policy of the
Environmental Protection Agency concerning
owners of property containing contaminated
aquifers, dated May 24, 1995.
(2) Effect of law
With respect to a person described in this subsection,
nothing in this subsection--
(A) limits any defense to liability that may be
available to the person under any other provision of
law; or
(B) imposes liability on the person that is not
otherwise imposed by subsection (a) of this section.
(3) Assurances
The Administrator may--
(A) issue an assurance that no enforcement action
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under this chapter will be initiated against a person
described in paragraph (1); and
(B) grant a person described in paragraph (1)
protection against a cost recovery or contribution
action under section 9613(f) of this title.
(r) Prospective purchaser and windfall lien
(1) Limitation on liability
Notwithstanding subsection (a)(1) of this section, a
bona fide prospective purchaser whose potential
liability for a release or threatened release is based
solely on the purchaser's being considered to be an
owner or operator of a facility shall not be liable as
long as the bona fide prospective purchaser does not
impede the performance of a response action or
natural resource restoration.
(2) Lien
If there are unrecovered response costs incurred by
the United States at a facility for which an owner of
the facility is not liable by reason of paragraph (1),
and if each of the conditions described in paragraph
(83) is met, the United States shall have a lien on the
facility, or may by agreement with the owner, obtain
from the owner a lien on any other property or other
assurance of payment satisfactory to the
Administrator, for the unrecovered response costs.
(3) Conditions
The conditions referred to in paragraph (2) are the
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following:
(A) Response action
A response action for which there are unrecovered
costs of the United States is carried out at the
facility.
(B) Fair market value
The response action increases the fair market value
of the facility above the fair market value of the
facility that existed before the response action was
initiated.
(4) Amount; duration
A lien under paragraph (2)--
(A) shall be in an amount not to exceed the increase
in fair market value of the property attributable to
the response action at the time of a sale or other
disposition of the property;
(B) shall arise at the time at which costs are first
incurred by the United States with respect to a
response action at the facility;
(C) shall be subject to the requirements of
subsection (1)(3); and
(D) shall continue until the earlier of--
(i) satisfaction of the lien by sale or other means;
or
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(ii) notwithstanding any statute of limitations
under section 9613 of this tile, recovery of all
response costs incurred at the facility
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USCA Title 42. The Public Health and Welfare
Chapter 103. Comprehensive Environmental
Response, Compensation, and Liability
Subchapter I. Hazardous Substances Releases,
Liability, Compensation
§ 9613. Civil proceedings
(a) Review of regulations in Circuit Court of Appeals of
the United States for the District of Columbia
Review of any regulation promulgated under this
chapter may be had upon application by any interested
person only in the Circuit Court of Appeals of the
United States for the District of Columbia. Any such
application shall be made within ninety days from the
date of promulgation of such regulations. Any matter
with respect to which review could have been obtained
under this subsection shall not be subject to judicial
review in any civil or criminal proceeding for
enforcement or to obtain damages or recovery of
response costs.
(b) Jurisdiction; venue
Except as provided in subsections (a) and (h) of this
section, the United States district courts shall have
exclusive original jurisdiction over all controversies
arising under this chapter, without regard to the
citizenship of the parties or the amount in controversy.
Venue shall lie in any district in which the release or
damages occurred, or in which the defendant resides,
may be found, or has his principal office. For the
purposes of this section, the Fund shall reside in the
District of Columbia.
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(c) Controversies or othe matters resulting from tax
collection or tax regulation review
The provisions of subsections (a) and (b) of this section
shall not apply to any controversy or other matter
resulting from the assessment of collection of any tax,
as provided by subchapter II of this chapter, or to the
review of any regulation promulgated under Title 26.
(d) Litigation commenced prior to December 11, 1980
No provision of this chapter shall be deemed or held to
moot any litigation concerning any release of any
hazardous substance, or any damages associated
therewith, commenced prior to December 11, 1980.
(e) Nationwide service of process
In any action by the United States under this chapter,
process may be served in any district where the
defendant is found, resides, transacts business, or has
appointed an agent for the service of process.
(f) Contribution
(1) Contribution
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
action under section 9606 of this title or under section
9607(a) of this title. Such claims shall be brought in
accordance with this section and the Federal Rules of
Civil Procedure, an« shall be governed by Federal
law. In resolving contribution claims, the court may
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llocate response costs among liable parties using
such equitable 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.
(2) Settlement
A person who has resolved its liability to the United
States or a State in an administrative or judicially
approved settlement shall not be liable for claims for
contribution regarding matters addressed in the
settlement. Such settlement does not discharge any of
the other potentially liable persons unless its terms so
provide, but it reduces the potential liability of the
others by the amount of the settlement.
