PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PCS NITROGEN INCORPORATED,
successor through purchase, name
change and merger to Columbia
Nitrogen Corporation,
Defendant and Third Party
Plaintiff-Appellant,
v.
ASHLEY II OF CHARLESTON LLC,
Plaintiff-Appellee,
ROSS DEVELOPMENT CORPORATION; J
HOLCOMBE ENTERPRISES LP;
KONINKLIJKE DSM NV; DSM
CHEMICALS OF NORTH AMERICA No. 11-1662
INCORPORATED; ROBIN HOOD
CONTAINER EXPRESS INCORPORATED;
ALL WASTE TANK CLEANING
INCORPORATED, f/k/a PSC Container
Services, LLC, now known as
QualaServices, LLC; J HENRY
FAIR, JR.,
Third Party Defendants-Appellees,
and
JAMES H. HOLCOMBE; CITY OF
CHARLESTON, SOUTH CAROLINA,
Third Party Defendants.
2 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
ROSS DEVELOPMENT CORPORATION,
Third Party Defendant-Appellant,
v.
PCS NITROGEN INCORPORATED,
successor through purchase, name
change and merger to Columbia
Nitrogen Corporation,
Defendant and Third Party
Plaintiff-Appellee,
and
ASHLEY II OF CHARLESTON LLC,
Plaintiff, No. 11-2087
J HOLCOMBE ENTERPRISES LP;
KONINKLIJKE DSM NV; ROBIN
HOOD CONTAINER EXPRESS
INCORPORATED; DSM CHEMICALS OF
NORTH AMERICA INCORPORATED;
ALL WASTE TANK CLEANING
INCORPORATED; J HENRY FAIR, JR.;
CITY OF CHARLESTON, SOUTH
CAROLINA; JAMES H. HOLCOMBE,
Third Party Defendants,
PSC CONTAINER SERVICES LLC,
Defendant.
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 3
ROBIN HOOD CONTAINER EXPRESS
INCORPORATED,
Third Party Defendant-Appellant,
v.
PCS NITROGEN INCORPORATED,
successor through purchase, name
change and merger to Columbia
Nitrogen Corporation,
Defendant and Third Party
Plaintiff-Appellee,
ASHLEY II OF CHARLESTON LLC,
Plaintiff-Appellee,
ROSS DEVELOPMENT CORPORATION; J
HOLCOMBE ENTERPRISES LP;
No. 11-2099
KONINKLIJKE DSM NV; DSM
CHEMICALS OF NORTH AMERICA
INCORPORATED; ALL WASTE TANK
CLEANING INCORPORATED; J HENRY
FAIR, JR.,
Third Party Defendants-Appellees,
and
CITY OF CHARLESTON, SOUTH
CAROLINA; JAMES H. HOLCOMBE,
Third Party Defendants,
PSC CONTAINER SERVICES LLC,
Defendant.
4 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
J HOLCOMBE ENTERPRISES LP;
J HENRY FAIR, JR.,
Third Party
Defendants-Appellants,
v.
PCS NITROGEN INCORPORATED,
successor through purchase, name
change and merger to Columbia
Nitrogen Corporation,
Defendant and Third Party
Plaintiff-Appellee,
ASHLEY II OF CHARLESTON LLC,
Plaintiff-Appellee,
ROBIN HOOD CONTAINER EXPRESS No. 11-2104
INCORPORATED; ROSS DEVELOPMENT
CORPORATION; KONINKLIJKE DSM
NV; DSM CHEMICALS OF NORTH
AMERICA INCORPORATED; ALL
WASTE TANK CLEANING
INCORPORATED,
Third Party Defendants-Appellees,
and
CITY OF CHARLESTON, SOUTH
CAROLINA; JAMES H. HOLCOMBE,
Third Party Defendants,
PSC CONTAINER SERVICES LLC,
Defendant.
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 5
ASHLEY II OFCHARLESTON LLC,
Plaintiff-Appellant,
v.
PCS NITROGEN INCORPORATED,
successor through purchase, name
change and merger to Columbia
Nitrogen Corporation,
Defendant and Third Party
Plaintiff-Appellee,
ROBIN HOOD CONTAINER EXPRESS
INCORPORATED; ROSS DEVELOPMENT
CORPORATION; KONINKLIJKE DSM
NV; DSM CHEMICALS OF NORTH No. 11-2297
AMERICA INCORPORATED; ALL
WASTE TANK CLEANING
INCORPORATED; J HOLCOMBE
ENTERPRISES LP; J HENRY FAIR, JR.,
Third Party Defendants-Appellees,
and
CITY OF CHARLESTON, SOUTH
CAROLINA; JAMES H. HOLCOMBE,
Third Party Defendants,
PSC CONTAINER SERVICES LLC,
Defendant.
Appeals from the United States District Court
for the District of South Carolina, at Charleston.
Margaret B. Seymour, Chief District Judge;
C. Weston Houck, Senior District Judge.
(2:05-cv-02782-MBS)
6 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
Argued: December 5, 2012
Decided: April 4, 2013
Before MOTZ, KING, and DIAZ, Circuit Judges.
Affirmed by published opinion. Judge Motz wrote the opin-
ion, in which Judge King and Judge Diaz joined.
COUNSEL
ARGUED: Brian J. Murray, JONES DAY, Chicago, Illinois,
for PCS Nitrogen Incorporated. Thomas Nolen Barefoot,
Bethesda, Maryland, for Ashley II of Charleston LLC; Capers
Gamewell Barr, III, BARR, UNGER & MCINTOSH,
Charleston, South Carolina, for J. Holcombe Enterprises LP
and J. Henry Fair, Jr.; Daniel S. McQueeney, Jr., PRATT-
THOMAS WALKER, PA, Charleston, South Carolina, for
Ross Development Corporation; Timothy William Bouch,
LEATH, BOUCH & CRAWFORD, LLP, Charleston, South
Carolina, for Robin Hood Container Express, Incorporated;
Lewis Bondurant Jones, KING & SPALDING, LLP, Atlanta,
Georgia, for Koninklijke DSM NV and DSM Chemicals of
North America, Incorporated. Jason Scott Luck, SEIBELS
LAW FIRM, PA, Charleston, South Carolina, for Allwaste
Tank Cleaning, Incorporated. ON BRIEF: John B. Williams,
COZEN O’CONNOR, Washington, D.C.; Jennifer L. Swize,
Craig I. Chosiad, JONES DAY, Washington, D.C., for PCS
Nitrogen Incorporated. G. Trenholm Walker, PRATT-
THOMAS WALKER, PA, Charleston, South Carolina;
Thomas M. Shelley, III, ROGERS, TOWNSEND &
THOMAS, PC, Columbia, South Carolina, for Ross Develop-
ment Corporation. Amy E. Melvin, LEATH, BOUCH &
SEEKINGS, LLP, Charleston, South Carolina, for Robin
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 7
Hood Container Express, Incorporated. Randall J. Butterfield,
John L. Fortuna, KING & SPALDING LLP, Atlanta, Geor-
gia, for Koninklijke DSM NV and DSM Chemicals of North
America, Incorporated.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
These appeals arise from disputes as to liability for cleanup
of hazardous substances at a former fertilizer manufacturing
site in Charleston, South Carolina. After incurring response
costs, Ashley II of Charleston, Inc., the current owner of a
portion of the site, brought a cost recovery action against PCS
Nitrogen, Inc., under the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), 42
U.S.C. §§ 9601-9675 (2006). PCS counterclaimed and also
brought third-party contribution actions against parties with
past and current connections to the site. The district court
bifurcated the case for trial. At the conclusion of the first
bench trial, it found PCS a potentially responsible party
jointly and severally liable for response costs at the site. At
the conclusion of the second bench trial, the court found some
of the other parties, including Ashley, potentially responsible
parties, each liable for an allocated portion of the site’s
response costs. PCS, Ashley, and many of the other parties
now appeal. For the reasons that follow, we affirm the judg-
ment of the district court in all respects.
I.
A.
Congress enacted CERCLA in response to "the increasing
environmental and health problems associated with inactive
hazardous waste sites." Nurad, Inc. v. William E. Hooper &
8 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
Sons Co., 966 F.2d 837, 841 (4th Cir. 1992). CERCLA "was
designed to promote the timely cleanup of hazardous waste
sites and to ensure that the costs of such cleanup efforts were
borne by those responsible for the contamination." Burlington
N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599, 602
(2009) (internal quotation marks omitted).
In furtherance of these goals, CERCLA allows "private par-
ties to recover the costs of cleaning up hazardous wastes from
certain defined types of person." Axel Johnson, Inc. v. Carroll
Carolina Oil Co., 191 F.3d 409, 413 (4th Cir. 1999). A
private-party plaintiff establishes a prima facie case for cost
recovery under CERCLA by establishing that (1) the defen-
dant is a potentially responsible person ("PRP"); (2) the site
constitutes a "facility"; (3) a "release" or a threatened release
of hazardous substances exists at the "facility"; (4) the plain-
tiff has incurred costs responding to the release or threatened
release of hazardous substances ("response costs"); and (5)
the response costs conform to the National Contingency Plan.
