Record and brief — Burlington N. & S. F. R. Co. v. United States

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Docket for 07-1601 Page | of 3

No. 07-1601

Vide 07-1607

Title: Burlington Norther and Santa Fe Railway Company, et al., Petitioners

United States, et al.

Docketed: June 25, 2008

Lower Ct: United States Court of Appeals for the Ninth Circuit

Case Nos.: (03-17125, 03-17153, 03-17169)

Decision Date: March 25, 2008

Questions Presented

~~~Date~~~ ~~~~~~~Proceedings and Orders~~~~~~~~~~~~~~~~~~~~~

Jun 23 2008 Petition for a writ of certiorari filed. (Response due July 25, 2008)

Jun 23 2008 Appendix of Burlington Northern and Santa Fe Railway Company, et al. filed.

Jul 11 2008 Order extending time to file response to petition to and including August 25, 2008, for all

respondents.

Jul 25 2008 Brief amici curiae of Chamber of Commerce of the United States, et al. filed. VIDED.

Jul 25 2008 Brief amicus curiae of Association of American Railroads filed.

Aug 25 2008 Brief of respondents United States, et al. in opposition filed. VIDED.

Sep 9 2008 Reply of petitioners Burlington Northern and Santa Fe Railway Company, et al. filed.

(Distributed)

Sep 10 2008 DISTRIBUTED for Conference of September 29, 2008.

Oct 12008 Petition GRANTED and consolidated with No. 07-1607, and a total of one hour is

allotted for oral argument.

Oct 31 2008 Consent to the filing of amicus briefs, in support of either party or neither party, received

from counsel for the petitioners in 07-1601. VIDED.

Nov 3 2008 Consent to the filing of amicus briefs, in support of either party or neither party, received

from counsel for the petitioners in case 07-1607. VIDED.

Nov 17 2008 Joint appendix filed. Statement of costs received. VIDED.

Nov 17 2008 Brief of petitioners Burlington Northern and Santa Fe Railway Company, et al. filed.

VIDED.

Nov 21 2008 Brief amicus cunae of Product Liability Advisory Council, Inc. filed. VIDED.

Nov 24 2008 Brief amicus curiae of Association of American Railroads filed. VIDED.

Nov 24 2008 Brief amici curiae of Chamber of Commerce of the United States, et al. filed. VIDED.

Nov 24 2008 Brief amici curiae of Newmont USA Limited and CanadianOxy Offshore Production Co

filed. VIDED.

Nov 24 2008 Brief amicus curiae of Civil Justice Association of California filed.

Nov 24 2008 Brief amicus curiae of General Electric Company filed. VIDED.

Nov 24 2008 Brief amicus curiae of Washington Lega! Foundation filed. VIDED.

Dec 5 2008 CIRCULATED.

Dec 8 2008 SET FOR ARGUMENT ON Tuesday, February 24, 2009

Dec 16 2008 The time for respondent Department of Toxic Substances Control within which to file the

brief on the merits is extended to and including December 22, 2008 VIDED

Dec |7 2008 Brief of respondent United States filed. VIDED. (Distributed)

Docket for 07-1601 Page 2 of 3

Dec 22 2008 Brief of respondent California filed. VIDED. (Distributed)

Dec 23 2008 Joint motion for divided argument filed by petitioners. VIDED.

Dec 24 2008 Record received from the U.S.C.A. for the 9th Circuit. (1 envelope)

Dec 31 2008 Record received from the U.S.D.C. for the Eastern District of California. (25 boxes) This

record was sent by the U.S.C.A. for the 9th Circuit.

Jan 12 2009 Motion for divided argument filed by petitioners GRANTED. VIDED.

Jan 162009 Reply of petitioners Burlington Northern and Santa Fe Railway Company, et al. filed.

VIDED. (Distributed)

Feb 24 2009 Argued. For petitioner in No. 07-1607: Kathleen M. Sullivan, New York, N.Y. For

petitioners in No. 07-1601: Maureen E. Mahoney, Washington, D.C. For respondents:

Malcolm L. Stewart, Deputy Solicitor General, Department of Justice, Washington, D.C.

~~Name~~~ ~ ~~ ~~~~~~~Address ~~Phone~~~

Attorneys for Petitioners:

Maureen E. Mahoney Latham & Watkins LLP (202) 637-2200

Counsel of Record 555 11th Street, NW

Suite 1000

Washington, DC 20004

Maureen.Mahoney@LW .com

Party name: Burlington Northern and Santa Fe Railway Company, et al.

Attorneys for Respondents:

Kenneth P. Alex Senior Assistant Attorney General (510) 622-2137

Counsel of Record 1515 Clay Street, 20th Floor

P.O. Box 70550

Oakland, CA 94612-0550

Party name: California

Edwin S. Kneedler Acting Solicitor General (202) 514-2217

Counsel of Record United States Department of Justice

950 Pennsylvania Avenue, N W

Washington, DC 20530-0001

Party name: United States. et al

Other:

Fred J. Lliestand 1121 L Street (916) 448-5100

Suite 404

Sacramento, CA 95814

Party name’ Civil Justice Association of California

Thomas C. Jackson Baker Botts L.L.P. (202) 639-7700

1299 Pennsylvania, Ave, N.W.

Washington, DC 20004-2400

Docket for 07-1601 Page 3 of 3

Party name: Chamber of Commerce of the United States, et al.

Charles H. Moellenberg Jr. Jones Day (412) 391-3939

500 Grant Street, Suite 4500

Pittsburgh, PW 15219-2502

Party name: Product Liability Advisory Council, Inc.

Joel W. Nomkin Perkins Coie Brown & Bain 602351800

2901 N. Central Avenue

Suite 2000

Phoenix, AZ 85012-2788

jnomkin@perkinscoie.com

Party name: Newmont USA Limited, and CanadianOxy Offshore Production Co

Carter G. Phillips Sidley Austin LLP (202) 736-8600

1501 K Street, N.W.

Washington, DC 20005

cphillips@sidley com

Party name: Association of American Railroads

Lawrence A. Salibra Il 1638 Berkshire Road (440) 336-4129

Gates Mill, OH 44040

Party name: Washington Legal Foundation

Laurence H. Tribe Houser Hall 420 (617) 495-4621

1575 Massachusetts Avenue

Cambridge, MA 02138

Party name: General Electric Company

PETITION

FOR

WRIT OF

CERTIORARI

q7 ) wnets it i _ b.

071601 JUN 23 2008

No. OFFICE OF THE CLERK

In the

Supreme Court of the Gnited States

THE BURLINGTON NORTHERN AND SANTA FE

RAILWAY COMPANY, and UNION PACIFIC RAILROAD

COMPANY,

PETITIONERS,

UNITED STATES OF AMERICA

AND

DEPARTMENT OF TOXIC SUBSTANCES CONTROL, STATE

OF CALIFORNIA,

RESPONDENTS.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE NINTH

CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

CHARLES G. COLE MAUREEN E. MAHONEY

BENNETT EVAN COOPER Counsel of Record

STEPTOE & JOHNSON J. SCOTT BALLENGER

LLP ERICA GOLDBERG

1330 CONNECTICUT Avk. LATHAM & WATKINS LLP

WASHINGTON, DC 20036 595 LITH STREET, NW

SUITE 1000

WASHINGTON, DC 20004

(202) 637-2200

Counsel for Petitioners

QUESTION PRESENTED

The Comprehensive, Environmental, Response,

Compensation, and Liability Act (“CERCLA”), 42

U.S.C. §9601 et seq., allows the government to obtain

reimbursement for the costs of remediating hazardous

waste sites from the owners and operators of land on

which a disposal of hazardous substances has occurred.

