Apportioning Cleanup Costs Among Multiple PRPs
By
Neil M. Ram and Douglas J. Swanson
Apportioning site cleanup costs among potentially responsible parties (PRPs) is a difficult and sometimes contentious process. Costly and protracted litigation to determine cost shares is an increasingly unattractive option and there is a strong incentive to devise a fair, understandable and efficient approach to allocating costs among PRPs.
PRPs with potential liability typically include (a) current and past site owners, (b) current and past operators or lessees, (c) “generators” whose wastes were released or disposed at the site and (d) transporters who selected the disposal site and took the generator’s wastes to the site for treatment and/or disposal.
A number of approaches have been used to apportion liability among such PRPs.
Gore Factors
Courts have considered the so-called “Gore Factors”[1] in evaluating the ability of the parties to demonstrate that their contribution to a discharge, release, or disposal of a hazardous waste can be distinguished. Gore Factors are:
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The amount of hazardous waste involved;
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The degree of toxicity of the hazardous waste involved;
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The degree of involvement by the parties in the generation, transportation, treatment, storage or disposal of the hazardous waste;
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The degree of care exercised by the parties with respect to the hazardous waste concerned, taking into account the characteristics of such hazardous wastes; and
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The degree of cooperation by the parties with Federal, State or Local officials to prevent any harm to the public health or the environment.
The first two Gore Factors require a technical evaluation of site data and information to arrive at a defensible allocation. The remaining factors are based on the PRPs involvement at the site.
Look to Others First
Before evaluating the apportionment among an identified group of PRPs, the first step is to determine if additional entities have a relationship (“nexus”) to the site and should be invited to join the party. This can be accomplished by environmental database searches, review of historical aerials and understanding corporate successorship. In addition, cost contributions from (a) insurance policies, (b) third parties, (c) state reimbursement programs (in the case of petroleum releases from underground storage tanks [USTs]), and (d) settlement agreements should also be carefully reviewed and considered.
Technical Approaches to Apportionment
Once all the PRPs are at the table, each party is evaluated using several factors as a basis of apportionment:
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Zero Apportionment;
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Unique factors for specific PRPs;
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Amount;
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Toxicity;
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Period of operation and/or site ownership; and
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Specialized apportionment factors.
Assigning Zero Apportionment
Zero apportionment can be assigned when (a) the PRP’s site ownership or operations pre-date the timeframe during which chemical release(s) occurred; (b) no releases occurred during the period that the PRP owned or operated the site following a release or releases by other parties or (c) [for a generator] none of a generator’s waste was disposed, or can be detected at the site.
Unique Factors for Specific PRPs
Compounds can sometimes be uniquely linked to specific PRPs or, alternatively, be eliminated from an association with certain PRPs and such linkage can be used to distinguish releases attributable to specific PRPs.
Amount
This factor is most useful at sites where most PRPs sent known quantities of similar waste types (e.g., spent solvents or mixed solid waste), although good waste-in data are frequently lacking, particularly at landfill sites. However, at the majority of sites, the quantities of waste are unknown and must be interpreted from soil and groundwater data (i.e., contaminant concentrations in various matrices). Once calculated, the mass of a unique chemical or chemicals associated with a PRP can then be compared to those attributable to other PRPs.
Toxicity
The relative potency of chemical toxicants can be approximated by the relative magnitude of the toxicological values (for carcinogens and non-carcinogens) published by the USEPA and therefore be considered in apportioning costs to PRPs.
Response Action Drivers
Response action drivers (chemicals that must be addressed to achieve site closure), along with their ease or difficulty of assessment and remediation are considered in assigning costs among PRPs. For example, a smaller mass of a recalcitrant or highly toxic chemical can represent a greater response action driver than a larger mass of less recalcitrant chemicals. Weighting costs towards PRPs responsible for chemicals requiring more aggressive or costly cleanup technologies should therefore be considered.
Period of Operation and/or Site Ownership
While a PRP’s (or its predecessor) ownership or operation period at a site should be considered in apportioning cleanup costs, such periods rarely exhibit a linear relationship with the actual volume of chemicals released during such time frames or the resulting response action costs. Variations in historical operations and waste treatment discharge and removal practices over time must be carefully evaluated to understand their relative environmental impact.
Specialized Apportionment Factors
In addition to the above, several specialized apportionment factors can be considered based upon the unique circumstances of the site and/or operations conducted by the PRP:
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For mining sites, apportionment can consider the amount of ore and/or waste rock generated;
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Compounds that are readily biodegradable may be discounted because of their potential for natural attenuation:
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Apportionment considerations may be appropriate for compounds (e.g., surfactants) that enhance the migration of other chemicals causing larger contaminant plumes;
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In the case of radioactive waste, apportionment can consider the specific isotopes used or discarded by each PRP;
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Apportionment based on volume is not always appropriate (e.g., the costs to cap a landfill are associated more to the landfill footprint rather than the total landfill volume).
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Apportionment should consider the degree to which volume decreases from consolidation and natural dewatering (e.g., municipal sludges consisting mostly of water for example should not necessarily be apportioned solely on volume relative to other solid wastes).
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PRPs contributing only minor amounts of chemicals to site remediation should not necessarily bear a proportional share as those PRPs contributing the major chemicals subject to remediation.
Conclusions
Assigning an equitable allocation to numerous PRPs is not a trivial matter and requires a careful evaluation of site-specific and PRP-specific information and data. Such analysis generally falls into one of the following five categories:
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Zero apportionment based on confirming no nexus between the PRP and the site and/or response actions required at the site;
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De minimis apportionment (minor amounts of hazardous substances, both in terms of volume, toxicity or other hazardous effects, relative to other hazardous substances at a site);
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De micromis apportionment (a subset of de minimis where waste volume is extremely small compared to a de minimus party’s volume);
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Assignable apportionment based on the factors discussed above; or
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Orphan shares (shares of responsibility that might otherwise be equitably attributed to PRPs who are insolvent or defunct and thus unable to contribute to cleanup costs) can also be allocated to viable PRPs using such allocation models.
Most importantly, the apportionment needs to have a firm, defensible basis to place each PRP into one of the above categories and, of course, reaching a consensual agreement among all PRPs for the final apportionment.
Roux Associates has extensive experience in apportioning response action costs to one or more PRPs having performed such analyses for dozens of clients at hundreds of sites.
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Useful Links:
May 2009 Supreme Court Decison regarding apportioniment for Burlington No. & Santa Fe R. Co. v. United States (07-1601)
USEPA: Burlington Northern v. United States decision and transcript of the oral arguments before the Supreme Court, the Ninth Circuit denial of rehearing en banc, and a speech by the Department of Justice's John Cruden
Shell Oil Co. v. United States (07-1607)
[1] US Code Cong. & Admin. News 2835 (1980), 3042; see In re Hemingway Transport, Inc. 993 F. 2d 915,921, 1st Cir. 1993