42 U.S.C. §§ 9601(9), (22), 9607(a); see ABB Indus. Sys., Inc.
v. Prime Tech., Inc., 120 F.3d 351, 356 (2d Cir. 1997).
Section 9607(a) establishes strict liability. See United
States v. Monsanto Co., 858 F.2d 160, 167 (4th Cir. 1988).
This liability under CERCLA is subject only to a few narrow
defenses and exemptions. See 42 U.S.C. § 9607(b) (defenses);
id. § 9607(o)-(r) (exemptions). Liability is, by default, joint
and several. See Monsanto, 858 F.2d at 171-72.
However, in some circumstances a PRP may mitigate the
sting of CERCLA’s imposition of joint and several liability
by apportionment or allocation of harm. See Axel Johnson,
191 F.3d at 413. Apportionment—also known as division of
damages—assigns a several share of liability to each PRP
based on "traditional and evolving principles of federal com-
mon law." Monsanto, 858 F.2d at 171-72. Under these princi-
ples, apportionment is available only when a PRP proves that
"there is a reasonable basis for determining the contribution
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 9
of each cause to a single harm." Burlington Northern, 556
U.S. at 614 (quoting Restatement (Second) of Torts
§ 433A(1)(b) (1963-64)).
In contrast, allocation of harm—also known as contribution
—is available to any party sued under § 9607(a), and allows
the party to "seek contribution from any other person who is
liable or potentially liable under [§] 9607(a)." 42 U.S.C.
§ 9613(f). The district court may then allocate several liability
for "response costs among liable parties using such equitable
factors as the court determines are appropriate." Id.; see Min-
yard Enters., Inc. v. Se. Chem. & Solvent Co., 184 F.3d 373,
385 (4th Cir. 1999).1
B.
Central to this CERCLA case is the history of the site at
issue here—approximately forty-three acres located in
Charleston, South Carolina. As a result of decades of phos-
phate fertilizer production, the westernmost thirty-four acres
1
In addition to the fact that apportionment rests on causation principles
and allocation rests on equity principles, the two also differ in function.
Although both technically negate CERCLA’s joint liability by assigning
shares of liability, see Minyard Enters., 184 F.3d at 385; Monsanto, 858
F.2d at 171-72, they differ in how they determine liability for so-called
"orphaned" shares—those shares of "liability attributable to a party who
is insolvent, cannot be located, or cannot be identified," Lyondell Chem.
Co. v. Occidental Chem. Corp., 608 F.3d 284, 303 (5th Cir. 2010). If a
court apportions harm, the party that incurred the response costs bears the
burden of orphaned shares because the apportioned orphan share is neces-
sarily unrecoverable. See Burlington Northern, 556 U.S. at 605, 618-19
(upholding apportionment that left over ninety percent of the harm as an
orphaned share ultimately borne by the government). But when a court
allocates shares it retains the equitable discretion to allocate orphaned
shares (or re-allocate newly orphaned shares) to solvent, available PRPs,
thus shifting the burden of orphaned shares from the party that incurs the
response costs. See Lyondell Chem. Co., 608 F.3d at 303; Pinal Creek
Group v. Newmont Mining Corp., 118 F.3d 1298, 1303 (9th Cir. 1997),
overruling on other grounds recognized by Kotrous v. Goss-Jewett Co. of
N. Cal., 523 F.3d 924, 927 (9th Cir. 2008).
10 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
of the site require remediation of soils contaminated with
arsenic, lead, and other hazardous substances. The evidence
presented at the two bench trials established the following
facts.
1.
From 1884 to the early 1900s, seven phosphate fertilizer
plants operated in close proximity to the site and provided
potential sources for pyrite waste that may have been dis-
posed of on the site prior to 1906.
Planters Fertilizer & Phosphate Company, now known as
Ross Development Corporation, purchased the site in 1906.
Planters manufactured phosphate fertilizer at the site by react-
ing sulfuric acid with phosphate rock. Planters produced the
sulfuric acid for the process on-site, and stored the acid in
lead-lined tanks. Prior to the 1930s, Planters used pyrite ore
as the primary fuel for its sulfuric acid production. The burn-
ing of pyrite ore generated a pyrite slag byproduct containing
high concentrations of arsenic and lead. Planters spread the
slag byproduct to stabilize roads on the site. This accounts for
the vast majority of arsenic and lead contamination found on
the site today.
Planters continued operating its fertilizer production plant
on the site until 1966. During that time, Planters constructed
and repaired several minor buildings and, after a fire
destroyed a significant portion of its original acid plant, con-
structed a modernized acid plant. On June 30, 1966, Planters
sold the site—including the plant and its equipment—to
Columbia Nitrogen Corporation ("Old CNC").
Old CNC continued operations of the acid and fertilizer
plants until 1970 and 1972, respectively. Although Old CNC
did not use pyrite ore, its superphosphate fertilizer production
generated dust that contained elevated levels of arsenic and
lead, and contributed to arsenic and lead soil contamination
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 11
on the site. During its operations, Old CNC constructed a new
granulation plant and converted the former granulation plant
into storage.
In April 1971, a wind storm extensively damaged many
buildings on the site, including the acid plant, and dispersed
contaminated materials across the site. Old CNC chose not to
repair, and instead demolished, the damaged acid plant. In the
process, Old CNC disturbed the subsurface soil to a depth of
at least two feet. By October 1972, Old CNC had ceased all
fertilizer production on the site.
The site remained inactive until 1977, when Old CNC
began to dismantle the remaining structures, a process com-
pleted in January 1981. All told, Old CNC’s construction and
demolition activities between 1971 and 1981 affected nearly
eighty percent of the area of contaminated soils that needs to
be remediated as part of the site’s cleanup. In May 1985, Old
CNC sold the site to James H. Holcombe and J. Henry Fair
(collectively "Holcombe and Fair"2). But in doing so, Old
CNC apparently did not transfer any of its corporate liabilities
for past actions on the site; thus, as the parties agree, Old
CNC—if still in existence—would be a PRP with respect to
the site. See infra § II.A.
2.
Old CNC did not limit its fertilizer production to the site.
Rather, while owning the site, Old CNC also owned and oper-
ated an ammonia and nitrogen fertilizer plant in Augusta,
Georgia. In 1986, over a year after Old CNC had sold its
2
Holcombe formed Holcombe Enterprises, Inc., on December 17, 1997
and conveyed his share of the site to Holcombe Enterprises six days later.
Holcombe, Fair, and Holcombe Enterprises are all parties to this appeal,
and were treated as one entity by the district court. For the sake of simplic-
ity, we identify the owners of the site as Holcombe and Fair both before
and after Holcombe’s conveyance of his share of the property to Hol-
combe Enterprises.
12 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
Charleston site, Old CNC’s parent corporations, Koninklijke
DSM N.V. and DSM Chemicals North America (collectively
"DSM Parties"), decided to shut down Old CNC to benefit
from a $100 million tax advantage in the Netherlands. To do
so, Old CNC sought a buyer for certain "Assets" and its "Ac-
quired Business," including its Augusta plant and operation.
Andlinger & Company, Inc., a firm specializing in the acqui-
sition of businesses, incorporated CNC Corp. ("New CNC")
to purchase Old CNC’s "Assets" and "Acquired Business."
Old CNC and New CNC entered into a series of agree-
ments, and the acquisition closed on November 6, 1986.
Under the Acquisition Agreement, New CNC purchased cer-
tain "Assets" and the "Acquired Business" for $50 million, an
approximately sixty percent discount from book value. In
exchange for an additional $5 million discount, New CNC
accepted the acquired business and assets "as is." After clos-
ing, New CNC immediately changed its name to "Columbia
Nitrogen Corporation" –- the same name under which Old
CNC operated. At the same time, Old CNC initiated the pro-
cess of liquidation and dissolution.
After the acquisition, New CNC continued producing
ammonia- and nitrogen-based fertilizers at the Augusta plant.
By virtue of a series of mergers and acquisitions, PCS Nitro-
gen, Inc., is a successor to New CNC. Neither New CNC nor
PCS ever owned or operated any portion of the Charleston
site at issue in this appeal.
3.
Meanwhile, Holcombe and Fair, who had acquired the
Charleston site from Old CNC in 1985, were unaware of any
contamination at the site. They first became aware of the pres-
ence of hazardous substances at the site in 1990.
