## Facts

- A chrome-plating shop near Odessa, Texas generated rinse water during plating operations; the rinse water was pumped out of the building and discharged onto the ground.
- After local residents complained of discolored drinking water, the Texas Water Commission investigated and focused on the shop as a likely source of groundwater contamination.
- The State’s remedial investigation found elevated concentrations of chromium in the Trinity Aquifer, the only groundwater source for the area.
- In 1984, the EPA designated the site a Superfund site under CERCLA and response activities followed.
- The property was owned by John R. Leigh from 1967 to 1981. The shop was operated successively by:
  - Leigh (chrome-plating activity in 1971–1972),
  - Bell Petroleum Services, Inc. (which purchased the shop assets and leased the property from Leigh, operating a larger plating operation from 1972–1976), and
  - Sequa Corporation (through a Chromalloy/Woolley Tool division that bought Bell’s assets and leased the property from Leigh, operating from 1976–1977).
- In 1988, the EPA (through the United States) brought a CERCLA § 107 cost-recovery action against Leigh, Bell, and Sequa to recover response costs.
- The EPA contended the contamination was a single, indivisible harm, requiring joint and several liability.
- Sequa argued the harm was divisible and could be allocated using record evidence and expert testimony estimating each operator’s relative contribution by time and volume of plating/wastewater generation, despite missing records and competing estimates.
- The district court held the harm indivisible, imposed joint and several liability, and allowed recovery of costs that included the design and construction of a permanent alternate water supply system.

## Issues

1. Did the district court apply the wrong legal standard by requiring Sequa to prove a certain or exact basis for apportionment, rather than a reasonable basis, before allowing divisibility and several liability under CERCLA?
2. Was EPA’s selection of a permanent alternate water supply system, and recovery of its design and construction costs as response costs, arbitrary and capricious based on the administrative record?
3. If liability and recoverable costs change, must prejudgment interest and the treatment of settlement proceeds be recalculated on remand?

## Decision

- The Fifth Circuit reversed the portion of the judgment imposing joint and several liability and remanded for further proceedings on divisibility and apportionment.
- The court held the district court demanded too much certainty and should determine whether there is a reasonable basis to apportion the harm among successive operators using the evidentiary record, including non-exact estimates.
- The Fifth Circuit reversed the portion of the judgment permitting recovery of the costs of designing and constructing the alternate water supply system because EPA’s decision to provide that system was arbitrary and capricious.
- The court remanded for deletion of those alternate-water-supply amounts and for recalculation of prejudgment interest and related monetary adjustments consistent with the revised recoverable costs and any apportionment.

## Legal Principles

- CERCLA § 107(a) imposes strict liability for recoverable response costs, but joint and several liability depends on common-law divisibility concepts reflected in the Restatement (Second) of Torts.
- When the government proves a defendant is within a class of liable parties and that releases contributed to contamination, the defendant may avoid joint and several liability by showing (1) the harm is divisible and (2) there is a reasonable basis for apportionment.
- A reasonable basis for apportionment does not require precise, record-perfect calculations; courts may use approximations grounded in testimony, operational history, and expert analysis when those estimates reasonably separate contributions.
- Courts should not default to joint and several liability solely because records are incomplete or experts disagree; the question is whether the evidence permits a fair allocation, not mathematical certainty.
- EPA’s selection of a response action is reviewed under an arbitrary-and-capricious standard based on the administrative record; if the record does not support the chosen action, associated costs may be unrecoverable.
- When recoverable costs are reduced or liability allocation is reopened, prejudgment interest and settlement credits/offsets must be recomputed to match the corrected principal amount and allocation.

## Conclusion

Bell Petroleum Services holds that CERCLA defendants can avoid joint and several liability by proving a reasonable, evidence-based method to apportion harm among multiple operators, and it confirms that EPA response costs are recoverable only when the chosen remedy is supported by the administrative record; here, the Fifth Circuit reversed joint and several liability, rejected costs for an alternate water supply as arbitrary and capricious, and remanded for recalculation of amounts owed.


Bell Petroleum Services, Inc. v. United States Environmental Protection Agency, 3 F.3d 889 (1993)