## Facts

- A former phosphate fertilizer manufacturing site in Charleston, South Carolina had extensive soil and groundwater contamination from decades-old industrial operations, including hazardous wastes such as acidic wastewater and phosphate sludges.
- Columbia Nitrogen Corporation (“Old CNC”) operated the fertilizer plant for roughly twenty years and generated substantial hazardous waste that contributed to site contamination.
- After Old CNC’s operations ceased, later owners conducted demolition and major earth-moving activities that redistributed contaminated soils and worsened the spread of contamination.
- In 2003, Ashley II of Charleston, LLC (“Ashley”) purchased approximately 27.62 acres of the property for mixed-use redevelopment, with knowledge of the site’s industrial history and existing contamination.
- Ashley performed environmental due diligence and incurred response costs for investigation and limited remediation, anticipating additional future costs.
- Through an asset sale and later corporate transactions, PCS Nitrogen Incorporated (“PCS”) became the corporate successor to entities connected to Old CNC; PCS disputed that it assumed Old CNC’s CERCLA liabilities.
- Ashley sued PCS under CERCLA § 107(a) for cost recovery and declaratory relief; PCS counterclaimed and pursued contribution against other owners/operators and related entities.
- The district court found PCS and multiple other parties to be potentially responsible parties (PRPs), held Ashley was also a PRP as current owner, denied Ashley’s bona fide prospective purchaser (BFPP) defense, imposed joint and several liability (no apportionment), and equitably allocated response costs among PRPs.
- PCS appealed rulings on successor liability, other parties’ PRP status, apportionment, and allocation; Ashley cross-appealed denial of BFPP status.

## Issues

1. Whether PCS was a PRP as Old CNC’s successor because the asset transaction(s) transferred or assumed CERCLA liabilities.
2. Whether prior owners/operators were PRPs based on “disposal” during their ownership, including earth-moving and demolition that redistributed contaminated soil.
3. Whether Ashley qualified for the BFPP defense under CERCLA § 101(40) and § 107(r) by exercising “appropriate care” and taking “reasonable steps” regarding known contamination.
4. Whether the harm was reasonably divisible such that liability could be apportioned rather than imposed jointly and severally.
5. Whether the district court abused its discretion in equitably allocating response costs among PRPs under CERCLA § 113(f).

## Decision

- The Fourth Circuit affirmed the district court in all respects.
- PCS was a PRP because the relevant acquisition agreement and extrinsic evidence supported a finding that the successor entity assumed Old CNC’s environmental liabilities, including CERCLA liability.
- Prior owners/operators were properly treated as PRPs because their redevelopment-related earth-moving and demolition constituted “disposal” by spreading contaminated soils.
- Ashley was a PRP as current owner and did not qualify as a BFPP because it failed to satisfy the statutory “appropriate care” and “reasonable steps” requirements after acquisition.
- Apportionment was denied because the record did not provide a reasonable basis to divide the commingled contamination by area, time, or volumetric contribution; joint and several liability applied.
- The equitable allocation of response costs among PRPs was affirmed as within the district court’s discretion.

## Legal Principles

- CERCLA successor liability may be established under traditional corporate and contract principles, including contractual assumption of environmental liabilities; ambiguous contractual language may be interpreted using extrinsic evidence.
- “Disposal” under CERCLA is broadly construed and can include redistribution of preexisting contaminated materials through grading, excavation, demolition, or similar site-disturbing activities during ownership or operation.
- The BFPP defense requires satisfaction of all statutory elements, including post-acquisition “appropriate care” by taking “reasonable steps” to stop continuing releases, prevent threatened releases, and prevent or limit exposure; due diligence alone is insufficient.
- Apportionment of CERCLA liability is permitted only where there is a reasonable basis to divide harm; widespread, commingled contamination commonly supports joint and several liability.
- In contribution actions under CERCLA § 113(f), trial courts have broad discretion to allocate response costs using equitable factors, including relative contribution to contamination, knowledge and conduct, cooperation with regulators, and benefits derived from the site’s use.

## Conclusion

The Fourth Circuit upheld a comprehensive CERCLA liability and cost-allocation judgment, confirming that contractual successor liability can attach in asset transactions, redevelopment activities can constitute “disposal,” BFPP protection demands active post-acquisition measures to manage known contamination, apportionment requires a concrete basis for divisibility, and cost allocation among PRPs is largely committed to equitable discretion.


PCS Nitrogen Inc. v. Ashley II of Charleston, L.L.C., 714 F.3d 161 (4th Cir. 2013)