Holcombe and Fair intended to subdivide and lease the site,
and the record contains no evidence that Holcombe and Fair
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 13
introduced any new hazardous substances to the site. How-
ever, even after learning of the possibility (and ultimate exis-
tence) of hazardous substances on the site, Holcombe and Fair
undertook site-wide earth-moving activities, including the
construction of a street extension, the addition of water and
sewer lines, excavation and grading, and the construction of
several detention ponds. As late as 1998, Holcombe and Fair
undertook earth-moving activities in areas with "discolored"
and "contaminated" soils, and destroyed on-site wetlands
along the Ashley River. However, they also added a four-to-
six inch limestone run of crusher cover over the majority of
the site, which mitigated risks of acute exposure to the site’s
contaminated soils.
During their ownership, Holcombe and Fair subdivided and
conveyed several parcels from the original site. First, in
December 1987, Holcombe and Fair sold three acres of the
site to Max and Marlene Mast. The Masts sold their parcel to
Allwaste Tank Cleaning, Inc., in August 1988. Allwaste oper-
ated a shipping container cleaning and storage business and in
1991 leased two additional acres from Holcombe and Fair for
storage. As part of its operations, Allwaste utilized an under-
ground sump system to capture wastewater generated by the
container-cleaning process and pump it into a treatment sys-
tem. Allwaste allowed the sumps to deteriorate during its
ownership of the parcel to the extent that the sumps presented
a threat of a release of hazardous substances. Although All-
waste did not introduce arsenic or lead to its parcel, both con-
taminate the soils in its parcel. Allwaste still owned the parcel
at the commencement of this action.
In December 1990, Holcombe and Fair contracted to sell
two acres of the site to Robin Hood Container Express
("RHCE"). In December 1991, RHCE directed and paid for
the excavation of a 1380-cubic-foot pond, two asphalt drive-
ways, and extended sewer and water lines on the site. Con-
tractors for RHCE also stripped six inches of topsoil and
graded and proof-rolled the land. A month later, Holcombe
14 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
and Fair conveyed the two-acre parcel to RHCE’s president,
Robin Hood, who leased it to RHCE to operate a dropyard.
During its tenure, RHCE filled in the pond, and limestone run
of crusher now covers the entire parcel. Although RHCE did
not introduce any arsenic or lead to its leasehold, both con-
taminate its leasehold’s soil. Robin Hood continued to own,
and RHCE continued to lease, this parcel at the commence-
ment of this action.
In December 1991, Holcombe and Fair conveyed the street
extension they had constructed, totaling 1.28 acres, to the City
of Charleston by quitclaim deed. The City remains the owner
of the street extension today.
Finally, in November 2003, Holcombe and Fair sold their
remaining 27.62 acres of the site to Ashley II of Charleston,
Inc., for $2.7 million. Ashley purchased the site to include it
as a portion of its Magnolia Development—a sustainable,
mixed-use project. As with other parcels within the project,
Ashley purchased the site with knowledge of, and the intent
to remediate, the contaminated soils.
By the time of Ashley’s ownership, the run of crusher
cover had degraded, leaving contaminated soil exposed in
many areas. For several years, Ashley allowed a trash pile to
accumulate on its parcel.
In February 2007—well after the commencement of this
action—Ashley contracted with Allwaste to purchase All-
waste’s three-acre parcel. Ashley engaged in extensive pre-
purchase environmental assessments of the parcel, and All-
waste conveyed the parcel to Ashley in May 2008.
In investigating and remediating the site, Ashley to date has
incurred response costs totaling at least $194,000.3
3
Since 1998, state and federal experts have comprehensively investi-
gated environmental conditions at the site, and have documented arsenic-
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 15
C.
On September, 26, 2005, Ashley filed this action, seeking
a declaratory judgment that PCS was jointly and severally lia-
ble for response costs as a PRP for the site, and recovery of
response costs already incurred. See 42 U.S.C.
§ 9607(a)(4)(B). Ashley contended that PCS was a successor
corporation to Old CNC, and thus liable as a PRP in Old
CNC’s stead.
PCS denied liability as a successor corporation to Old
CNC, and in the alternative filed a contribution counterclaim
under 42 U.S.C. § 9613(f) against Ashley and third-party
claims against Ross, the DSM Parties, Holcombe and Fair,
Allwaste, RHCE, and the City of Charleston. Those parties in
turn filed counter- and cross-claims against one another under
§ 9613(f), and also sought determination of their rights to
future cost recovery and contribution.
The district court bifurcated the proceedings. The first trial
would determine if PCS was liable to Ashley under § 9607(a).
If so, the second trial would allocate the ultimate responsibil-
ity of each party for response costs at the site under § 9613(f).
On September 28, 2007, after a bench trial on PCS’s liabil-
ity, the court held that PCS was a corporate successor to Old
CNC, and thus jointly and severally liable to Ashley for
response costs as a PRP for the site. A year later, the presiding
and lead-contaminated soils and low soil pH conditions across the site, as
well as two carcinogenic polycyclic aromatic hydrocarbon "hotspots."
Although EPA considered undertaking removal actions during Holcombe
and Fair’s ownership of the site, it did not do so. After Ashley purchased
the site, it asked EPA to notify it if the agency desired "specific coopera-
tion, assistance, access or the undertaking of any reasonable steps with
respect to the Site." In October 2005, EPA determined that the site quali-
fied for a non-time-critical removal action and described its preferred
removal alternatives. To date, however, EPA has not ordered Ashley to
take any remedial actions on the site.
16 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
judge disqualified himself from further participation in the
case, and the case was reassigned to another judge. On June
2, 2009, the successor judge denied PCS’s motion to vacate
the original judge’s order as to PCS’s liability. Shortly there-
after, the court granted summary judgment to the DSM Par-
ties, holding them not liable because "no basis existed" for
imputing Old CNC’s acts to them.
Then, between October 2009 and January 2010, the district
court held a sixteen-day bench trial on the allocation phase.
The court ultimately allocated liability for past and future
response costs at the site to PCS, Ashley, Ross, Holcombe
and Fair, RHCE, and Allwaste in various amounts.
These appeals followed. On appeal, no party disputes that
Ashley incurred response costs for the cleanup of hazardous
substances at the site that were consistent with the National
Contingency Plan. Rather, the parties solely dispute whether
and to what amount each is liable for response costs at the
site.
II.
We first address the appeals of the district court’s determi-
nations as to which parties constitute PRPs for the site.
CERCLA defines four non-mutually exclusive classes of
PRPs liable for costs incurred in responding to a "release" of
hazardous substances at any "facility." 42 U.S.C. § 9607(a);
see Nurad, 966 F.2d at 841. These PRPs include (1) the cur-
rent "owner" or "operator" of a "facility"; (2) any "person"
who "owned" or "operated" the "facility" at the time of dis-
posal of a hazardous substance; (3) any "person" who "ar-
ranged for disposal or treatment" of hazardous substances at
the "facility"; and (4) any "person" who accepts hazardous
substances "for transport to disposal or treatment facilities,
incineration vessels or sites." 42 U.S.C. § 9607(a)(1)-(4);
Nurad, 966 F.2d at 841. The classes of PRPs have an undeni-
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 17
ably broad reach. See United States v. Atl. Research Corp.,
551 U.S. 128, 136 (2007). But they nonetheless remain sub-
ject to the limitations of derivative liability inherent in corpo-
rate law. See United States v. Bestfoods, 524 U.S. 51, 62-64
(1998).
A PRP’s strict liability for response costs is subject only to
CERCLA’s limited defenses and exemptions. Axel Johnson,
191 F.3d at 413. Courts do not consider equity in determining
whether a party is a PRP. Congress, however, did provide for
equitable allocation of liability under § 9613(f) to mitigate
any inequity arising from CERCLA’s strict liability scheme.
Id. at 415.
With these principles in mind, we review the district court’s
determinations of PRP status de novo. See Pneumo Abex
Corp. v. High Point, Thomasville & Denton R.R. Co., 142
F.3d 769, 773 (4th Cir. 1998). We first consider PCS’s appeal
of the determination that it is a PRP. Then, we turn to the
multiple challenges to the determinations of the other parties’
PRP status in the second trial.
A.
The district court held that PCS is a PRP for the Charleston
site as the corporate successor to Old CNC. Although PCS
never owned or operated the site, it admits that it is a succes-
sor to New CNC, and that Old CNC—despite dissolving dec-
ades ago—would be a PRP.
Under CERCLA, successor corporations may be liable for
the actions of their predecessors. United States v. Carolina
Transformer Co., 978 F.2d 832, 837 (4th Cir. 1992). How-
ever, as at common law, a corporation that acquires the assets
of another corporation typically does not acquire its liabilities,
unless "(1) the successor expressly or impliedly agrees to
assume the liabilities of the predecessor; (2) the transaction
may be considered a de facto merger; (3) the successor may
18 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
be considered a ‘mere continuation’ of the predecessor; or (4)
the transaction is fraudulent." Id. at 838. In the past, we have
also recognized successor liability where "substantial continu-
ity" exists between a predecessor and successor corporation.
