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Lynda Oswald

Influential Federal Appellate Court Cites Ross Professor's Work

6/5/2007 -- Ninth Circuit quotes from article of Lynda Oswald in deciding case involving cleanup of contaminated sites.

ANN ARBOR, Mich.óResearch by Ross School professor Lynda Oswald figured prominently in a recent federal appeals court decision on businesses' liability for environmental cleanup costs.

In deciding United States v. Burlington Northern & Santa Fe Railway, the U.S. Court of Appeals for the Ninth Circuit cited Oswald's 1995 article "New Directions in Joint and Several Liability under CERCLA."

The case dealt with CERCLA (often called "Superfund"), a federal environmental statute providing for cleanup of sites contaminated with hazardous waste. Under CERCLA, the government may undertake cleanup of a contaminated site and then sue potentially responsible parties (PRPs) for recovery of cleanup costs. Current and past owners or operators of the site, as well as those who arranged for disposal of the waste and those who transported the waste, may be held strictly liable for cleanup costs even if they were not directly involved in the activities leading to contamination.

"Those who currently own land that was contaminated by former owners or by the activities of neighboring property owners may find themselves liable for cleanup costs of millions of dollars," said Oswald, professor of business law at the Ross School of Business.

Moreover, liability under CERCLA is joint and several, meaning that the court can hold one PRP responsible for all of the cleanup costs, leaving it up to that PRP to sue other PRPs for contribution for the cleanup costs. These contribution suits can be costly to pursue and may result in PRPs being held liable for cleaning up contamination they did not cause, says Oswald.

In this case, the Ninth Circuit held that the court may decline to hold a PRP jointly and severally responsible for the full amount of cleanup costs, and may instead under appropriate circumstances apportion the liability among the PRPs depending upon their relative degree of fault.

"This was critical in this case, as the major contributor of contamination to the site was defunct," Oswald said. "The government sought to hold the two remaining parties liable for all of the cleanup costs."

In holding that liability for cleanup costs can be apportioned among PRPs according to their fault, the Ninth Circuit noted that other federal circuit courts that had looked at the issue had followed common law tort principles in determining when and how to apportion CERCLA liability.

The Ninth Circuit quoted Oswald's article, however, in finding that traditional tort law principles are not necessarily appropriate for CERCLA actions because of the unique nature of CERCLA liability.

"The Ninth Circuit ultimately found CERCLA actions should not be decided under the traditional 'causation' principles of tort law, and instead articulated a standard of CERCLA liability that takes into account the nexus between the PRP's status as an owner or arranger and its activities at the site," Oswald said.

The case has important implications both for owners of commercial or industrial properties and for manufacturers of products that contain hazardous substances, she said.

"Although the Ninth Circuit made it clear that apportionment is potentially available in CERCLA cases, it also made it clear that businesses seeking to avoid joint and several liability for environmental cleanup costs in the future will need to be very proactive in planning and monitoring their own activities and activities that might occur on property that they own or operate in order to avoid joint and several liability."

For more information, contact:
Bernie DeGroat
Phone: (734) 936-1015 or 647-1847