A Missouri court recently highlighted how difficult it is to establish the divisibility of harm exception to joint and several liability in cases under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as CERCLA. In doing so, the United States District Court for the Western District of Missouri rejected divisibility arguments and imposed joint and several liability in Short Creek Development v. MFA Incorporated, No 22-05021, 2023 WL 8452430 (W.D. Mo. Dec. 6, 2023). The court systematically analyzed the requirements for divisibility, making the opinion a useful template for future divisibility claims.

Background

The environmental harm in Short Creek was from a fertilizer plant that produced phosphogypsum as a byproduct, which was stored onsite in a gypstack. Phosphogypsum is primarily gypsum and phosphate, but it also contains arsenic, low-level radionuclides, selenium, zinc, cadmium, fluoride, sodium, potassium, chloride, nitrates, ammonia, sulfate, sulfuric acid, phosphoric acid, and hydrofluoric acid. When rainwater runs through the gypstack, these components leach into surface water and groundwater.

Different parties had owned the fertilizer plant over the past 70 years, with each contributing different amounts of phosphogypsum to the gypstack. The real controversy was about how to apportion liability for the leachate contamination. Was everyone supposed to be held equally liable despite contributing different amounts?

The Argument

The defendant, MFA, Inc., certainly did not think it should be liable for the entire amount — it had only contributed about 6% of the phosphogypsum. Though CERCLA generally provides for joint and several liability, there is an exception if the harm can be shown to be divisible through a technical evaluation. So, MFA tried to show that the harm could be divided volumetrically.

Proving divisibility is an uphill battle. The defendant asserting the divisibility defense bears the burden of proof to show that the harm is capable of being divided among each entity that caused the environmental harm. Adding to the difficulty, CERCLA provides no clear guidance for the technical requirements to demonstrate divisibility. As a result, courts have typically evaluated divisibility claims through the Restatement (Second) of Torts, which requires a showing of either “(1) distinct harm or (2) a reasonable basis for determining the contributing of each cause to a single harm.” Restatement (Second) of Torts § 433A (1965).

Among other things, a court will consider the types of pollution, contributors to the pollution, and the form of the pollution in the environment after the discharge. In the analysis, however, the court is guided by principles of causation alone, and the evidence must be concrete and specific. Each party must cause a separate amount of harm, and neither party can have any responsibility for the harm caused by the other. If there is any doubt, courts will impose joint and several liability.

For a volumetric determination, the Missouri court explained that a divisibility-by-volume proponent must show that there is a relationship between waste and volume, the release of hazardous substances, and the harm. Also playing into the analysis are relative toxicity, migratory potential, degree of migration, and synergistic capacity of the hazardous substances at the site.

The Ruling

Though the volume each defendant contributed is a reasonable basis for divisibility of harm, there can be no other independent factors that have a substantial effect on the harm to the environment. The court zeroed in on this requirement and found that MFA did not prove that no independent factors were at play.

The independent factors included the gradual reduction in the concentration of contaminants, referred to as attenuation, would be different for phosphogypsum produced by the different parties;  additional volumes of phosphogypsum would affect how long previously placed phosphogypsum could retain pollutants and could exacerbate the pollutants placed earlier; the site’s leachate management system would also have an effect on the phosphogypsum’s attenuation; and contaminants from mining wastes that the Environmental Protection Agency had placed on the stack could interact with the phosphogypsum placed by the parties. MFA’s expert acknowledged that these factors were distinct from volume, but his failure to address these factors in relation to the harm was fatal to MFA’s divisibility defense.

MFA did not present evidence as to how much of the environmental harm was attributable to each contributing factor. Without evidence about each contribution to the environmental harm, the court explained it could not divide the harm resulting in joint and several liability.

To further solidify its rejection of divisibility, the court noted that the defendant only apportioned liability among the parties to the case and failed to apportion responsibility among the five historical entities that had contributed to the phosphogypsum stack.

Implications for Future Cases

Despite CERCLA’s lack of instruction on divisibility of harm, the court’s opinion in Short Creek clearly presents the divisibility requirements — specifically when divisibility is sought on a volumetric basis. In particular, Short Creek shows that proponents of divisibility will need to be more vigilant about (1) addressing the amount that each independent factor affecting the pollution contributes to environmental harm and (2) dividing the amount of environmental harm among all historical actors and contributors, and not only among the parties to the case. Future cases in Short Creek’s wake will especially require a heightened analysis of these issues.

Attorneys in Taft’s Environmental practice group are continuing to closely monitor developments surrounding CERCLA law. For help navigating CERCLA liability and remediation, contact Taft attorneys Frank Deveau and Tommy Sokolowski.