Id.
The district court held PCS liable as a successor to Old
CNC under three theories. We need only address one—that
New CNC either unambiguously, or based on extrinsic evi-
dence, assumed Old CNC’s liabilities for the site under the
1986 Acquisition Agreement. In doing so, we review the dis-
trict court’s applications of contract principles de novo, and
its findings of fact with respect to extrinsic evidence for clear
error. Hendricks v. Cent. Reserve Life Ins. Co., 39 F.3d 507,
512-13 (4th Cir. 1994). Under the Acquisition Agreement’s
choice of law provision, we apply New York contract law.
New York law enforces unambiguous contracts in accor-
dance with their plain terms. W.W.W. Assocs., Inc. v. Gian-
contieri, 566 N.E.2d 639, 642 (N.Y. 1990). In determining
whether a contract is ambiguous, a court must
examine the entire contract and consider the relation
of the parties and the circumstances under which it
was executed. Particular words should be consid-
ered, not as if isolated from the context, but in the
light of the obligation as a whole and the intention
of the parties as manifested thereby. Form should not
prevail over substance, and a sensible meaning of
words should be sought.
William C. Atwater & Co. v. Panama R.R. Co., 159 N.E. 418,
419 (N.Y. 1927). Thus, when considering isolated, potentially
conflicting provisions, so long as a contract "makes clear the
parties’ over-all intention," a court "should then choose that
construction which will carry out the plain purpose and object
of the [agreement]." Kass v. Kass, 696 N.E.2d 174, 181 (N.Y.
1998) (internal quotation marks omitted). In harmonizing pro-
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 19
visions, however, "no provision of a contract should be left
without force and effect." Muzak Corp. v. Hotel Taft Corp.,
133 N.E.2d 688, 690 (N.Y. 1956).
1.
Applying these principles, the district court initially held, as
Ashley maintained, that New CNC unambiguously assumed
Old CNC’s CERCLA liabilities for the Charleston site under
the Acquisition Agreement. We cannot agree.
Section 3.4 of the Agreement, on which the district court
relied, does unambiguously transfer "[a]ll obligations required
to be performed under all court, administrative and regulatory
orders." But § 3.4 does not address, let alone unambiguously
provide, that it covers CERCLA "obligations" arising after
execution of the Agreement.
Ashley alternatively argues that New CNC unambiguously
assumed Old CNC’s CERCLA liability for the site in § 3.6 of
the Agreement. This argument fares no better. All parties rec-
ognize that under § 3.6 New CNC did assume unknown,
future CERCLA liability. The liability assumed, however,
was only that "arising out of or in connection with the
Acquired Business or the Purchased Assets."
It is undisputed that the phrase "arising out of or in connec-
tion with" would transfer liabilities from businesses or assets
no longer owned by a seller in a stock sale. But typically this
phrase does not transfer such liabilities in an asset sale. See
Honeywell Int’l, Inc. v. Phillips Petroleum Co., 415 F.3d 429,
435-36 (5th Cir. 2005). The Acquisition Agreement does not
clearly establish whether the parties intended an ordinary
asset sale or an atypical asset sale that was to be treated as a
stock sale. Rather, the Agreement ambiguously provides that
New CNC "assume[s] all obligations and liabilities relating to
the Acquired Business . . . as if [Old CNC] were to sell and
[New CNC] were to purchase the stock of [Old CNC] on the
20 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
open market." This ambiguity prevents us from concluding
that under the Agreement New CNC unambiguously assumed
Old CNC’s CERCLA liabilities for the Charleston site.
This ambiguity also defeats PCS’s contention that the
Acquisition Agreement clearly provides that New CNC did
not assume Old CNC’s CERCLA liabilities for the site. For
PCS can point to no language in the Agreement which clari-
fies that, even if this were an atypical stock-like asset sale,
New CNC assumed no CERCLA liabilities for the site.
At its outset, § III of the Agreement does, as PCS contends,
limit the transfer of liabilities and obligations to New CNC to
those "relating to the Acquired Business and Purchased
Assets." But PCS’s heavy reliance on the narrowness of this
"relating to" language at the beginning of § III ignores lan-
guage at the end of that same section that provides that trans-
ferred liabilities include "without limitation, the liabilities and
obligations described below" in §§ 3.1-3.7. Among the liabili-
ties "described below" are those in § 3.4, which provides that
New CNC will assume not only the certain obligations "relat-
ing to the Acquired Business and Purchased Assets" but also
those "applicable to the Seller." Where a general provision
like that at the outset of § III conflicts with a specific provi-
sion like that in § 3.4, "the specific provision controls."
Muzak Corp., 133 N.E.2d at 690.
Therefore, we cannot accept either party’s arguments that
the Agreement unambiguously determines whether New CNC
assumed Old CNC’s CERCLA liability for the site.
2.
Usually, when we conclude that a district court has erred in
holding a contract unambiguous, we must remand for a fac-
tual determination of the parties’ intent based on consider-
ation of extrinsic evidence. See, e.g., Atalla v. Abdul-Baki,
976 F.2d 189, 195 (4th Cir. 1992). However, in this case, the
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 21
district court has already analyzed the extrinsic evidence
offered by the parties during the bench trial, and alternatively
found based on that evidence that New CNC intended to and
did acquire CERCLA liabilities for the site under the Acquisi-
tion Agreement. We review a district court’s factual finding
as to intent for clear error. See Hendricks, 39 F.3d at 512. We
can reverse only if, after reviewing the entire record, we are
"left with the definite and firm conviction that a mistake has
been committed." Easley v. Cromartie, 532 U.S. 234, 242
(2001) (internal quotation marks omitted). This rigorous stan-
dard does not permit reversal here.
The district court based its ultimate factual finding that
extrinsic evidence established that New CNC intended to
assume CERCLA liability for the Charleston site on several
predicate findings. When considering ambiguity, the court ini-
tially found that even if the "as if" clause in the Agreement
did not evince the parties’ intent to enter into something very
akin to a stock sale, at the very least the clause was ambigu-
ous. Thus, the court considered the extrinsic evidence and
found it demonstrated that the parties did intend to enter into
an agreement "tantamount to a stock sale," i.e., "as if" meant
"equivalent to."
In support of this critical finding, the district relied on the
abundant extrinsic evidence that New CNC knew of Old
CNC’s determination to dissolve by December 31, 1986, to
preserve the $100 million tax advantage. The court found that
New CNC’s knowledge of Old CNC’s paramount aim to avail
itself of this tax advantage supported Ashley’s contention that
the parties—Old CNC and New CNC—agreed that New CNC
would acquire "all of Old CNC that was not specifically
retained or sold to another entity." Given that no one contends
that Old CNC’s CERCLA liability for the Charleston site was
"specifically retained or sold to another entity," the court
found this evidence supported Ashley’s position that Old
CNC transferred this liability to New CNC.
22 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
The district court also pointed to the extrinsic evidence that
Old CNC discounted its sale price of $50 million by sixty per-
cent from book value, and discounted an additional $5 million
from the sale price in exchange for New CNC’s assumption
of the business and assets "as is," i.e., including unknown
environmental liabilities. The court noted that New CNC’s
lawyer on the transaction testified that the principals at New
CNC were "comfortable enough with [their] due diligence to
conclude that any unknown liabilities would not exceed $5
million." (To date, of course, the CERCLA cleanup costs for
the site ($194,000) do not approach that number.) The court
concluded that the heavily discounted purchase price further
reduced by the $5 million discount for acceptance "as is" con-
stituted additional extrinsic evidence that New CNC acquired
"all of Old CNC that was not specifically retained or sold to
another entity," i.e., New CNC acquired CERCLA liability
for the Charleston site.
Finally, the court found that New CNC intended to acquire
"substantially all" of Old CNC—including its environmental
liabilities—evidenced by two other agreements that New
CNC entered into at the same time as the Acquisition Agree-
ment. One of these agreements governed future advances, and
the other contained guarantees signed by the chairman of New
CNC. In both, New CNC stated that it was purchasing "sub-
stantially all" of Old CNC’s liabilities. The court noted that
these contemporaneous statements by New CNC "contradic-
t[ed]" its after-the-fact litigation position as to the limited
nature of the liabilities acquired.
Based on these facts, the court found that the parties
intended to and in the Acquisition Agreement did transfer all
of Old CNC’s assets and liabilities not explicitly retained or
sold to another entity, including Old CNC’s latent CERCLA
liabilities for the site.
