March 01, 2012

Equity Versus Advocacy

John M. Barkett

In one of my lawyer lives, I serve as a Superfund allocation neutral. In my experience, parties who are strictly liable settle contribution actions if they can be made to think like the judge who is required to “equitably” allocate. Parties who instead believe their own expert advocates take their chances in trial and usually rue the decision.

State of New York v. Solvent Chemical Co., Inc. et al., 685 F. Supp. 2d 357 (W.D.N.Y. 2010) illustrates the point. Ultimately, this matter involved the allocation of response costs for four media: soils, “A-Zone” groundwater, “B-Zone” groundwater, and “Hot Spot” groundwater contamination. Solvent Chemical Co., Inc. (Solvent) had spent $9,124,328 addressing soils and groundwater contamination at the site. E.I. du Pont de Nemours & Company (DuPont), and Olin Corporation (Olin) were the allocation defendants. DuPont was the offsite source of chlorinated aliphatic compounds that reached the B-Zone and the Hot Spot. Olin had offsite mercury and chlorinated benzene releases that impacted soils, the B-Zone, and the Hot Spot. Olin also had a counterclaim against Solvent for response costs incurred in the remediation of an area called “Gill Creek.”


The district court “struggled with the astonishing lack of consensus” among the parties’ experts regarding the data generated from the remedial activities. After witnessing a “battle of the experts,” the district court elected to do its own analysis—reminding litigants again that equity, not advocacy, is Superfund’s allocation goal.

For soils, Olin had sought a 2.3 percent allocation in response to Solvent’s proposed share for Olin of 19.74 percent. The district court, motivated by the “underlying equitable principle that the party profiting from the operation of the site should bear the primary responsibility for the cleanup,” first split the difference between Solvent and Olin’s experts’ estimations of the amount of mercury contributed to the site by Olin’s operations. The district court then split the difference between each party’s experts on the relative contribution to the environmental harm in soils caused by mercury (based on the prevalence of mercury and its average concentration in relation to state toxicity standards). The district court then multiplied the “adjusted contribution rate for mercury” (18.98 percent) by the “adjusted share of responsibility for mercury” ascribed to Olin (61.65 percent) to produce an allocation of 11.7 percent for Olin with respect to soils. Solvent bore the remaining 88.3 percent share.

For the A-Zone groundwater, Olin was not involved, but Solvent sought a 0.7 percent share from DuPont, which argued for a zero percent share. Solvent’s proposal was based only on the concentrations of chemicals sourced to DuPont (chlorinated aliphatics) or Solvent (chlorinated benzenes) without consideration of toxicity. The district court determined that chlorinated benzene “caused the principal environmental impact driving the A-Zone remedy.” It also found unpersuasive evidence that the chlorinated aliphatics detected in the A-Zone had migrated from DuPont’s facility. DuPont received a zero percent share as a result.

In the B-Zone groundwater, using contaminant concentrations from pumping-well data, Solvent’s expert concluded that 68.39 percent of the contamination being remediated consisted of chlorinated aliphatics (DuPont) and 31.61 percent consisted of chlorinated benzenes (Solvent). Olin was linked to 2 percent of the chlorinated benzene contamination based on migration through the groundwater from Olin’s facility. Solvent gave 98 percent of the chlorinated aliphatic contamination to DuPont based on the small amount of chlorinated aliphatics handled by Solvent during its operations. As a result, Solvent proposed a 67.02 percent share for DuPont and a 32.35 percent share for itself leaving 0.63 percent for Olin.

Once again, the district court concluded that chlorinated benzenes “caused the principal negative environmental impact,” driving the B-Zone groundwater remedy so that “those” responsible for release of chlorinated benzenes “should bear the primary responsibility for the costs of remediation.” However, for this allocation “undisputed proof” that DuPont’s chlorinated aliphatics had migrated to the B-Zone also had to be taken into account. The district court accepted the “ample proof” at trial to support assignment of the “lion’s share” of chlorinated aliphatics to DuPont. So the “assessment of the relative risk of harm” posed by chlorinated aliphatics had to be determined.

The district court rejected Solvent’s sole reliance on the amount of the respective chemicals being remediated because it failed to “adequately” account for the remedy driver, chlorinated benzenes. It also failed to account for the “significant concentrations of chlorinated benzene DNAPL found in the soil covering approximately 60 percent” of the site and in and below the bedrock fractures, which resulted in the state regulatory agency’s determination that “a groundwater and DNAPL cleanup remedy” for the B-Zone was technically impracticable. (DNAPL is a Dense Non-aqueous Phase Liquid.)

The district court was also troubled by reliance on volumetric data alone where the pumping wells were located in an area “where monitoring well data show the lowest chlorinated benzene concentrations and the highest chlorinated aliphatic concentrations in the B-Zone.” The district court was not persuaded by Solvent’s expert testimony that pumping-well data should be solely utilized to the exclusion of monitoring well data in deciding how much harm to the environment was caused by each party’s chemical releases.

Instead, the district court considered DuPont’s expert evidence that accounted for the average total of chlorinated benzenes and chlorinated aliphatics detected in monitoring well sampling. These results were divided by New York state groundwater cleanup standards “to calculate a risk-weighted concentration factor.” Using this approach, chlorinated benzenes represented 92.5 percent of the risk of harm in the B-Zone and chlorinated aliphatics, 7.5 percent.

