As Urged in WLF Paper, Judge Reverses Himself in Superfund Case

Cross-posted by Forbes.com at WLF contributor site

A February 2012 Washington Legal Foundation Legal Opinion Letter urged a Wisconsin federal judge to reconsider his December 2011 decision to allow Superfund liability for two businesses. That outcome was a 180 degree reversal of the same judge’s July 2011 ruling rejecting Superfund liability. The paper, Judge’s Double-Take For Double Liability Spells Trouble For U.S. Businesses, was authored by Shook, Hardy & Bacon L.L.P. partners Victor Schwartz and Phil Goldberg. On April 10, Judge William Griesbach reversed his reversal and returned to his original, and in our opinion, correct July 2011 conclusion with USA v. NCR Corp. and Appleton Papers Inc. decision.

In the WLF paper, Schwartz and Goldberg surmised that Judge Griesbach ‘s December 2011 turnabout arose from his concerns that the cleanup of PCBs in the Lower Fox River (which NCR and Appleton had independently agreed to pursue) would be imperiled absent federal force. As the attorneys correctly stated in their Legal Opinion Letter, “American jurisprudence does not allow the ends to justify the means.”

After reviewing the briefs supporting and opposing NCR/Appleton’s motion for reconsideration, Judge Griesbach seems to have acquiesced to this principle with his April 10 ruling. The 1978 purchase agreement between NCR and Appleton stated that Appleton assumed liability for obligations arising out of facts in existence at the time of the agreement. The government argued, and the judge agreed in his December order, that those liability requirements included CECRLA liability.

But as the judge pointed out in this latest decision, CERCLA didn’t exist until 1980, and the PCB releases occurred in the 1960s.  Due process, if not old-fashioned common sense, dictates that Appleton couldn’t have assumed Superfund claims from NCR that occurred before Congress passed CERCLA.

The government tried to argue that violations of other federal laws on the books in 1978, such as the Clean Water Act, could somehow give rise to Superfund claims. The judge slapped that argument away, reasoning that: 1) the toxic nature of PCBs were not known in the 1960s and thus would not give rise to federal liability; 2) violations of other laws are not a precursor to, nor can give rise to, CERCLA liability; and 3) the 1978 purchase agreement was very specific as to which kind of environmental claims Appleton would assume, and Superfund-related liability wasn’t one.

It’s a credit to Judge Griesbach’s commitment to the rule of law that he stepped back from his December 2011 ruling, which truly was, as Schwartz and Goldberg wrote in their WLF paper, “a real head-scratcher,” and issued an opinion yesterday that reaches the legally correct result.