PCS maintains that the district court clearly erred in so
finding. PCS first contends that, contrary to the district court’s
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 23
conclusions, Old CNC’s foremost intent to dissolve for tax
benefit purposes and its agreement to discount its price if New
CNC assumed the assets "as is" are "irrelevant" as to the
actual scope of the liabilities transferred. That characterization
seems to us to be an overstatement. While these facts are not
dispositive, the district court could certainly find them rele-
vant. PCS also points to evidence that after the sale Old CNC
never transferred to New CNC records relating to the site
(including those regarding environmental contamination); that
New CNC was so cautious about assuming environmental lia-
bilities that it did not acquire the land underlying the Augusta
plant; and that some of the parties involved in the transaction
testified that New CNC only intended to acquire the Augusta
plant and operations. Although these facts are helpful to
PCS’s position, none require a finding in its favor.
Finally, PCS contends that, although Recital B describes
the Agreement "as if" it were a stock sale, at the time the
Agreement was executed witnesses at trial "agreed" that the
sale transferred only assets. If the undisputed evidence at trial
had established such contemporaneous "agreement" between
Old CNC and New CNC, then PCS might well have been
entitled to judgment. But the trial evidence did not establish
this "agreement." In fact, only PCS’s witnesses "agreed" on
this point, and the district court was free to weigh their testi-
mony against the contrary, above-outlined evidence offered
by Ashley.
This is not to say PCS did not present evidence from which
the district court could have resolved the Agreement’s
ambiguity in its favor. But Ashley presented contrary evi-
dence supporting its view as to the meaning of the ambiguous
contract language, and the district court, as fact finder, found
in favor of Ashley. We cannot conclude that the court clearly
erred in doing so. Here, as in many other cases, "both the
intrinsic and extrinsic evidence of intended reach of the agree-
ment might have supported a contrary finding." See Brown v.
Balt. & Ohio R.R. Co., 805 F.2d 1133, 1140 (4th Cir. 1986).
24 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
But we are not "left with the definite and firm conviction that
a mistake has been committed." Easley, 532 U.S. at 242
(internal quotation marks omitted). Accordingly, we must
affirm the judgment of the district court holding that in the
Agreement New CNC assumed Old CNC’s CERCLA liabili-
ties for the site and that PCS is therefore a PRP as a successor
to Old CNC’s CERCLA liability for the site.4
B.
Next, we turn to the appeals of other parties challenging the
district court’s determinations that they too constituted PRPs.
As the plaintiff in the allocation action under 42 U.S.C.
§ 9613(f), PCS bore the burden of proving that another party
was a PRP under § 9607(a). See Minyard Enters., 184 F.3d at
385. We consider each defendant’s challenge to PRP status in
turn, reviewing the district court’s ultimate determinations of
PRP status de novo, and its factual findings underlying those
determinations for clear error.
1.
The district court held that Holcombe and Fair are PRPs as
owners of the site at the time of disposal. See 42 U.S.C.
§ 9607(a)(2). The court based its holding on its factual finding
that Holcombe and Fair’s earth-moving and construction
4
For the reasons well stated by the successor judge in her written opin-
ion, we reject PCS’s contention that we should vacate the judgment of her
predecessor to remedy that court’s asserted violation of 28 U.S.C.
§ 445(a). We also reject PCS’s contention that the district court erred in
granting summary judgment to the DSM Parties on PCS’s contribution
claims for alleged derivative CERCLA liability for the acts of Old CNC.
Before the district court, PCS merely argued that veil-piercing and single
business enterprise theories rendered the DSM Parties liable. The district
court rejected both contentions. On appeal, PCS contends that the "amal-
gamation" theory renders the DSM Parties liable. See, e.g., Kincaid v.
Landing Dev. Corp., 344 S.E.2d 869, 874 (S.C. Ct. App. 1986). PCS
waived this argument by failing to raise it before the district court. See
Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999).
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 25
activities redistributed already-contaminated soils, causing a
disposal of hazardous substances on the site.
Holcombe and Fair do not challenge the legal basis for the
district court’s conclusion. Indeed, Holcombe and Fair accept
that past owners or operators of a facility are liable for "sec-
ondary disposals"—that is, the movement or dispersal of
already-once-disposed hazardous substances through earth-
moving or construction activities—that occur during their
ownership or operation of the facility. See Tanglewood E.
Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1573
(5th Cir. 1988) ("[CERCLA’s] definition of disposal does not
limit disposal to a one-time occurrence—there may be other
disposals when hazardous materials are moved, dispersed, or
released during landfill excavations and fillings."); see also
Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489,
1510 (11th Cir. 1996) (same); Kaiser Aluminum & Chem.
Corp. v. Catellus Dev. Corp., 976 F.2d 1338, 1342-43 (9th
Cir. 1992) (same); cf. Westfarm Assocs. Ltd. P’ship v. Wash-
ington Suburban Sanitary Comm’n, 66 F.3d 669, 680-81 (4th
Cir. 1995) (refusing to limit "multiple release" disposals to
non-migrating hazardous materials); Nurad, 966 F.2d at 844-
46 (interpreting "disposal" broadly to include passive acts,
such as leaking or spilling).
Instead, Holcombe and Fair challenge the district court’s
finding that a secondary disposal actually occurred during
their ownership of the site. Holcombe and Fair argue that the
court clearly erred because PCS offered no "discrete proof"
that Holcombe and Fair actually moved or dispersed contami-
nated soils during their earth-moving activities. At best, Hol-
combe and Fair contend, the evidence demonstrates only that
a disposal "probably" occurred during their ownership of the
site.
To be sure, PCS presented no direct evidence that Hol-
combe and Fair moved or dispersed any contaminated soils.
However, "CERCLA does not require a smoking gun." Niag-
26 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
ara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d
112, 136 (2d Cir. 2010). Instead, "CERCLA liability may be
inferred from the totality of the circumstances [and] need not
be proven by direct evidence." Tosco Corp. v. Koch Indus.,
Inc., 216 F.3d 886, 892 (10th Cir. 2000); see also Franklin
Cnty. Convention Facilities Auth. v. Am. Premier Underwrit-
ers, Inc., 240 F.3d 534, 547 (6th Cir. 2001).5 Thus, as with
any other factual finding, we are bound to affirm any infer-
ence of CERCLA liability if "plausible in light of the record
viewed in its entirety." See Davis v. Richmond, Fredericks-
burg & Potomac R.R. Co., 803 F.2d 1322, 1327 (4th Cir.
1986) (internal quotation marks omitted).
The district court heard evidence showing that Holcombe
and Fair engaged in extensive grading and construction that
affected at least 27.9% of the site during their ownership, and
that even superficial earth-moving activities such as grading
can redistribute contaminated soils. Considering the evidence
of widespread contamination across the site, the court’s infer-
ence that Holcombe and Fair’s construction activities at some
point effected a disposal is certainly plausible.
Accordingly, we affirm both the court’s finding that a dis-
posal occurred during Holcombe and Fair’s ownership of the
site, and its holding that Holcombe and Fair are therefore
PRPs for the site under 42 U.S.C. § 9607(a)(2).
5
Holcombe and Fair rely on Redwing Carriers for their contention that
a district court needs "discrete proof" to find that a secondary disposal
occurred. But in Redwing Carriers the Eleventh Circuit merely held that
"the only reasonable inference" from the evidence presented did not
include disposal, "[n]o matter how broadly the term is defined." 94 F.3d
at 1510-12. The court did not require "direct evidence" of movement or
dispersal of contaminated soil, but just evidence that would support such
an inference. Such evidence was absent in Redwing Carriers, but is pres-
ent here.
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 27
2.
The district court held that RHCE is a PRP for the site as
a current operator. See 42 U.S.C. § 9607(a)(1). On appeal,
RHCE concedes that it is a current operator,6 but challenges
its PRP status on several grounds—all unavailing.
Most fundamentally, RHCE argues that its leasehold is not
"part of the property for which Ashley sued PCS to remedi-
ate." RHCE Br. at 1, 25. This argument misunderstands CER-
CLA. Whether RHCE’s leasehold is "part of the property for
which Ashley sued PCS to remediate" is simply irrelevant.
The relevant question is whether RHCE’s leasehold is part of
a "facility" as defined by CERCLA. See, e.g., 42 U.S.C.
§ 9607(a)(1) (making liable "the owner and operator of a . . .
facility").
CERCLA defines "facility" to include "any site or area
where a hazardous substance has been deposited, stored, dis-
posed of, or placed, or otherwise come to be located." Id.
§ 9601(9). The definition is not predicated, as RHCE seems
to believe, on the area targeted for remediation. Instead, the
statutory definition indicates "that the bounds of a facility
should be defined at least in part by the bounds of the contam-
ination." United States v. Twp. of Brighton, 153 F.3d 307, 313
(6th Cir. 1998); see Nurad, 966 F.2d at 842-43 (holding a "fa-
cility" includes that portion of a larger property "in and
around the [leaking] storage tanks"). The district court did not
err in finding on the basis of the evidence before it that
RHCE’s leasehold is contaminated as part of a pattern of
widespread contamination across the entire site. That is,
RHCE’s parcel is part of the contaminated "facility" for CER-
CLA’s purposes.