(3) Persons not party to settlement
(A) If the United States or a State has obtained less
than complete relief from a person who has resolved
its liability to the United States or the State in an
administrative or judicially approved settlement, the
United States or the State may bring an action
against any person who has not so resolved its
liability.
(B) A person who 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
may seek contribution from any person who is not
party to a settlement referred to in paragraph (2).
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(C) In any action under this paragraph, the rights of
uny person who has resolved its liability to the United
States or a State shall be subordinate to the rights of
the United States or the State. Any contribution
action brought under this paragraph shall be
governed by Federal law.
(g) Period in which action may be brought
(1) Actions for natural resource damages
Except as provided in paragraphs (3) and (4), no
action may be commenced for damages (as defined in
section 9601(6) of this title) under this chapter, unless
that action is commenced within 3 years after the
later of the following:
(A) The date of the discovery of the loss and its
connection with the release in question.
(B) The date on which regulations are promulgated
under section 9651(c) of this title.
With respect to any facility listed on the National
Priorities List (NPL), any Federal facility identified
under section 9620 of this title (relating to Federal
facilities), or any vessel or facility at which a
remedial action under this chapter is otherwise
scheduled, an action for damages under this chapter
must be commenced within 3 years after the
completion of the remedial action (excluding
operation and maintenance activities) in lieu of the
dates referred to in subparagraph (A) or (B). In no
event may an action for damages under this chapter
With respect to such a vessel or facility be
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commenced (i) prior to 60 days after the Federal or
State natural resource trustee provides to the
President and the potentially responsible purty a
notice of intent to file suit, or (ii) before selection of
the remedial action if the President is diligently
proceeding with a remedial investigation and
feasibility study under section 9604(b) of this title or
section 9620 of this title (relating to Federal
facilities). The limitation in the preceding sentence
on commencing an action before giving notice or
before selection of the remedial action does not
apply to actions filed on or before October 17, 1986.
(2) Actions for recovery of costs
An initial action for recovery of the costs referred to
in section 9607 of this title must be commenced--
(A) for a removal action, within 3 years after
completion of the removal action, except that such
cost recovery action must be brought within 6 years
after a determination to grant a waiver under
section 9604(c)(1)(C) of this title for continued
response action; and
(B) for a remedial action, within 6 years after
initiation of physical on-site construction of the
remedial action, except that, if the remedial action is
initiated within 3 years after the completion of the
removal action, costs incurred in the removal action
may be recovered’ in the cost recovery action
brought under this subparagraph.
In any such action described in this subsection, the
court shall enter a declaratory judgment on liability
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for response costs or dlamages that will be binding
on any subsequent action or actions to recover
further response costs or damages. A subsequent
action or actions under section 9607 of this title for
further response costs at the vessel or facility may
be maintained at any time during the response
action, but must be commenced no later than 3 years
after the date of completion of all response action.
Except as otherwise provided in this paragraph, an
action may be commenced under section 9607 of this
title for recovery of costs at any time after such
costs have been incurred.
(3) Contribution
No action for contribution for any response costs or
damages may be commenced more than 3 years after-
(A) the date of judgment in any action under this
chapter for recovery of such costs or damages, or
(B) the date of an administrative order under
section 9622(g) of this title (relating to de minimis
settlements) or 9622(h) of this title (relating to cost
recovery settlements) or entry of a judicially
approved settlement with respect to such costs or
damages.
(4) Subrogation
No action based on rights subrogated pursuant to this
section by reason of payment of a claim may be
commenced under this subchapter more than 3 years
after the date of payment of such claim.
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(5) Actions to recover indemnification payments
Notwithstanding any other provision of this
subsection, where a payment pursuant to an
indemnification agreement with a response action
contractor is made under section 9619 of this title, an
action under section 9607 of this title for recovery of
such indemnification payment from a _ potentially
responsible party may be brought at any time before
the expiration of 3 years from the date on which such
payment is made.
(6) Minors and incompetents
The time limitations contained herein shall not begin
to run--
(A) against a minor until the earlier of the date
when such minor reaches 18 years of age or the date
on which a legal representative is duly appointed for
such minor, or
(B) against an incompetent person until the earlier
of the date on which such _incompetent's
incompetency ends or the date on which a legal
representative is duly appointed for such
incompetent.