Because even passive landowners may be subjected to

CERCLA liability, Congress removed language from

early CERCLA bills mandating joint and several

liability for multiple defendants who own or operate a

particular site. In the present case, the Ninth Circuit

nevertheless imposed joint and several liability for the

entire cost of a facility’s remediation on two landlords,

even though they owned only a portion of the overall

site for a fraction of its period of operation, and the

parcel they owned required no remediation. The

question presented is:

Whether the Ninth Circuit erred by reversing the

district court’s reasonable apportionment of

responsibility under CERCLA, and by adopting a

standard of review and proof requirements that depart

from common law principles and conflict with decisions

of other circuits.

‘i

LIST OF PARTIES AND RULE 29.6

STATEMENT

BNSF Railway Company (“BNSF”), whose name

changed from The Burlington Northern and Santa Fe

Railway Company, is the successor in interest to the

Atchison Topeka and Santa Fe Railway Company.

BNSF has publicly traded debt securities listed on the

New York Stock Exchange. BNSF is also a wholly-

owned subsidiary of Burlington Northern Santa Fe

Corporation, which is a publicly held corporation whose

common stock is listed on the New York Stock

Exchange, Chicago Stock Exchange, and Pacific

Exchange. Approximately 18.5% of the stock of

Burlington Northern Santa Fe Corporation is owned

by Berkshire Hathaway Inc.

Union Pacific Railroad Company (“UPRR”) was

formerly known as Southern Pacific Transportation

Company. Union Pacific Corporation owns 62.6% of

UPRR’s stock, and also wholly owns Southern Pacific

Rail Corporation. Union Pacific Corporation has issued

publicly traded securities, and UPRR has issued

publicly traded debt securities.

Aiso petitioning from the decision below, by

separate petition for certiorari, is:

Shell Oil Company (“Shell”), a wholly owned

subsidiary of Shell Petroleum, Inc.

TABLE OF CONTENTS

Page

RE Es sy: | eR i

LIST OF PARTIES AND RULE 29.6

ali rinasntciseecepeedacannbceuneensiandensteneniak ii

I ic crscrncssstcseccccssacusncssosansosanessen iii

SE Ge EES ID ovnccccscevnccsscccssosessctnsonsenstesnes Vv

ia ac ict esteneiinntonh 1

ETS A SR 1

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED...................ccc.cccececeesees 1

pw ey | 4 td) Lo! \ | SEC 1

REASONS FOR GRANTING THE WRIT................. 18

I THE NINTH CIRCUITS DECISION

CONFLICTS WITH GOVERNING

COMMON LAW PRINCIPLES AND THE

DECISIONS OF OTHER CIRCUITS ................ 20

A. The Ninth Circuit’s Proof

Requirements Are Inconsistent

With Restatement Principles ......................... 20

B. The Ninth Circuit’s Reasoning

Conflicts With Decisions Of Other

RESP actor eee Ne a neeewenT TT 26

C. The Circuits are Further Divided

on The Appellate Standard of

EERE ar ea SN ee oe ae ee 30

TABLE OF CONTENTS—Continued

Page

II. THIS CASE PRESENTS ISSUES OF

NATIONAL IMPORTANCE THAT

REQUIRE GUIDANCE FROM THIS

SE heii cesnnindpinaienpnaneiinilnreiienndeniinisniiaianiceiaiil 32

SINT isinecisiccsvcnititstcnninssousiiaventsiiiumeddgeiimasiicttaadiiian 35

APPENDIX

United States v. Burlington Northern & Santa

Fe Railway Co.,

520 F.3d 918 (9th Cir. Mar. 25, 2008)..............0.ccc0eee la

United States v. Atchison, Topeka & Santa Fe

Railway Co.,

Nos. CV-F-92-5068 OWW, CV-F-96-6226

OWW, CV-F-96-6228 OWW, 2003 WL

25518047 (E.D. Cal. July 15, 2008) ..................00e 82a

United States v. Burlington Northern & Santa

Fe Railway Co.,

502 F.3d 781 (9th Cir. Sept. 4, 2007)...............0.. 263a

Oe rs I ncincctccscicinscincatsencssecnnieionanens 3lla

Sr IIIT sci aciciasiincnhcsnncneninintniindesindiiiniidencinnitvaiali 317a

TABLE OF AUTHORITIES

Page(s)

CASES

Continental Title Co. v. Peoples Gas Light &

Coke Co.,

959 F’. Supp. 893 (N.D. Ill. 1997) .............cccccscssssseeees 23

Cooper Industries, Inc. v. Aviall Services, Inc.,

Se FED cetineviniseniseserenstersmnesnnntitinenainiaenit 34

Eastern Enterprises v. Apfel,

eI aici ccnsicnictncniicctannesnemninenbiesnsetadidaebanin 23

Federal Savings & Loan Insurance Corp. v.

Reeves,

SES FBG 190 GEER Ce. 1967) n..ccrccccccccnsscnrsccssconsseseses 30

General Electric Co. v. AAMCO

Transmissions, Inc.,

O62 F.2d 281 (2d Cir. 1902)........0ccecccccsoceserecsecesees 25, 26

In re Bell Petroleum Services, Inc.,

3 F.3d 889 (Sth Cir. 1993) ....................-cscsessees passim

Northern States Power Co. v. Fidelity &

Casualty Co. of New York,

523 N.W.2d 657 (Minn. 1994) .0..............cccsccsseecesseeeees 34

O’Neil v. Picillo,

BD Fe BI Cate Ce. Ba ccccsesesencvcencsnssessnstossnsenness 35

Sauer v. Burlington Northern Railroad Co.,

106 F.3d 1490 (10th Cir. 1996) .................cccccccccesceeees 29

TABLE OF AUTHORITIES

United States v. Alcan Aluminum Corp.,

oo LL 31

United States v. Atlantic Research Corp.,

ee 4, 34

United States v. Chem-Dyne Corp.,

572 F. Supp. 802 (S.D. Ohio 1983) ...........c..000 4, 5, 32

United States v. Gencorp, Inc.,

93 F. Supp. 928 (N.D. Ohio 1996) ............0...-cceceeeeeees 34

United States v. Hercules, Inc.,

247 F.3d 706 (8th Cir.), cert. denied, 534 U.S.

rn 18, 29, 30

United States v. Kramer,

19 F. Supp. 2d 273 (D.N.J. 1998) ........ccccceeeceeseeeseeeees 34

United States v. Southeastern Pennsylvania

Transportation Authority,

i Se 34

United States v. Township of Brighton,

153 F.3d 307 (6th Cir. 1998) ...........ccsrserererecsrseees 29, 30

STATUTES AND REGULATIONS

28 U.S.C. §$1254(1). eee ee ee 1

TABLE OF AUTHORITIES

SD UNIO <ccrenneriencinnnanintsintimaniniendinneitenigaiaien’ 5

i 8

i ED crcrncrecrrerscnscmmmanee 33

ee cresrsctcterntentnesemnenmecensinnsemennaiiienineamnnmniis 7

Se I tttteercernnneninnsnnnnmnnienmnnintinatintill 3

8 ee 3

42 USB.C. S9G0T(ANB)....nn-ccncecreocerserececeee susenceousmenseseumsumsened 3,8

ee I ce rttnnncreceereesernnemeenmennnmneniesiel 3

cinesnernacesrenmsesneemsesecnsmenectnnnsementenintiaiailel 4

OU eT 34, 35

enn crentneensncenssensenemenimnaigaié 34

ee 8

Cal. Health & Safety Code §§25300-25395.45..............00. 4

LEGISLATIVE HISTORY

126 Cong. Rec. 30832 (1980).........ccccccrsseeseseeversereeeeeeseeveserers 4

TABLE OF AUTHORITIES—Continued

Page(s)

126 Cong. Rec. 30072 (19B0) .....0...ceceececsvseveeceeesecsserseses 4, 24

H.R. Rep. No. 96-1016(1) pt. 1 (1980) .........cccecreeesereeneneee 4

H.R. Rep. No. 99-253(I) (1985), as reprinted in

NE SI ietitectitericttcinerimnmncemenenentiil 5

OTHER AUTHORITY

EPA, Superfund Enforcement: Success in

Enhancing Fairness and Expediting

Settlements, available at

http://www.epa.gov/superfund/accomp/

DT EDE ATE ROED ccccecesesssesssssecsssesssesesssnsesecsswesse0s 35

EPA, NPL Site Totals by Status and Milestone

(May 8, 2008),

http://www.epa.gov/superfund/sites/

query/queryhtm/npltotal Atm ...........0ccccereeeees —

EPA, Superfund Site Information,

http://efpub.epa.gov/supercpad/cursites/

0 EE 33, 34

Richard A. Epstein, Two Fallacies In The Law

Of Joint Torts, 73 Geo. LJ. 1377 (1985) .......cecceeeee 25

Jill E. Fisch, Captive Courts: The Destruction of

Judicial Decisions by Agreement of the

Parties, 2 N.Y.U. Envtl. LJ. 191 (1993).................33

TABLE OF AUTHORITIES—Continued

Page(s)

GAO, Consolidating and Restructuring the

Buccutive Branch: Hearing Before the

ement, Information, & Technology of

the Commies on Government Reform and

Oversight, 104th Cong. (1995) ...-.<-v0« pemmnasuensnenessenees 33

GAO, Federal Facilities: Agencies Slow to

Define the Scope and Cost of Hazardous

Waste Site Cleanups, Report to the

Subcommittee on Investigations and

Oversight, Committee on Public Works and

Transportation (Apr. 1994), available at

http//archive.gao.gov/t2pbat3/151689.pdf ............. 32

GAO, Superfund Program Management (Feb.