6
The district court also held that RHCE was a PRP as an operator at the
time of disposal under § 9607(a)(2), a holding that RHCE contends consti-
tutes clear error. We need not reach that question because RHCE does not
challenge on appeal the court’s alternative holding that RHCE is a current
operator.
28 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
RHCE’s seeming suggestion that its leasehold—even
though contaminated—should be considered separately from
the rest of the site also fails. "Courts have uniformly refused
to divide widely contaminated properties . . . into separate
facilities in response to a party’s claim to be responsible for
contamination in only certain parts of the property." Axel
Johnson, 191 F.3d at 418; see also United States v. Capital
Tax Corp., 545 F.3d 525, 535 (7th Cir. 2008) ("The bounda-
ries of [a] facility do not necessarily reflect property bounda-
ries, and liability can extend beyond what . . . defendants
actually own." (internal citation omitted)).
In this case, fertilizer production and construction activities
widely contaminated the site, including the area of RHCE’s
leasehold. That the leasehold is less contaminated than some
of the rest of the site and would not require remediation for
its current industrial use makes no difference for purposes of
determining PRP status under CERCLA. This is so because
the hazardous substances located on RHCE’s leasehold are
not distinct from those on the rest of the site. Otherwise, an
operator of a less-contaminated leasehold, like RHCE’s, in a
multiple-parcel facility could always avoid liability for CER-
CLA response costs for the rest of the facility merely by dem-
onstrating less pollution-sensitive land use on its leasehold.
This would turn § 9607(a)’s strict liability on its head, and
would improperly broaden Congress’ specific exemption from
liability for "innocent" contiguous landowners. See 42 U.S.C.
§ 9607(q).7
7
RHCE’s argument that its leasehold cannot be a part of the "facility"
because EPA has neither defined the bounds of the facility nor approved
a final remediation plan for the site is similarly meritless. CERCLA does
not require EPA to have defined an area as a "facility" in order for a pri-
vate party to bring a recovery action. See 42 U.S.C. §§ 9601(9), 9607(a).
And "governmental approval is not a prerequisite to private recovery for
cleanup costs." Richland-Lexington Airport Dist. v. Atlas Props., Inc., 901
F.2d 1206, 1208-09 (4th Cir. 1990).
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 29
Finally, although RHCE does not claim that it meets the
rigorous qualifications necessary to be exempt from PRP sta-
tus as an innocent contiguous landowner under § 9607(q), it
does assert a defense from liability as an innocent landowner
under § 9607(b)(3). This defense requires a party otherwise
liable as a PRP to prove "by a preponderance of the evidence:
(1) that another party was the ‘sole cause’ of the release of
hazardous substances and the damages caused thereby; (2)
that the other, responsible party did not cause the release in
connection with a contractual, employment, or agency rela-
tionship with the defendant; and (3) that the defendant exer-
cised due care and guarded against the foreseeable acts or
omissions of the responsible party." Westfarm Assocs. Ltd.
P’ship, 66 F.3d at 682. The district court rejected RHCE’s
assertion of this defense, holding that it failed on all three
prongs. On appeal, RHCE only challenges the court’s hold-
ings under the first and third prongs of the defense. Because
a party must establish all three prongs of the defense, and
RHCE does not challenge the court’s determination that it
failed the second prong, we must affirm the court’s denial of
RHCE’s innocent landowner defense.
In short, because RHCE is a current operator of a leasehold
that is part of the facility at the site, we affirm the district
court’s determination that RHCE is a PRP for the site as a
current operator under 42 U.S.C. § 9607(a)(1).
3.
The district court also held Ashley to be a PRP for the site
as a current owner. See 42 U.S.C. § 9607(a)(1). In doing so,
the court rejected Ashley’s attempt to establish a bona fide
prospective purchaser ("BFPP") exemption from liability. See
id. §§ 9601(40), 9607(r)(1). On appeal, Ashley again invokes
the BFPP exemption.
In 2002, Congress enacted the BFPP exemption as one in
an array of CERCLA amendments intended "to promote the
30 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
cleanup and reuse of brownfields" under the Small Business
Liability Relief and Brownfields Revitalization Act
("Brownfields Act"), Pub. L. No. 107-118, 115 Stat. 2356
(2002). BFPP status exempts from CERCLA liability a party
otherwise liable simply because it is "considered to be an
owner or operator of a facility" under 42 U.S.C. § 9607(a)(1).
See 42 U.S.C. § 9607(r)(1). To qualify for the exemption, a
current owner or operator of a facility must have acquired the
facility after January 11, 2002, must "not impede the perfor-
mance of a response action or natural resource restoration" at
the facility, and must establish eight criteria by a preponder-
ance of the evidence. See id. §§ 9601(40)(A)-(H), 9607(r)(1).
The district court held that Ashley failed to establish a
number of these eight criteria. Among them is the requirement
that a current owner "exercises appropriate care with respect
to hazardous substances found at the facility by taking reason-
able steps to (i) stop any continuing release; (ii) prevent any
threatened future release; and (iii) prevent or limit human,
environmental, or natural resource exposure to any previously
released hazardous substance." Id. § 9601(40)(D). The court
specifically found that Ashley failed to clean out and fill in
sumps that should have been capped, filled, or removed when
related aboveground structures were demolished, and that
Ashley did not monitor and adequately address conditions
relating to a debris pile and the limestone run of crusher cover
on the site. The court concluded that these inactions estab-
lished that Ashley did not exercise appropriate care at the site.
Ashley argues that the purposes of the Brownfields Act
necessitate that courts apply a less-stringent standard of "ap-
propriate care" and "reasonable steps" than that applied by the
district court. Otherwise, Ashley maintains, landowners will
not undertake voluntary brownfields redevelopment for fear
of becoming fully liable for cleanup costs as a result of minor
mistakes that may not even contribute to harm at the facility.
Even recognizing Congress’ clear intent to promote voluntary
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 31
brownfields redevelopment in passing the Brownfields Act,
however, Ashley’s argument goes too far.
In particular, Ashley fails to provide a persuasive rationale
for requiring a lower level of "care" from a BFPP under
§ 9607(r)(1), than from an "innocent landowner" under
§ 9607(b)(3). Both the BFPP exemption and the innocent
landowner defense require a demonstration of "reasonable
steps." Compare 42 U.S.C. § 9601(35)(B)(i)(II), with id.
§ 9601(40)(D). Logic seems to suggest that the standard of
"appropriate care" required of a BFPP, who by definition
knew of the presence of hazardous substances at a facility,
should be higher than the standard of "due care" required of
an innocent landowner, who by definition "did not know and
had no reason to know" of the presence of hazardous sub-
stances when it acquired a facility. Compare id.
§§ 9601(40)(D), 9607(r)(1) (BFPP exemption and "appropri-
ate care" standard), with id. §§ 9601(35), 9607(b)(3) (innocent
landowner defense and "due care" standard).
We need not here determine whether the BFPP standard of
"appropriate care" actually is higher than the standard of "due
care" mandated elsewhere in CERCLA, because in all events
"appropriate care" under § 9601(40)(D) is at least as stringent
as "due care" under § 9607(b)(3). Accord Office of Enforce-
ment & Compliance Assurance, U.S. Envtl. Prot. Agency,
Interim Guidance Regarding Criteria Landowners Must Meet
in Order to Qualify for Bona Fide Prospective Purchaser,
Contiguous Property Owner, or Innocent Landowner Limita-
tions on CERCLA Liability 9 (March 6, 2003) (stating that
reasonable steps required under the "appropriate care" stan-
dard establish "an approach that is consonant with traditional
common law principles and the existing CERCLA ‘due care’
requirement").
We therefore borrow standards from CERCLA’s "due care"
jurisprudence to inform our determination of what "reason-
able steps" must be taken to demonstrate "appropriate care."
32 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
We agree with the Second Circuit that the "due care" inquiry
asks whether a party "took all precautions with respect to the
particular waste that a similarly situated reasonable and pru-
dent person would have taken in light of all relevant facts and
circumstances." New York v. Lashins Arcade Co., 91 F.3d
353, 361 (2d Cir. 1996) (internal quotation marks omitted).
Under this standard, Ashley’s inactions clearly show that it
failed to exercise "appropriate care." For Ashley’s delay in
filling the sumps—which even Ashley’s expert admitted
should have been filled a full year before Ashley did so—
demonstrates that it did not take the "reasonable steps to . . .
prevent any threatened future release," 42 U.S.C.
§ 9601(40)(D), that "a similarly situated reasonable and pru-
dent person would have taken," Lashins Arcade Co., 91 F.3d
at 361 (internal quotation marks omitted).