(h) Timing of review
No Federal court shall have jurisdiction under Federal
law other than under section 1332 of Title 28 (relating
to diversity of citizenship jurisdiction) or under State
law which is applicable or relevant and appropriate
under section 9621 of this title (relating to cleanup
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standards) to review any challenges to removal or
remedial action selected under section 9604 of this title,
or to review any order issued under section 9606(a) of
this title, in any action except one of the following:
(1) An action under section 9607 of this title to
recover response costs or damages or for
contribution.
(2) An action to enforce an order issued under section
9606(a) of this title or to recover a penalty for
violation of such order.
(3) An action for reimbursement under section
9606(b)(2) of this title.
(4) An action under section 9659 of this title (relating
to citizens suits) alleging that the removal or remedial
action taken under section 9604 of this title or secured
under section 9606 of this title was in violation of any
requirement of this chapter. Such an action may not
be brought with regard to a removal where a
remedial action is to be undertaken at the site.
(5) An action under section 9606 of this title in which
the United States has moved to compel a remedial
action.
(i) Intervention
In any action commenced under this chapter or under
the Solid Waste Disposal Act [42 U.S.C.A. § 6901 et
seq.] in a court of the United States, any person may
intervene as a matter of right when such person claims
an interest relating to the subject of the action and is so
situated that the disposition of the action may, as a
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practical matter, impair or impede the person's ability
to protect that interest, unless the President or the
State shows that the person's interest is adequately
represented by existing parties.
(j) Judicial review
(1) Limitation
In any judicial action under this chapter, judicial
review of any issues concerning the adlequacy of any
response action taken or ordered by the President
shall be limited to the administrative record.
Otherwise applicable principles of administrative law
shall govern whether any supplemental materials may
be considered by the court.
(2) Standard
In considering objections raised in any judicial action
under this chapter, the court shall uphold the
President's decision in selecting the response action
unless the objecting party can demonstrate, on the
administrative record, that the decision was arbitrary
and capricious or otherwise not in accordance with
law.
(3) Remedy
If the court finds that the selection of the response
action was arbitrary and capricious or otherwise not
in accordance with law, the court shall award (A) only
the response costs or damages that are not
inconsistent with the national contingency plan, and
(B) such other relief as is consistent with the National
Contingency Plan.
(4) Procedural erron's
In reviewing alleged procedural errors, the court may
disallow costs or damages only if the errors were so
serious and related to matters of such central
relevance to the action that the action would have
been significantly changed had such errors not been
made.
(k) Administrative record and participation procedures
(1) Administrative record
The President shall establish an administrative record
upon which the President shall base the selection of a
response action. The administrative record shall be
available to the public at or near the facility at issue.
The President also may place duplicates of the
administrative record at any other location.
(2) Participation procedures
(A) Removal action
The President shall promulgate regulations in
accordance with chapter 5 of Title 5 establishing
procedures for the appropriate participation of
interested persons in the development of the
administrative record on which the President will
base the selection of removal actions and on which
judicial review of removal actions will be based.
(B) Remedial action
The President shall provide for the participation of
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interested persons, including potentially responsible
parties, in the development of the administrative
record on which the President will base the
selection of remedial actions and on which judicial
review of remedial actions will be based. The
procedures developed under this subparagraph shall
include, at a minimum, each of the following:
(i) Notice to potentially affected persons and the
public, which shall be accompanied by a brief
analysis of the plan and alternative plans that
were considered.
(ii) A reasonable opportunity to comment and
provide information regarding the plan.
(iii) An opportunity for a public meeting in the
affected area, in accordance with section 9617(a)(2)
of this title (relating to public participation).
(iv) A response to each of the _ significant
comments, criticisms, and new data submitted in
written or oral presentations.
(v) A statement of the basis and purpose of the
selected action.
For purposes of this subparagraph, the
administrative record shall include all items
developed and received under this subparagraph
and all items described in the second sentence of
section 9617(d) of this title. The President shall
promulgate regulations in accordance with
chapter 5 of Title 5 to carry out the requirements
of this subparagraph.
(C) Interim record
Until such regulations under subparagraphs (A) and
(B) are promulgated, the administrative record shall
consist of all items developed and received pursuant
to current procedures for selection of the response
action, including procedures for the participation of
interested parties and the public. The development
of an administrative record and the selection of
response action under this chapter shall not include
an adjudicatory hearing.
(D) Potentially responsible parties
The President shall make reasonable efforts to
identify and notify potentially responsible parties as
early as possible before selection of a response
action. Nothing in this paragraph shall be construed
to be a defense to liability.
(1) Notice of actions
Whenever any action is brought under this chapter in a
court of the United States by a plaintiff other than the
United States, the plaintiff shall provide a copy of the
complaint to the Attorney General of the United States
and to the Administrator of the Environmental
Protection Agency.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.