1997), available at http://www.gao.gov/

archive/1QVTMEITIOIL.DAE .....ccceceossccsreesrsecsessereserseeeee 33

Roger Parloff, Rigging The Common Law,

American Lawyer (Mar. 1992) ........:c:c0-ceseresereeeseees 33

Ridgeway M. Hall, Jr. et al., Superfund

Response Cost Allocations: The Law, The

Science and The Practice, 49 Bus. Law. 1489

W. Page Keeton et al., Prosser & Keeton on The

Law of Torts $52 (Sth ed. 1984) 2.0.....cccccccceecereeeeeees 22

—_

TABLE OF AUTHORITIES—Continued

Page(s)

William A. Landes & Richard A. Posner, Joint

and Multiple Tortfeasors: An Economic

Analysis, 9 J. Leg. Stud. 517 (1980) ........ccreeeerevees 25

Te a 31

Donald Sutherland, Superfund Awakes in State

Supreme Courts, RiskWorld, (Dec. 5, 1997),

available at http://www.riskworld.com/

NEWS/97G4/NW7AaDSES.NLM. ....0ccccrrereeeerersereseresereesrenees 33

OPINIONS BELOW

The amended opinion of the Ninth Circuit and the

dissent from the denial of rehearing en banc (Pet.App.-

la—81la) are reported at 520 F.3d 918. The prior opinion

of the Ninth Circuit (Pet.App.-263a-310a) is reported

at 502 F.3d 781. The amended findings of fact and

conclusions of law of the district court for the Eastern

District of California (Pet.App.-82a-262a) are reported

at 2003 WL 25518047.

JURISDICTION

The Ninth Circuit entered its opinion denying

rehearing on March 25, 2008. (Pet.App.-la). This

Court has jurisdiction under 28 U.S.C. $1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Appendix (Pet.App.-3lla-18a) reproduces the

relevant text of the Comprehensive, Environmental,

Response, Compensation, and _ Liability Act

“CERCLA”, 42 U.S.C. $9601 et seq.

STATEMENT OF THE CASE

CERCLA imposes _ retroactive liability for

environmental cleanup on multiple “responsible

parties,” including the actual polluters but also

landowners who did not contribute to the

contamination on their property. Courts have

uniformly held that CERCLA liability is joint and

several only if there is no reasonable basis for

apportioning causal responsibility, under principles

outlined in §433A of the Restatement (Second) of Torts

(1965) (“the Restatement”). This case involves the

relative responsibility of the 29-year operator of an

agricultural chemical distribution facility, and two

uninvolved landlords who leased that operator a small

parcel of land, for approximately half the period, for

use as a parking lot and for storage of empty cans and

—_ ‘The Gotriet court made detailed findings

ability ooid be sabmediie (indeed, conservatively)

wrtioned by reference to the relative sizes of the

land parcel, the Lag of thine each was anes, and the

day tril, the district court made extensive findings and

cluded that “(t]he concept that a passive owner of a

contignent quseil, not representing more than 19% in

area of a CERCLA site, operated less than 44% of the

time, where substantially smaller volumes of hazardous

substance releases occurred, should be strictly liable

for the entire site remediation ... takes strict liability

beyond any rational limit.” Pet.App.-245a.

The Ninth Circuit reversed, holding that

apportionment requires “records” showing with

“precision” exactly what chemicals were spilled, where,

and when. Pet.App.-4la. The panel conceded that such

records would rarely if ever exist, and that landowners

will have a far harder time avoiding joint and several

liability under its test than other defendants who were

directly involved in causing the contamination. /d.

The Ninth Cireuit’s proof requirements are

inconsistent with the governing common law principles,

which require only a factual basis for an approximate

practical apportionment, upon reasonable assumptions

determined by the trier of fact. The panel

acknowledged a direct conflict with the Fifth Circuit’s

decision in In re Bell Petroleum Services, Inc., 3 F.3d

889, 904 & n.19 (5th Cir. 1993), which permits

apportionment on the basis of reasonable assumptions

even if records are “incomplete,” so long as a factual

basis exists for a “rough approximation” of each

defendant’s causal responsibility for the harm.

Pet.App.-46a n.32. The panel also acknowledged a

separate circuit split over the standard of appellate

review, and whether the possibility of apportionment is

a question of fact or law. Pet.App.-35a. Eight judges

dissented from the denial of rehearing en banc, noting

that the panel had “applie(d] CERCLA in a novel and

unprecedented way to impose impossible-to-satisfy

burdens on CERCLA defendants,” and that its

“unreasonable application of CERCLA apportionment

law imposes joint and several liability on CERCLA

defendants where Congress did not so _ intend.”

Pet.App.-57a (footnote omitted).

This case involves several acknowledged circuit

splits on an issue of national importance. This Court

has never addressed the basic principles governing

apportionment under CERCLA, and the issue involves

the proper allocation of hundreds of billions of dollars of

liability at thousands of cleanup sites nationwide.

Certiorari is warranted.

A. Statutory Background

CERCLA was enacted in 1980. It effected a radical

change in the law by imposing retroactive strict

liability for environmental cleanup costs on four

categories of potential responsible parties (“PRPs”).

42 U.S.C. §9607(a)(1}(4).! Even “innocent’ private

1 CERCLA also established the “Superfund,” and California

established a similar account, to fund remediation of contaminated

sites where the responsible party is insolvent or no longer exists.

parties .... not responsible for contamination,” such as

an uninvolved landlord, “may fall within the broad

definitions of PRPs.” United States v. Atl. Research

Corp., 127 8. Ct. 2331, 2336 (2007).

CERCLA is silent, however, as to how

responsibility for cleanup costs should be apportioned

between multiple PRPs. Early draft bills would have

imposed joint and several liability, but many Senators

criticized that solution because it threatened to

“impose financial responsibility for massive costs and

damages awards on persons who contributed minimally

(if at all) to a release or injury.” See 126 Cong. Rec.

30972 (1980). Both houses’ bills eventually eliminated —

language concerning joint and several liability “to avoid

a mandatory legislative standard applicable in all

situations which might produce inequitable results in

some cases.” United States v. Chem-Dyne Corp., 572

F. Supp. 802, 808 (S.D. Ohio 1983). Senator Jennings

Randolph, sponsor of the bill, explained that “we have

deleted any reference to joint and several liability,

relying on common law principles to determine when

parties should be severally liable.” 126 Cong. Rec.