Accordingly, the district court did not err in finding that
Ashley failed to demonstrate that it exercised "appropriate
care" at the site. Because a party must establish all eight fac-
tors under 42 U.S.C. § 9601(40) to qualify for a BFPP exemp-
tion from liability, this failure mandates denial of Ashley’s
claim to BFPP exemption and affirmance of the district
court’s holding that Ashley is a PRP for the site as a current
owner under § 9607(a)(1).
III.
PCS and RHCE challenge the district court’s denial of
apportionment of harm at the site.8 Both argue that the harm
at the site is divisible and thus should be apportioned. We
8
We note that some courts have held that apportionment is not available
to parties, like RHCE, sued under § 9613(f), because apportionment is a
defense to joint and several liability, and § 9613 imposes only several lia-
bility. See Redwing Carriers, 94 F.3d at 1513. Because no party raises this
argument and RCHE’s apportionment claim fails on the merits, we need
not decide the issue and assume, for purposes of this case, that RHCE may
argue for apportionment to avoid the court’s equitable allocation of harms
under § 9613(f).
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 33
review a district court’s determination of whether a harm is
capable of apportionment de novo, and review the factual
findings underlying such a determination for clear error. See
In re Bell Petroleum Servs., Inc., 3 F.3d 889, 902 (5th Cir.
1993).
A.
"While CERCLA does not mandate the imposition of joint
and several liability, it permits it in cases of indivisible harm."
Monsanto, 858 F.2d at 171. The Supreme Court has con-
firmed that "[t]he universal starting point for divisibility of
harm analyses in CERCLA cases is § 433A of the Restate-
ment (Second) of Torts." Burlington Northern, 556 U.S. at
614 (internal quotation marks omitted); see also Monsanto,
858 F.2d at 172.
"Under the Restatement, when two or more persons acting
independently caus[e] a distinct or single harm for which
there is a reasonable basis for division according to the contri-
bution of each, each is subject to liability only for the portion
of the total harm that he has himself caused. . . . But where
two or more persons cause a single and indivisible harm, each
is subject to liability for the entire harm." Burlington North-
ern, 556 U.S. at 614 (internal quotation marks and citations
omitted); see Monsanto, 858 F.2d at 171-72. Thus, PRPs can
avoid joint and several liability by establishing either that on-
site harms are distinct, or that there exists "a reasonable basis
for apportioning liability" for a single harm "among responsi-
ble parties." Monsanto, 858 F.2d at 172 (citing Restatement
(Second) of Torts § 433B (1965)).
By its nature, apportionment necessarily requires a fact-
intensive, site-specific analysis. See United States v. NCR
Corp., 688 F.3d 833, 841-42 (7th Cir. 2012); Bell Petroleum
Servs., 3 F.3d at 895-96; United States v. Alcan Aluminum
Corp., 964 F.2d 252, 269 (3d Cir. 1992). "Not all harms are
capable of apportionment, . . . and CERCLA defendants seek-
34 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
ing to avoid joint and several liability bear the burden of prov-
ing that a reasonable basis for apportionment exists."
Burlington Northern, 556 U.S. at 614.
For this reason, CERCLA’s joint and several liability
scheme may be "terribly unfair in certain instances." Bell
Petroleum Servs., 3 F.3d at 897. Nonetheless, "[e]quitable
considerations play no role in the apportionment analysis,"
Burlington Northern, 556 U.S. at 615 n.9, because the avail-
ability of contribution actions under 42 U.S.C. § 9613(f) miti-
gates any inequity arising from the unavailability of
apportionment, see Axel Johnson, 191 F.3d at 415.
B.
The district court found that two factors contributed to the
harm at the site—the amount of hazardous substances each
PRP caused to be contributed to the site, and the amount of
soil each PRP caused to be contaminated through secondary
disposals. The court thus recognized that the harm at the site
was at least "theoretically divisible" if a defendant provided
sufficient evidence to establish a reasonable basis for appor-
tionment based on those two factors.
At trial, PCS offered several bases for apportionment,
including (1) the amount of fill material each PRP added to
the site; (2) the volume of contaminants Planters and Old
CNC introduced to the site; (3) the period of time that Plant-
ers and Old CNC produced fertilizers on the site; (4) the per-
centage of soils each PRP first disturbed on the site; and (5)
the number of contaminated soil samples attributable to each
PRP. According to PCS, these bases produced consistent
results demonstrating PCS was responsible for, at most, six
percent of the harm at the site.
The district court rejected PCS’s proposed bases for appor-
tionment. In doing so, the court identified several flaws sys-
temic to PCS’s proposed bases for apportionment. Most
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 35
notably, the court found PCS’s methods did not (1) provide
a reasonable estimate of the volume of soil contaminated by
secondary disposals; (2) account for the likelihood of contam-
ination prior to 1906, and thus assumed that Planters was
responsible for all contamination prior to 1945; or (3) com-
pensate appropriately for changes in the type and intensity of
uses and construction on the site over time.
C.
1.
On appeal, PCS first argues that the district court erred in
requiring the establishment of more than a "reasonable basis"
for apportionment, in contravention of the standard applied by
the Supreme Court in Burlington Northern. (RHCE adopts
PCS’s argument on this point.) In Burlington Northern, the
district court sua sponte apportioned the collective harm that
two railroad companies caused at a facility by multiplying
three factors: (1) the percentage of the total area of the facility
the railroads owned; (2) the percentage of time the railroads
leased their parcel to the facility operator; and (3) an estimate
of the percentage of contamination at the facility attributable
to the types of hazardous substances present on the railroads’
parcel. The court then adjusted its calculation by adding a
fifty-percent margin of error, and apportioned nine percent of
the harm at the facility to the railroads. 556 U.S. at 616-18.
After the Ninth Circuit reversed, concluding that these factors
provided an unreliable measure of harm, the Supreme Court
reversed the Ninth Circuit, and upheld the apportionment. The
Supreme Court explained that the record before the district
court provided a "reasonable basis" for the methodology it
had adopted. See id. at 617-18.
Contrary to PCS’s assertion, the district court’s denial of
apportionment here is entirely consistent with Burlington
Northern. To be sure, Burlington Northern demonstrates that
a "reasonable basis for apportionment" need not be mathemat-
36 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
ically precise, and may be based on the "simplest of consider-
ations," e.g., time and land area. See 556 U.S. at 617-18; see
also NCR Corp., 688 F.3d at 842. However, Burlington
Northern neither mandates these "simplest of considerations,"
nor establishes their presumptive propriety in every case. See
NCR Corp., 688 F.3d at 842. For the factual scenario in Bur-
lington Northern was relatively simple: "the primary pollution
at the [site] was contained in an unlined sump and an unlined
pond in the southeastern portion of the facility most distant
from the Railroads’ parcel and . . . the spills of hazardous
chemicals that occurred on the Railroad parcel contributed to
no more than 10% of the total site contamination." Burlington
Northern, 556 U.S. at 617. Only "[w]ith those background
facts in mind" did the Court conclude that the district court’s
methodology was reasonable. Id. at 617-18. Clearly, after
Burlington Northern, apportionment necessarily remains a
fact-intensive, site-specific determination. See NCR Corp.,
688 F.3d at 841-42.
Here the district court undertook precisely such a fact-
intensive, site-specific determination. Weighing the facts in
this case, the court held that any reasonable basis for appor-
tionment must include reliable evidence as to both the initial
disposals of hazardous substances and any secondary dispos-
als that occurred over time. Indeed, the court distinguished
Burlington Northern on this ground, emphasizing that in Bur-
lington Northern most of the hazardous substances were
located in unlined sumps and ponds, and that no evidence
indicated that secondary disposals significantly contributed to
the harm. The court further found that PCS’s apportionment
methodologies individually and collectively failed to provide
the evidence as to secondary disposals necessary to "establish
a reasonable basis for apportioning the harm at the Site."
Denying apportionment because a party fails to provide reli-
able evidence as to one of the factors informing apportion-
ment is in no way at odds with Burlington Northern.
Indeed, as Burlington Northern confirmed, in the face of
uncertain causation of harm, "‘courts have refused to make an
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 37
arbitrary apportionment for its own sake.’" 556 U.S. at 614-15
(quoting Restatement (Second) of Torts § 433A cmt. i (1963-
64)). An arbitrary apportionment is just what the district court
refused to make, as any apportionment without adequate evi-
dence as to the harm caused by secondary disposals necessar-
ily would have been arbitrary. Therefore, the district court’s
fact-intensive and site-specific analysis underlying its denial
of apportionment entirely accords with Burlington Northern.
2.
PCS and RHCE next argue that, even if the district court’s
apportionment analysis was consistent with Burlington North-
ern, the court erred in holding that they failed to establish a
reasonable basis for apportionment. Although the court found
that all of the proposed methods of apportionment improperly
assumed Planters’ responsibility for all harm at the site prior
to 1945, PCS and RHCE each maintain that they established
a reasonable basis for apportioning at least their individual
shares of the harm. Because PCS and RHCE are PRPs under
different CERCLA provisions, we consider their arguments
on this point separately.
a.
