Paper Companies That “Created, Mobilized and Profited From” PCBs Must Bear 100% of Cleanup Costs in Fox River CERCLA Case, But May Not Be Liable for PCBs in Waste Paper Sold to Recyclers

The other shoe dropped on February 28 in the closely watched CERCLA case involving PCB contamination of the Fox River in Wisconsin. District Judge William C. Griesbach, who had previously ruled that the paper companies that made and discharged PCBs to the river could not seek contribution from recycling mills that unknowingly bought PCB-laden waste paper, called “broke,” and also discharged PCBs, held that those companies must reimburse those comparatively innocent companies for 100% of the costs they have incurred for most of the polluted river. But he held that it was too early to say whether the paper companies knew, and did, enough, to make them liable for “arranging for” disposal of the PCBs that ended up in the recycling mills’ discharges to an upstream stretch of the river.

In his recent decision, Judge Griesbach considered arguments concerning two separate stretches of the Fox River Superfund Site in Wisconsin, which the U.S. Environmental Protection Agency has divided into five operable units (OUs). The plaintiff paper companies discharged PCBs into OU2, and the PCBs flowed downstream to OUs 3,4, and 5. The recycling mills discharged PCBs to all five OUs, including OU1, which is upstream from all of the others. (Another decision in the Fox River case was the subject of an earlier blog post.

The defendants sought contribution from plaintiffs Appleton Papers Inc. and NCR Corp., which themselves or through their predecessors made carbonless copy paper using a coating that contained PCBs. Waste paper from the manufacturing process was sold to the recyclers, whose manufacturing process also discharged PCBs. In December 2009, Judge Griesbach had determined that the plaintiffs could not receive contribution from other parties because they knowingly took the risk that the product they made, sold, and mobilized would harm the environment. Their fault, said Judge Griesbach, outweighed all other equitable factors in his determination of how cleanup costs should be allocated for OUs 2 through 5. He used the same analysis in his recent decision to find that the paper companies must reimburse the defendants for their costs in these areas, stating:

Although the Defendants may have discharged roughly half of the PCBs into OU2-OU5, and although some of them may have polluted the river in other ways,” he wrote, “they do not share any of the culpability for the PCB pollution that gave rise to this CERCLA action.

The plaintiffs did manage to salvage a partial victory with respect to OUs 2 through 5. Many defendants had received payments from insurers regarding their cleanup activities in those areas. The court determined that there should be no windfall and that the amounts some insurers paid to some of the defendants would subject to the collateral source rule and the plaintiffs were entitled to discovery on the issue.

OU1, the upstream stretch, presented a different situation. The paper companies’ discharges to OU2 could not have caused the PCB contamination there (because the river flows in only one direction), so they could bear CERCLA liability for cleanup costs at OU1 only if they could be said to have “arranged for” the disposal of PCBs there within the meaning of CERCLA Section 107(a)(3). In its 2009 opinion in Burlington Northern and Santa Fe Ry. Co. v. United States, the Supreme Court held that “arranger” liability required an intent to dispose of the material in question. Here, while the paper companies clearly wished to get rid of the waste paper, they sold it (rather than paying someone to haul it away). In addition, the record was not clear as to whether they had sufficient knowledge that the PCBs in the waste paper would end up in the river. Such unresolved fact questions, said Judge Griesbach, were enough to require denial of the defendants’ motion for summary judgment as to OU1.

It was a split decision from Judge Griesbach for the plaintiff paper companies — a loss (albeit with some limited success) on OUs 2 through 5, and a win on OU1. But their win was only temporary, and given Judge Griesbach’s past decisions, it seems clear that they are still swimming against the current.

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