30932 (1980).

This Court has never determined whether or when

CERCLA creates joint and several liability, see Atl.

Research, 127 S. Ct. at 2339 n.7, but the leading early

case held that Congress intended the scope of liability

to be governed by “traditional and evolving principles

of common law,” articulated in §4383A of the

42 U.S.C. §9611; Cal. Health & Safety Code §§25300-25395.45; see

also H.R. Rep. No. 96-1016(1) pt. 1, at 34 (1980) (defendant

establishing divisibility pays only the portion of costs reasonably

attributable to him).

Restatement. Chem-Dyne, 572 F. Supp. at 808. The

legislative history to the 1986 Superfund Amendments

and Reauthorization Act endorsed this approach, see

H.R. Rep. No. 99-253(1) at 74 (1985), as reprinted in

1986 U.S.C.C.A.N. 2835, 2856, demonstrating that

Congress twice rejected the opportunity to impose a

mandatory joint and several liability scheme. The

principles of the Restatement have been followed by all

subsequent courts to address the issue.

The Restatement provides that “[dJamages for

harm are to be apportioned among two or more causes

where: (a) there are distinct harms, or (b) there is a

reasonable basis for determining the contribution of

each cause to a single harm.” Comments explain

various methodologies providing a “reasonable basis”

for apportionment. One illustration suggests that

“where the cattle of two or more owners trespass upon

the plaintiff's land and destroy his crop,” the resulting

damages should “be apportioned among the owners of

the cattle, on the basis of the number owned by each,

and the reasonable assumption that the respective

harm done is_ proportionate to that number.”

Restatement §433A illus. d. Another example suggests

that if two defendants “operating the same plant,

pollute a stream over’ successive periods,”

responsibility should be apportioned in proportion to

the length of time each operated the facility—on the

premise that total pollution would be _ roughly

proportionate to length of operation. Jd. cmt.c. If no

“reasonable basis” for apportionment can be identified,

even after making “reasonable assumption(s]” like

these, the Restatement calls for joint and several

responsibility.

B. Factual and Procedural Background

1. Operations at the Arvin Site

This case involves an agricultural chemical facility

in Arvin, California. The facility was owned by Brown

& Bryant (“B&B”), a now-defunct company that

operated in Arvin from 1960 until 1988. Pet.App.-12a,

16a n.9. B&B used its Arvin facility to store, mix, and

load into application rigs agricultural chemical products

produced by manufacturers such as Shell Oil Company

(“Shell”), which B&B sold to local growers. Pet.App.-

13a. B&B stored and distributed the weed killer

dinoseb, as well as the soil fumigants D-D and

Nemagon, which are injected into soil and rapidly

disperse to kill nematodes (microscopic worms that

attack crop roots). Jd.

B&B was a “sloppy” operator that actively

contaminated its facility and the underlying

groundwater. Pet.App.-130a. Leaks occurred when

B&B employees transferred bulk shipments of D-D

into storage tanks, and when “nurse tanks” were

inspected or rinsed out. Pet.App.-92a. Spills also

occurred on a daily basis when B&B transferred its

products from storage tanks to application rigs.

Pet.App.-93a; SER56-57.2. The storage of these three

chemicals also caused leakage from their containers.

D-D in particular is a corrosive solvent that “caused

numerous tank failures and spills” in the 1960s.

Pet.App.-115a.

2 SER refers to the Supplemental Excerpts of Record filed by

the Railroads in the Ninth Circuit. ER refers to the Joint

Excerpts of Record filed by the United States and the State of

California.

The entire site was graded toward a drainage pond

in the southeast corner of the facility, which collected

run-off. ER68; Pet.App.-12a. In 1960, B&B installed a

sump, into which as much as 2,000 to 4,000 gallons of

rinse water was dumped per month, in the center of its

parcel. Pet.App.-llla; ER68, SER331, SER342-43,

SER316, SER267, SER365, SEK367. The sump was

connected to the pond with a pipe. Neither the sump

nor the pond were lined until 1979. Pet.App.-111a, 95a.

The sump and pond increased the rate at which these

chemicals, which were naturally volatile and might

otherwise have evaporated, leached into groundwater.

Pet.App.-104a—05a.

2. Site Characteristics

Beginning in 1975, for the last thirteen years of the

Arvin facility’s operation, B&B leased an adjacent 0.9-

acre parcel jointly owned by Atchison, Topeka, & Santa

Fe Railroad Co. (the predecessor in interest to

Burlington Northern & Santa Fe Railway Co.) and

Southern Pacific Transportation Co., (the predecessor

in interest to Union Pacific Railroad Co. (“the

Railroads”). Pet.App.-12a. Including the Railroads’

small parcel, B&B’s facility occupied 4.7 acres of land.

Id. The Railroads’ parcel was located at the

westernmost portion of the Arvin site, adjacent to

B&B’s warehouse and farthest from the pond in the

southeastern corner. Pet.App.-12a. |

The Railroads did not have any role in B&B’s

operations, and all parties agree that the only basis for

imposing CERCLA liability against the Railroads is

the “owner” provision of 42 U.S.C. §9607(a). Because

the parcel leased from the Railroads was used

principally for parking fertilizer rigs, Pet.App.-12a, and

secondarily for storing empty cans and drums,

Pet.App.-94a, the overwhelming majority of the

chemical disposals occurred on parts of the facility not

owned or controlled by the Railroads. Pet.App.-247a—

48a.

C. District Court Proceedings

In the early 1980s, California’s Department of Toxic

Substances Control (“DTSC”) found evidence of soil

and groundwater contamination at B&B’s facility.

Pet.App.-l4a. In 1988, DTSC ordered B&B to correct

the violations and the cost drove B&B out of business.

In 1989, the Environmental Protection Agency

(“EPA”) listed the B&B facility on the CERCLA

National Priorities List. See 42 U.S.C. §9605; 40 C.F.R.

pt. 300, app. B. The contamination on the Railroads’

parcel did not require remediation, but in 1991 the

EPA ordered the Railroads to take measures to

prevent future contamination. Pet.App.-l4a-l5a. In

1996, the United States and California filed suit under

CERCLA against the Railroads and Shell for

reimbursement of investigation and clean-up expenses.

Pet.App.-15a.

After a bench trial, the district court issued what

the Ninth Circuit later described as an “exceedingly

detailed 185-page” opinion. It found the Railroads

liable as owners, and Shell liable as an entity that

“arranged” for the disposal of hazardous substances.

See 42 U.S.C. §9607(a)(3). The court found that the

United States incurred response costs of $7,809,683.46

as of June 39, 1997, not including interest or attorneys

fees. Pet.App.-230a. As of March 31, 1998, California

incurred response costs of $401,827.81. Jd. The court

also entered a declaratory judgment establishing

liability for future costs. Pet.App.-231a.

1. District Court Findings

The district court made extensive findings relevant

to the apportionment inquiry, the vast majority of

which were held to be “factually correct” by the Ninth

Circuit. See Pet.App.-42a.

Activities on the Railroads’ Parcel. The

district court found that the overwhelming majority of

B&B’s chemical disposals occurred on land not owned

by the Railroads. Pet.App.-247a-48a. The “Railroad

parcel was only used for vehicle and equipment

storage, washing and limited loading-unloading of

agricultural chemicals, not active operations or

maintenance.” Pet.App.-247a. Drums of dinoseb and

empty cans of pesticide were stored on the Railroads’

parcel, which occasionally resulted in small leakages.

Pet.App.-93a—95a. Nemagon drums were also stored

on the Railroad parcel, after being emptied of their

contents on the B&B parcel. Pet.App.-95a. The

district court found that there was only “slight” D-D

contamination on the Railroad parcel “as a result of D-

D rig and nurse tank storage” there. Pet.App.-25la.