PCS’s assertion of individual share apportionment presents
the question of whether an owner or operator at the time of
disposal under § 9607(a)(2) must provide a reasonable basis
to apportion all of the harm, or only its share of the harm, to
avoid joint and several liability.
Neither we nor the Supreme Court has ever before consid-
ered the question. Contrary to PCS’s suggestion, Burlington
Northern provides no guidance. The district court there appor-
tioned all of the harm, because, in that case, all harm not
caused by the railroads was necessarily caused by the long-
time operator of the facility. See Burlington Northern, 556
U.S. at 606.
38 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
Nor do traditional and evolving standards of common law
provide clear guidance on the issue. Compare Restatement
(Second) of Torts § 433A(1)(b) (suggesting apportionment is
appropriate only when a defendant can demonstrate that
"there is a reasonable basis for determining the contribution
of each cause to a single harm" (emphasis added)), with
United States v. Rohm & Haas Co., 2 F.3d 1265, 1280 (3d
Cir. 1993) (holding apportionment required a showing "that
there is a way to determine what portion of the ‘harm’ . . . is
fairly attributable to [the defendant], as opposed to other
responsible parties."), overruled on other grounds by United
States v. E.I. Dupont De Nemours & Co., 432 F.3d 161 (3d
Cir. 2005); Chem-Nuclear Sys., Inc. v. Bush, 292 F.3d 254,
259-60 (D.C. Cir. 2002) (holding that a PRP can avoid joint
and several liability by proving "the amount of the harm that
it caused" (internal quotation marks omitted)).
However, we ultimately need not decide today whether a
PRP under § 9607(a)(2) can avoid joint and several liability
by apportioning only its own harm. For, even assuming that
a PRP could do so, the district court did not err in holding that
PCS failed to establish a reasonable basis for apportioning its
own harm in this case. Both primary disposals (from fertilizer
manufacturing) and secondary disposals (from earth-moving
and construction) occurred during Old CNC’s ownership and
operation of the site. Therefore, even to establish its own
share of the harm, PCS (Old CNC’s successor) needed to pro-
vide an apportionment methodology that addressed both types
of disposals. Because it did not do so, PCS failed to provide
a "reasonable basis for apportionment" of its own harm (let
alone all of the harm), and we affirm the district court’s denial
of apportionment. See Chem-Nuclear Sys., 292 F.3d at 260
(finding defendant failed to prove its own share of the harm);
Rohm & Haas Co., 2 F.3d at 1280 (same).
b.
RHCE contends that, as a current operator PRP under
§ 9607(a)(1), it can avoid joint and several liability by demon-
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 39
strating that no disposal of hazardous substances has occurred
during its operation of the facility, and thus a reasonable basis
exists to apportion it a zero-share of the harm. This argument
clearly fails.
The structure and purposes of CERCLA simply do not per-
mit current owner or operator PRPs to use individual share
apportionment to apportion themselves a zero-share harm.9
Section 9607(a)(1) renders current owners and operators
strictly liable for response costs regardless of their culpability.
42 U.S.C. § 9607(a)(1); Trinity Am. Corp. v. U.S. Envtl. Prot.
Agency, 150 F.3d 389, 395 (4th Cir. 1998). "Innocent" current
owners and operators seeking to avoid CERCLA’s strict lia-
bility scheme must meet the requirements necessary to claim
the narrow defenses and exemptions specifically established
by Congress. E.g., 42 U.S.C. § 9607(b); see Trinity Am. Corp,
150 F.3d at 395-96.
Allowing current owner and operator PRPs to avoid joint
and several liability through a zero-share apportionment
because no disposal occurred during their ownership or opera-
tion of a facility effectively would render current owner or
operator liability coterminous with liability based on owner-
ship or operation at the time of disposal. Compare 42 U.S.C.
§ 9607(a)(1) (establishing liability for current owners and
operators, regardless of whether disposal occurred during
ownership or operation), with id. § 9607(a)(2) (requiring dis-
posal during ownership or operation for liability).
Such a rule would frustrate the several narrow statutory
defenses and exemptions Congress created to address truly
9
That the district court held RHCE was also a PRP as an operator at the
time of disposal under § 9607(a)(2) does not affect this conclusion. It
would defeat the purposes of CERCLA to permit a current operator PRP,
who was also an operator at the time of disposal, to claim individual share
apportionment, while denying this right to a current operator PRP who was
not a PRP at the time of disposal.
40 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
"innocent" landowners. See, e.g., id. § 9601(20)(D), 35(A)
(involuntary acquisition exemption); id. §§ 9601(35),
9607(b)(3) (defense for innocent landowners); id.
§§ 9601(40), 9607(r) (bona fide prospective purchaser exemp-
tion); id. § 9607(q) (contiguous property owner exemption).
All of these provisions require much more than a mere show-
ing that no disposal occurred during a current owner or opera-
tor’s tenure at a facility. See, e.g., id. §§ 9601(35), 9607(b)(3).
Consequently, allowing such PRPs to apportion solely their
own zero-share of liability would render the heightened
requirements of these narrow defenses and exemptions dead
letters. Where possible, we must interpret a statute to avoid
rendering any of its provisions superfluous. Astoria Fed. Sav.
& Loan Ass’n v. Solimino, 501 U.S. 104, 112 (1991). Our
holding today avoids such redundancy, and preserves Con-
gress’ calculated balance of broad strict liability and narrow
defenses and exemptions under CERCLA.
IV.
Having affirmed the district court’s holding that the harm
at the site is not subject to apportionment, we finally consider
the several appeals of the court’s ultimate allocation of liabili-
ties under 42 U.S.C. § 9613(f). The district court equitably
allocated liability for the response costs to the PRPs as fol-
lows: forty-five percent to Ross; thirty percent to PCS; sixteen
percent to Holcombe and Fair; five percent to Ashley; three
percent to Allwaste; one percent to RHCE; and zero percent
to the City of Charleston. As the party bringing the § 9613(f)
action, PCS bears the burden of proving each party’s equita-
ble share of response costs. Minyard Enters., 184 F.3d at 385.
Section 9613(f) allows "[a]ny person [to] seek contribution
from any other person who is liable or potentially liable under
section 9607(a) . . . during or following any civil action . . .
under section 9607(a)." A court "may allocate response costs
among liable parties using such equitable factors as the court
determines are appropriate." 42 U.S.C. § 9613(f)(1). This
PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON 41
plain language grants a court significant discretion to choose
which factors to consider in determining equitable allocation
of liability. We review a district court’s choice of factors for
abuse of discretion, and its ultimate allocations of liability for
clear error. See Boeing Co. v. Cascade Corp., 207 F.3d 1177,
1187 (9th Cir. 2000).
In this case, the parties do not challenge the court’s selec-
tion of relevant factors in arriving at the appropriate alloca-
tion. They only challenge the court’s application of those
factors. PCS, RHCE, and Holcombe and Fair each contend
that the court clearly erred by allocating too much liability to
each of them, and not enough to the other parties.10
Considering, as we must, the record as a whole, we cannot
conclude the district court clearly erred. The court’s ultimate
allocation of liability reasonably weighs relevant factors,
including the degree of involvement each party had in dispos-
als (both primary and secondary) on the site, the degree of
care each party exhibited with respect to hazardous sub-
stances, the degree to which each party cooperated with gov-
ernment officials with respect to hazardous substances, and
the benefit each party reaped from disposals of hazardous
substances on the site. Although the record also might have
supported a different allocation, the ultimate "allocation [is]
among the reasonable conclusions supported by the evi-
dence." Boeing, 207 F.3d at 1188. We therefore affirm the
district court’s allocation of liabilities under § 9613(f).11
10
We reject Holcombe and Fair’s alternative argument that we remand
for further factual findings because the district court’s analysis assertedly
lacked the detail and exactness required for adequate appellate review. See
Fed. R. Civ. P. 52(a). The district court made over two hundred factual
findings, and specifically referenced the findings it considered important
in its allocation determination for each PRP. This factual analysis ade-
quately satisfies Rule 52(a).
11
Ross challenges the district court’s judgment directing that Ashley
recover from PCS $147,617.02 plus interest, and that PCS recover from
42 PCS NITROGEN INC. v. ASHLEY II OF CHARLESTON
V.
For the foregoing reasons, the judgment of the district court
is
AFFIRMED.
Ross $87,404.82 plus interest. Ross contends that the money judgment
against it is premature because PCS, as the jointly and severally liable
party under 42 U.S.C. § 9607(a), has not yet paid its proportionate share
of allocated liability to Ashley. However, the court’s order denying modi-
fication of the money judgment explicitly recognized that PCS cannot
recover from Ross until it has paid more than its proportionate share to
Ashley. Considering the court’s clarification on the record, we find no
error in the form of the money judgment.