Given the “wide disparity” in the interpretation of “vast amounts of data generated” over decades, the district court resorted to splitting the difference between 68.39 percent (Solvent’s attribution of B-Zone costs to chlorinated aliphatics) and 7.5 percent (DuPont’s attribution), and assigned DuPont 37.95 percent of B-Zone costs. However, because chlorinated benzenes were the “primary negative environmental impact driving the overall remedy,” the district court added 10 percent to Solvent’s self-imposed chlorinated aliphatic share of 2 percent, specifically adding—presumably in case there was an appeal—that its allocation also accounted for Solvent’s arguments that DuPont’s chlorinated aliphatics increased costs because they caused a delay in the startup and prove out of the groundwater remediation system and a modification of discharged permit levels, and contributed to incidental increases in treatment plant operating costs.

The district court thus assigned DuPont 33.39 percent (37.95 percent for its toxicity or “risk of harm” contribution x 88 percent for its volume contribution) of the B-Zone costs. It gave Olin 0.63 percent for its chlorinated benzene contribution. The remaining share, 65.98 percent, was assigned to Solvent.

For the Hot Spot groundwater contamination, Solvent relied on volume again in advocating that 93.52 percent of the contamination in the treated groundwater was represented by chlorinated aliphatics, and 6.48 percent by chlorinated benzenes. Another one of Solvent’s experts calculated that, based on groundwater flow direction, bedrock slopes, contaminant ratios, and a chemical fingerprinted back solely to DuPont, 100 percent of the chlorinated aliphatics came from DuPont and 98 percent of the chlorinated benzenes came from Olin. As a result, Solvent asked the district court to allocate 0.13 percent to itself, 6.35 percent to Olin, and 93.52 percent to DuPont.

The district court was again not persuaded by this advocacy. Based on the state’s Record of Decision (ROD), the pumping wells in the Hot Spot were installed for hydraulic control made necessary because contaminants in the Hot Spot were similar to the “predominant site indicator chemicals” driving the remedy—chlorinated benzenes—which, the state wrote, were “likely due in part to migration from the Solvent Site.” Based on the extensive chlorinated benzene and DNAPL contamination from Solvent, but considering the migration of chlorinated aliphatics and the parties’ inability to reach a consensus on the scientific conclusions that should be drawn from the data, the district court gave DuPont the same share of the Hot Spot that DuPont received for the B-Zone, or 33.39 percent.

Because the Hot Spot was located on Olin’s property and Olin was also found to be a source of chlorinated benzenes, the district court accepted Solvent’s allocation of 6.35 percent for Olin. Solvent received the remaining 60.26 percent share.

With respect to Gill Creek, Olin had spent $4,467,099 in removing contaminated sediments. (DuPont also incurred response costs at Gill Creek but did not make a claim against Solvent.) Olin sought 50 percent of this sum from Solvent based on chlorinated benzene discharges from Solvent’s facility. Solvent argued for a share of no more than 0.18 percent. Its expert looked at concentrations, volumes, and toxicity and assigned a “relative contaminant share” of 0.44 percent to chlorinated benzenes in the sediments and assigned 40 percent of this share to Solvent based on expert testimony that the chlorinated benzenes detected were “more closely associated” with Olin’s operations instead of Solvent’s operations.

The district court rejected Olin’s proposed allocation because its expert’s opinion was based on costs of removing sediments from one area that represented only 3 percent of the volume of contaminated Gill Creek sediments removed. The Gill Creek ROD had identified six contaminants of concern driving the remedy. Only one chlorinated benzene was among the six, and it was linked to Olin’s manufacturing process, not Solvent’s operations. “In any event,” the district court explained, “it is beyond serious dispute that the chlorinated benzene contamination within the creek sediments, regardless of its source, was not a matter of significant environmental concern when compared to the PCBs, BHC, and other contaminants contributed by Olin and DuPont.”

The district court then refused to allocate any of Solvent’s future response costs to Olin or DuPont because future costs were going to be driven by chlorinated benzenes coming from Solvent.

The district court’s final judgment in comparison to amounts claimed is shown in a chart on page 51.

Here’s the other part of the story. The parties had a one-day settlement conference with a magistrate judge. It was unsuccessful. They then endured a 19-day trial. They presented 10 live witnesses and another 24 witnesses through their depositions. There were 1,200 trial exhibits. Posttrial submissions were followed by three days of oral submissions in November 2008. The district court took 15 months to write its allocation opinion.

Posttrial, Olin’s net payment was $454,248. Pretrial, apparently, it was being asked to pay too much at the same time that it was demanding too much. As a result, its litigation fees and costs had to have exceeded the award against it by a wide margin.

Solvent collected $2,504,619, or about $3 million less than it had sought through its proposed allocation. When one subtracts Solvent’s litigation costs and fees, one has to wonder how disciplined Solvent was in preparing a settlement assessment. I assume it put too much faith in its expert’s advocated allocation. Based on the numbers, DuPont presumably had no choice but to try to the matter. Solvent, I assume, would not compromise much based on its expert’s allocation. It seems unlikely that, net of litigation fees and costs, Solvent came out ahead.

We will never have the benefit of knowing what happened during the settlement conference, or why the parties did not find a way a lot sooner to resolve the matter long before trial. But this case is a reminder that, in Superfund allocation, foresight guided by equity is always less costly than hindsight associated with advocacy.

Party Solvent’s Proposed Allocation Court’s Allocation
DuPont $4,926,595 $2,050,371
Olin $633,950 $462,289
Solvent $3,563,783 $6,611,669
  Olin’s Proposed Allocation at Gill Creek  
Solvent $2,233,550 $8,041

John M. Barkett

Mr. Barkett is a partner in the Miami office of Shook, Hardy & Bacon LLP, and he is a member of the editorial board of Natural Resources & Environment.