The activities that caused most of the spills—

including mixing, formulating, unloading, and

transporting chemicals—were predominantly

performed on B&B’s parcel. Pet.App.-247a—48a. The

court also noted that “(i]t is undisputed that the pond,

the sump, and the dinoseb spill area, all of which are

located on the B&B parcel, were and are the primary

sources of the groundwater contamination at the Site.”

Pet.App.-104a. “(TJhe overwhelming contaminant

mass is on and under the B&B parcel.” Pet.App.-102a.

Timing Of Spills. B&B did not begin leasing

the Railroad parcel until 1975, fifteen years into its

operation of the Arvin facility. The district court found

that “(ijn the first twenty years of its operations, B&B

took almost no precaution to prevent the release of

hazardous agricultural chemicals into the

environment.” Pet.App.-130a. B&B lined the pond and

sump in 1979, and began taking greater environmental

precautions. Pet.App.-111la.

Chemical Properties of Substances. Not all

hazardous substances spills reach the groundwater. D-

D and Nemagon are volatile chemicals, designed to

evaporate rapidly when injected into soil. The district

court found, for example, that “[iJn the absence of

added water, a spill of at least 500 gallons (on bare soil)

or in excess of 10,000 gallons (on intact asphalt), of a

volatile chemical such as 1,2-DCP,” one of the

constituents of D-D, “would be required on the

Railroad parcel, before a_ spill would reach

groundwater in concentrations sufficient to require a

remedial response.” Pet.App.-98a-99a. “There is no

evidence that a single spill of that magnitude ever

occurred on the Railroad parcel.” Pet.App.-99a.

But while chemicals like D-D and Nemagon “will

raj dly volatilize and ‘fume’ when injected into the soil,

or spilled onto the ground, the pure phase D-D which

was rinsed into the sump” on the B&B parcel and then

flowed directly into the pond “could not readily

volatilize due to the pressure of the water overlying it.”

Pet.App.-105a.

Migration of Spilled Chemicals. The

groundwater at the site is divided into three zones, and

the nearest drinking water well draws water from the

C-zone, or deepest level of groundwater. Pet.App.-87a.

Disposals at the Arvin site have contaminated the A-

zone, and some of that contamination has reached the

B-zone. The B- and C-zones are separated by an

impermeable clay layer. /d.

Migration from a surface release is confirmed by

‘ sampling results showing a vertical trail of

contamination into the groundwater and increased

concentrations of contamination in the groundwater.

The district court found that soil borings on the

Railroad parcel and “[tjhe size and shape of the

groundwater plumes” indicate that any surface spills

on the Railroad parcel did not contribute to the

principal groundwater contamination, and that the

“most likely explanation” for groundwater

contamination below the southern portion of the

Railroad parcel is groundwater flow from the sump on

B&B's property. Pet.App.-103a-04a. The court found

that only a limited amount of contaminated

groundwater in the northern portion of the Railroad

parcel was likely caused by spills on the Railroad

parcel. Pet.App.-112a. It also found that the levels of

contamination even in the A-zone groundwater

beneath the Railroad parcel are “too low to require

remediation.” Pet.App.-97a.

According to the United States and California,

because a small pipe allowed water on the Railroads’

parcel to drain onto B&B’s parcel, surface water on the

Railroads’ parcel could have reached the pond on

B&B's parcel. The court found the scientific evidence

“inconclusive,” but held that “the presence of

agricultural chemical spills on the Railroad parcel”

contributed to the need to incur costs under CERCLA.

Pet.App.-112a—13a.

2. District Court’s Apportionment Holding

The district court reasoned that “|tjhe burden to

show an appropriate basis for apportionment is heavy,”

and that “[t]he evidence supporting divisibility must be

concrete and specific.” Pet.App.-249a, 237a. The court

concluded, however, that the Railroads had satisfied

that burden and shown a reasonable basis for

apportionment under the Restatement guidelines. It

held that “[tJhis is a classic ‘divisible in terms of degree’

case, both as to the time period in which defendants’

conduct occurred, and ownership existed, and as to the

estimated maximum contribution of each party’s

activities that released hazardous substances that

caused Site contamination.” Pet.App.-239a.

The district court apportioned the harm by

multiplying the percentage of the overall land that was

owned by the Railroads (19.1%), the percentage of the

29 years of B&B’s operations during which it leased

land from the Railroads (45%), and the percentage of

overall site contamination attributable to the two

chemicals that meaningfully contaminated the

Railroads’ land (66%), for an initial allocation of 6%.

Pet.App.-25la-52a. It reasoned that an allocation

based on these reasonable assumptions was

conservative, in the sense that, if anything, it

overstated the Railroads’ responsibility. “({I}t is

indisputable that the overwhelming majority of

hazardous substances were released from the B&B

parcel,” and “[rjelatively fewer activities that could

result in releases were conducted on the Railroad

parcel.” Pet.App.-247a—48a. Indeed, “considerable

evidence of the relative levels of activity and number of

releases on the two parcels [indicated that) the

Railroad parcel could not have contributed to more

than 10% of the volume or mass of the overall site

contamination resulting from B&B’s hazardous

substance-release producing activities.” Pet.App.-252a

(emphasis added). Even allowing for “calculation

errors up to 50%,” there is me Cumy < sunase of

contaminants” under which the Railroads

causally responsible “for more than 9%” of the overall

harm. Jd. The court therefore increased its initial 6%

apportionment figure by half, assigning 9% of the total

liability to the Railroads. Jd. The court also held Shell

liable for 6% of the total harm based on the percentage

of leakages on the facility that involved Shell’s

products. B&B, although insolvent, was assigned 100%

joint and several liability. Pet.App.-16a.

The district court concluded that “[tJhe concept that

a passive owner of a contiguous parcel, not

representing more than 19% in area of a CERCLA site,

operated less than 44% of the time, where substantially

smaller volumes of hazardous substance releases

occurred, should »e strictly liable for the entire site

remediation ... takes strict liability beyond any rational

limit.” Pet.App.-246a.

D. The Ninth Circuit’s Opinions

The Ninth Circuit issued an opinion on March 16,

2007. It amended that opinion immaterially in

September 2007, and then more substantially in March

2008, in response to a petition for rehearing en banc.

1. The September 2007 Opinion

The Ninth Circuit’s initial opinion reversed the

district court’s apportionment and imposed joint and

several liability on the Railroads and Shell.

The Ninth Circuit acknowledged a conflict over the

appellate standard of review. The Fifth and Eighth

Circuits review de novo “whether there is a reasonable

basis for apportioning the harm,” and then for clear

error “precisely how damages are to be divided.”

Pet.App.-288a. The Sixth Circuit reviews the entire

inquiry as a question of fact. The Ninth Circuit

purported to adopt the Fifth and Eighth Circuit

standard, with the “refinement,” suggested by a

dissenting judge in one of the Fifth Circuit cases, that

“whether the party with the burden of proof met that

burden” is always a question of law reviewed de novo.

Pet.App.-288a-89a.

The Ninth Circuit held that the apportionment

principles outlined in $433A of the Restatement are a

“poor fit” that require various modifications to comport

with the “super-strict’ nature of CERCLA.” Pet.App.-

278a-79a. The court of appeals noted that the

Restatement standard “works nicely” and is “relatively

straightforward” when the “defendants are all

polluters themselves,” so long as the court “can

estimate with some confidence the amount of waste

that each defendant disposed of” and “has a basis for

determining that the extent of contamination is

proportional to” disposal. Pet.App.-28la. The panel

repeatedly stated that a landowner can prove

divisibility of harm, however, “only by demonstrating

that portions of the contamination are in no respect

traceable to the portion of the facility that the

landowner owned at the time of disposal.” Pet.App.-

282a; see also Pet.App.-291la (same).

The panel held that apportionment in proportion to

land area was a “meat axe’ approach,” because B&B’s

usage of the Railroad parcel as a parking and storage

lot may have had the “synergistic” effect of enabling

B&B to purchase more chemicals and consequently

process and spill a higher volume of contaminants on

its own land. Pet.App.-294a, 293a. The court of

appeals then (inconsistently) acknowledged that

comparisons of “the amount of chemicals stored,

poured from one container to another, or spilled on

each parcel” might have been “pertinent.” Despite the

district court’s extensive findings about precisely those

issues, however, the Ninth Circuit stated thet “none of

this data is in the record.” Pet.App.-293a-94a. The

Ninth Circuit faulted the Railroads for failing to

produce, for example, “records that separate out, with

any precision, the amount of toxic chemicals stored on

one part of [the] facility’—while also acknowledging

that such records “would have had little utility to B&B

.. and none to the Railroads,” and that “such

information is, as a practical matter, not available for

periods long in the past.” Pet.App.-294a.

The court of appeals similarly overturned the

district court’s temporal apportionment, reasoning that

it “assumes constant leakage on the facility as a whole

or constant contamination traceabie to the facility as a

whole for each time period,” and that “no evidence

suggests that to be the case.” Pet.App.-295a. Again,

the panel ignored the district court's finding that B&B

was more careless “[ijn the first twenty years of its

operations,” which indicates that an assumption of

“constant contamination” is reasonable or even

conservative. Pet.App.-130a Finally, the panel held

that the district court committed a “factual error” in

determining that any D-D contamination on the

Railroad parcel was too “slight” to contribute to the

groundwater contamination that required remediation.

Pet.App.-295a, 25la. The panel wrote that there “is no

evidence as to which chemicals spilled on the parcel”

and “there is evidence that there may well have been

leakage on the Railroad parcel of D-D.” Pet.App.-295a.

In conclusion, the panel again acknowledged that a

landlord often “will not be able to prove in any detail

the degree of contamination traceable to activities on

its land,” and that “(tJhe net result of our approach to

apportionment ... may be that landowner PRPs, who

typically have the least involvement in generating the

contamination, will be the least able to prove

divisibility.” Pet.App.-296a. The panel thought that

outcome acceptable because CERCLA is “not ...

concerned with allocation of fault” and because joint

and several liability should be “the norm” in order “to

assure, as far as possible, that some entity with

connection to the contamination picks up the tab”

rather than the taxpayers. Jd. The panel expressly

recognized that there is “something of a circuit split on

the degree of specificity of proof’ necessary for

apportionment, because the Fifth Circuit has

“permitted informal estimates or data rather than

more exact calculations.” Pet.App.-299a n.29. But it

thought that conflict not outcome-determinative here

because “the district court’s extrapolations could not be

upheld under even a forgiving standard.” Pet.App.-

300a.

The panel also held that Shell is strictly liable as an

“arranger,” and reversed the district court’s

apportionment analysis (for reasons similar to those

deployed against the Railroads) to hold Shell jointly

and severally liable. Pet. App.-300a-—09a.

2. The Amended Opinion and Dissent from

the Denial of Rehearing En Banc

The Railroads and Shell sought en banc review. In

response, the panel amended its opinion to eliminate

some of its obviously incorrect statements, but did not

modify its basic reasoning or conclusions. See

Pet.App.-3a-10a. For example, the panel removed all

references to “super-strict liability” or the phrase

“perfect information,” and added a footnote stating

that, “if adequate information is available, divisibility

may be established by ‘volumetric, chronological, or

other types of evidence.” Pet.App.-3a—4a, 9a, 24a. But

the Ninth Circuit retained all of the language and

analysis rejecting the district court’s reasonable basis

for geographic and temporal apportionment, and

maintained the requirement that landowners produce

forms of documentary evidence that they have no

reason to possess. Pet.App.-40a—4la.

Eight judges of the Ninth Circuit dissented from

the denial of rehearing en banc, writing that the panel’s

apportionment reasoning “applies CERCLA in a novel

and unprecedented way to impose impossible-to-satisfy

burdens on CERCLA defendants.” Pet.App.-57a. The

dissenters concluded that the panel’s discussion of the

standard of review was “sleight of hand,” and that its

opinion “effectively ... disregard[s]” the Restatement

test for apportionment. Pet.App.-65a, 59a. in

apportioning liability for destroyed crops in proportion

to the ownership of escaped cows, for example, “the

Restatement, unlike the panel, does not require

‘adequate records’ of the harm caused by each animal;

the farmer is not required to stand by his crop at all

times and meticulously record each step taken by each

animal, to trace the harm done back to the individual

cattle owners.” Pet.App.-69a—-70a. “Indeed,” the

dissenters explained, “this is precisely what the

‘reasonable basis’ standard is designed to avoid ....”

Pet.App.-69a. The dissenters cited both the Fifth and

Eighth Circuits for the proposition that it is

“reasonable to assume that each year of ownership

caused an equal amount of contamination, even though

the contamination may have been worse in some years

than in others.” Pet.App.-73a (citing Bell Petroleum, 3

F.3d at 903-04); United States v. Hercules, Inc., 247

F.3d 706 (8th Cir.), cert. denied, 534 U.S. 1065 (2001).

The dissenters also explained that “(tlhe district

court’s findings of fact, which the panel does not find to

be clearly erroneous, contradict the panel’s appellate

factfinding.” Pet.App.-70a. For example, “the district

court’s assumption of constant contamination over the

entire period not only provides a reasonable basis to

apportion liability, but, if anything, overestimates the

contamination attributable to the Railroad parcel”

because of the district court’s finding that B&B took

steps to reduce contamination after leasing the

Railroad parcel. Pet.App.-73a.

The dissenters concluded that “{ilf this evidence

does not provide a ‘reasonable estimate’ for

apportionment of liability, I do not see how—short of

‘perfect information’ sufficient to trace every molecule

of pollution to the landlord’s parcel—apportionment

could ever be possible under CERCLA.” Pet.App.-59a.

REASONS FOR GRANTING THE WRIT

As the eight dissenters from denial of rehearing en

banc explained, the Ninth Circuit’s opinion adopts

proof requirements for apportionment of harm under

CERCLA that are so onerous and unrealistic that

liability will almost never be apportioned. The Ninth

Circuit made no secret of its motivation: to ensure that

CERCLA hiability is essentially always joint and

several, so that EPA and the States can always collect

the “orphan” shares of any insolvent PRPs from

private parties rather than spreading those costs

across society as a whole. The Ninth Circuit also

candidly admitted that its approach to apportionment

perversely punishes the least culpable PRPs while

permitting others with more direct involvement in the

contamination to escape joint and several liability if

they keep detailed enough records.

The Ninth Circuit's demand ffor precise

documentation, and its rejection of apportionment on

the basis of reasonable assumptions, conflicts with the

Restatement principles embraced by every other

circuit, and particularly with the Fifth Circuit’s

decision in Bell Petroleum. Its belief that those

Restatement principles must be distorted to ensure

that government agencies never have to absorb

“orphan” cleanup costs also conflicts with decisions of

the Fifth and Eighth Circuits, and with all available

evidence of Congress’s intent. The Ninth Circuit’s

approach to appellate review conflicts with several

other circuits by according essentially no deference to

the district court’s apportionment decision and factual

findings. And, as explained in detail in the separate

petition filed by Shell, its interpretation of “arranger”

liability under CERCLA conflicts with other circuits.

Liability must be apportioned when reasonable

assumptions can be used to approximate a defendant’s

contribution to the harm. Where, as here, a district

court has carefully analyzed specific and concrete

evidence, based its determination on reasonable

assumptions, and calculated the maximum possible

contribution of a PRP to the environmental harm,

deference should be afforded to that apportionment

decision.

This Court should grant this petition as well as the

separate petition for certiorari filed by Shell, and

consolidate both petitions for argument.

I. THE NINTH CIRCUIT'S DECISION

CONFLICTS WITH GOVERNING

COMMON LAW PRINCIPLES AND THE

DECISIONS OF OTHER CIRCUITS

A. The Ninth Circuit’s Proof

Requirements Are _ Inconsistent

With Restatement Principles

Congress chose to leave the question of how

CERCLA costs would be divided or apportioned to the

courts, applying evolving common law principles.

Following the seminal decision in Chem-Dyne, every

court to address these issues has agreed that the

relevant principles are embodied in §433A of the

Restatement. The decision in this case marks a

dramatic departure from those principles, in the

service of the Ninth Circuit’s misguided and incorrect

view of the policies underlying CERCLA.

The Ninth Circuit faulted the district court for

relying on “simplistic” assumptions, including that the

Railroads’ responsibility for the overall contamination

was roughly proportional to the size of their parcel and

the time period it was leased. But the Restatement

expressly contemplates reliance on “reasonable

assumption[s],” such as the assumption that the

damage done by escaped cows will be roughly

proportional to their numbers (comment d). Individual

cows certainly act differently, but those differences are

not likely to matter in the aggregate and simply cannot

be reconstructed from any form of evidence likely to be

available. The Restatement also expressly endorses

the reasonable assumptions that environmental

damage to a polluted stream is roughly proportional to

the volume of pollution discharged by each defendant

(comment d) or the length of time each operated a

polluting plant (comment c).

The district court’s assumptions here were at least

as reasonable as the Restatement assumptions and

supported by extensive findings. For example, the

district court did not simply assume that contamination

was evenly distributed. It found that “(rJelatively

fewer activities that could result in releases were

conducted on the Railroad parcel,” and that “the

predominant activities conducted on the Railroad

parcel through the years were storage and some

washing and rinsing” of equipment, whereas “[mlixing,

formulating, loading and unloading of ag-chemical

hazardous substances, which contributed most of the

liability causing releases, were primarily carried out by

B&B on the B&B parcel.” Pet.App.-247a—48a. Overall,

“(tjhe volume of the hazardous substance releasing

activities on the B&B site is at least ten times greater

than” on the Railroad parcel. Pet.App.-179a. The

district court also carefully evaluated the expert

evidence and determined that the “overwhelming

contaminant mass is on and under the B&B parcel,”

Pet.App.-102a, and that no remediation is necessary at

this time on the Railroad parcel, Pet.App.-10la—02a,

112a-13a. Against that backdrop, the district court’s

assumption that the Railroads’ causal share of the

harm was proportionate to parcel size was not just

reasonable but plainly conservative. The district court

made similar findings supporting its division on the

basis of time, and its conclusion that the Railroads are

causally responsible for contamination associated with

only two of the three chemicals spilled at the facility.

The Ninth Circuit held that CERCLA

apportionment requires specific “records that separate

out,” with “precision,” the volume of toxic chemicals

stored or spilled on each parcel. The Restatement does

not require either “records” or “precision,” but

contemplates rough apportionment based on

reasonable asswmptions. See W. Page Keeton et al.,

Prosser & Keeton on The Law of Torts $52, at 345 (5th

ed. 1984) ‘apportionment requires only “a factual basis

... for some rough practical apportionment”).

The Ninth Circuit recognized that the

documentation it required will never, “as a practical

matter, [be] available for periods long in the past,” and

that keeping such records “would have had little utility

to B&B, the operator of the facility, and none to the

Railroads.” Pet.App.-4la. The court’s requirement of

“precis{e!’ documentation therefore makes the

apportionment contemplated by the Restatement

impossible, at least for landlords. As the Ninth Circuit

candidly conceded, “(t]he net result of our approach to

the apportionment of liability, consequently, may be

that landowner PRPs, who typically have the least

direct involvement in generating the contamination,

3 The Ninth Circuit held that the district court committed a

“factual error” by holding the Railroads responsible for only two

of the three chemicals, because “there is evidence that there may

well have been leakage on the Railroad parcel of D-D.” Pet.App.-

42a. That is a non-sequitur. The district court found that any such

leakage was so “slight” and incidental that it could not have

reached groundwater or contributed causally to the

contamination—particularly in light of the chemical properties of

that substance. Supra, at 10-11.

will be the least able to prove divisibility.” Pet.App.-

43a

EPA’s broad discretion to define the boundaries of

the “facility” aggravates these problems. By virtue of

-leasing a small adjoining parcel to B&B, the Railroads

were held jointly and severally liable here for

contamination not even occurring on their land, that

the Railroads had no realistic ability to monitor or

document, let alone prevent. B&B’s activities also

occurred in large part before CERCLA was even

passed. Congress intended for courts to develop

sensible apportionment principles grounded in the

common law. Requiring documentation that

landowners could not have kept, and had no reason to

keep, is inconsistent with the Restatement and

completely disregards Congress’s wishes.

The Ninth Circuit grounded its rigid insistence on

precision and unavailable documentation on a slanted

conception of the policy considerations informing

CERCLA apportionment. The Ninth Circuit’s opinion

repeatedly emphasized its belief that joint and several

liability must be the norm under CERCLA, and

apportionment the rare exception, because the

government should not be left “holding the bag for a

great deal of money” if one PRP is insolvent. See

4 Because CERCLA has bees interpreted to apply

retroactively, PRPs have been held liable for chemical spills that

occurred a century ago. See Continental Title Co. v. Peoples Gas

Light & Coke Co., 959 F. Supp. 893, 894 (N.D. Ill. 1997) (applying

CERCLA retroactively for the disposal of hazardous substances

that occurred at a gas plant between 1894 and 1930). Applying the

Ninth Circuit’s onerous burden of proof in cases where liability is

retroactive raises serious questions about CERCLA’s

fundamental fairness, akin to those underlying this Court’s

decision in Eastern Enterprises v. Apfel, 524 U.S. 498 (1998)...

Pet.App.-lla. The Ninth Circuit’s standard reflects a

strong bias in favor of joint and several liability that

departs dramatically from both CERCLA and the

Restatement. The court reasoned that any “perceived

unfairness” to individual PRPs is a result of the

statute’s strict liability nature, and that CERCLA

seeks first and foremost to assure that cleanup costs

fall on “those with some connection to the

contamination,” as opposed to “those with none, such

as the taxpayers.” Pet.App.-33a. “Any court-created

structure that would allow PRPs to whvitle their share

to little or nothing and leave the taxpayers holding the

bag,” the Ninth Cireuit held, “may seem more

equitable to some PRPs but would violate the basic

structure of the CERCLA statutory scheme.”

Pet.App.-33a—34a.

The Ninth Circuit’s freelance policymaking draws

no support from the statute. Congress intentionally

chose not to mandate joint and several liability under

CERCLA, because doing so would “impose financial

responsibility for massive costs and damages awards

on persons who contributed minimally (if at all) to a

release or injury.” See 126 Cong. Rec. 30972 (1980).

Congress chose to leave apportionment of harm to

common law principles, rather than to enshrine any

overarching policy that protecting the public fise is

more important than fairness to PRPs. It also created

the Superfund to cover cleanup costs when the

responsible party is missing or insolvent. And the

Ninth Circuit’s suggestion that the societal burden of

cleaning up pollution caused by now-insolvent parties

should be borne by private entities who happened to be

in the vicinity of the pollution, rather than by the

taxpayers generally, is highly dubious public policy.®

The Ninth Circuit also suggested that geographic

apportionment was a “meat-axe’ approach” because it

assumed that the availability of extra parking and

storage space on the Railroad parcel had the

“synergistic” effect of enabling B&B to do a higher

volume of business, and hence spill more on its own

land. Pet.App.-4la, 40a. That reasoning would

preclude geographic apportionment in nearly every

case, and is inconsistent with the basic premises of

landowner liability under CERCLA. The statute

imposes strict liability on passive landowners for

disposals of hazardous substances on their land—not

for disposals of hazardous substances elsewhere that

were somehow enabled by activities on that land. In

General Electric Co. v. AAMCO Transmissions, Inc.,

962 F.2d 281, 287-88 (2d Cir. 1992), for example, the

Second Circuit explained that the lessor of a service

station is not liable for damage caused by his lessee’s

5 The Ninth Circuit justified that preference by suggesting

that PRPs with “some connection” to the contamination probably

benefited from it. But the premise of apportionment is that a

reasonable basis exists for separating the harm that each PRP is

causally responsible for. CERCLA makes the Railroads strictly

liable as landowners for any disposals on their own land, but there

is no basis in fairness or public policy for holding them responsible

for the harm caused by the entirely separate chemical spills on

B&B's land—or for assuming that the Railroads benefited

economically in some way from those spills. And joint and several

liability for harms that are beyond a defendant’s causal control can

actually decrease his incentives to make efficient investments in

preventing harm. See, e.g., Richard A. Epstein, Two Fallacies In

The Law Of Joint Torts, 73 Geo. L.J. 1377, 1385-86 (1985); William

A. Landes & Richard A. Posner, Joint and Multiple Tortfeasors:

An Economic Analysis, 9 J. Leg. Stud. 517, 543 (1980).

disposal of hazardous substances generated at the

leased premises but disposed of elsewhere. Even if a

landlord “had the opportunity or ability to control [its

lessee’s] waste disposal practices” off the leased

property, it has no obligation to do so. Jd. at 286.

B. The Ninth Circuit’s Reasoning

Conflicts With Decisions Of Other

Circuits

The Ninth Circuit’s decision conflicts with decisions

of other circuits apportioning liability under CERCLA,

and apportioning damages under common law

principles in other contexts. Indeed, the Ninth Circuit

directly acknowledged a circuit split on the “degree of

specificity of proof necessary to establish” a reasonable

basis for apportionment. Pet.App.-46a n.32. The Ninth

Circuit’s suggestion that the circuit split is irrelevant

to this case is plainly incorrect. The district court’s

careful apportionment would have been upheld under

the standards applied in at least the Fifth Circuit, and

likely other courts as well.

In Bell Petroleum, three CERCLA defendants

successively operated a chrome-plating shop. The

district court held that “there was no method of

dividing the liability among the defendants which

would rise to any level above mere speculation,” in part

because “each of the proposed apportionment methods

involved a significant assumption factor, inasmuch as

records had been lost.” 3 F.3d at 894. The Fifth

Circuit reversed. After surveying the purposes of

CERCLA, the Restatement, and the apportionment

case law, the Fifth Circuit held that “(i]f the expert

testimony and other evidence establishes a factual

basis for making a reasonable estimate that will fairly

apportion liability, joint and several liability should not

be imposed in the absence of exceptional

circumstances.” Jd. at 903. The court of appeals held

that even though “the records of these activities were

not complete,” and in some cases had been “destroyed,”

there was “testimony from various witnesses

regarding the rinsing and wastewater disposal

practices of each defendant, and the amount of chrome-

plating activity conducted by each.” Jd. at 903-04 &

n.18.

The Fifth Circuit also permitted “significant

assumption factors,” so long as “those assumptions are

well founded and reasonable, and not inconsistent with

the facts as established.” Jd. at 904. And it held that

precision in the allocation of responsibility is not

required. The defendants need not show with

“absolute certainty the exact amount of chromium each

defendant introduced into the groundwater,” so long as

there is “sufficient evidence from which a reasonable

and rational approximation of each defendant’s

individual contribution to the contamination can be

made.” Jd. at 903 (emphasis added). “[{E]vidence

sufficient to permit a rough approximation is all that is

required under the Restatement.” Jd. at 904 n.19

(emphasis added).

The Fifth Circuit also articulated an understanding

of the policies underlying CERCLA apportionment

that is directly contrary to the Ninth Circuit’s view in

this case. The Fifth Circuit explained in Bell that

Congress recognized that CERCLA “can be terribly

unfair in certain instances in which parties may be

required to pay huge amounts for damages to which

their acts did not contribute,” and “left it to the courts

to fashion some rules that will, in appropriate

instances, ameliorate this harshness.” Jd. at 897. The

Fifth Circuit expressly rejected any suggestion that

the insolvency of a defendant could be relevant to the

apportionment analysis, “especially when the plaintiff

is the government,” because “the deck of legal cards is

heavily stacked in favor of the government” already.

Id. at 901 n.13.

If this case had arisen in the Fifth Circuit, the

district court’s careful apportionment analysis would

have been affirmed. The Fifth Circuit in Bell

specifically rejected the suggestion, central to the

Ninth Circuit’s analysis here, that apportionment

requires contemporaneous written records showing the

defendants’ respective activities with great specificity.

It also held that “testimony and other evidence

establish[ing] a factual basis for making a reasonable

estimate,” id. at 903, “reasonable and _ rationz!

approximation,” or “rough approximation,” is enough.

The Fifth Circuit specifically endorsed reliance on

reasonable assumptions, and the assumptions it

approved were, if anything, less well supported than

those the district court employed here.6 And it

rejected any proof requirements that “would be the

equivalent of a mandate of joint and several liability in

all CERCLA cases,” id. at 904 n.19, like the

requirements adopted by the Ninth Circuit here.

6 As explained by the dissent in Bell Petroleum, the Fifth

Circuit held that the evidence permitted a _ reasonable

apportionment, even though (1) a PRP’s expert assumed that the

electrical usage for its plating operations was 30% of its electrical

usage, but 50% of the electrical usages for two other PRPs, (2)

only “seattered invoices” were available to demonstrate sales

records, (3) expense records were available only for one 3-month

period out of the 6-year period during which defendants operated,

and (4) a PRP’s expert assumed that there was no waste disposal

after a catch tank was installed at the site. 3 F.3d at 911.

The Ninth Circuit’s decision also rejects both

geographic and temporal divisibility even though other

courts have endorsed both approaches. Compare, e.g.,

United States v. Township of Brighton, 153 F.3d 307,

320 (6th Cir. 1998) (“[T]ime seems the most obvious

and probable way that an operator can show

divisibility.”); United States v. Hercules, Inc., 247 F.3d

706, 719 (8th Cir. 2001) (“A defendant need not prove

that its ‘waste did not, or could not, contribute’ to any

of the harm at a CERCLA site ... because it is also

possible to prove divisibility of single harms based on

volumetric, chronological, or other types of evidence.”)

The Eighth Circuit has also embraced a view of the

general policies underlying apportionment that is

consistent with the Fifth Circuit’s opinion in Bell, and

inconsistent with the Ninth Circuit’s decision in this

case. The Eighth Circuit held in Hercules that

apportionment is “both compatible with the text and

the overall statutory scheme of CERCLA and a

sensible way to avoid imposing on parties excessive

liability for harm that is not fairly attributable to

them.” 247 F.3d at 716-17. Like the Fifth Circuit, it

also “reject{ed] any suggestion that the financial

condition of the parties should play a role in a

CERCLA divisibility analysis.” Jd. at 718 n.10.

The Ninth Circuit’s decision is also clearly

inconsistent with decisions of other circuits

apportioning harms under common law principles in

other contexts. In Sawer v. Burlington Northern

Railroad Co., 106 F.3d 1490, 1494 (10th Cir. 1996), for

example, the Tenth Circuit permitted apportionment

under the Federal Employers’ Liability Act between a

pre-existing injury and aggravation of that injury

resulting from negligence, and held that “(t]he extent

to which an injury is attributable to a preexisting

condition or prior accident need not be proved with

mathematical precision or great exactitude.” And the

Fourth Circuit held that apportionment was

appropriate in a suit for mismanagement of loans

against former officers of a federally insured bank, so

long as ““a factual basis can be found for some rough

practical apportionment.” Fed. Sav. & Loan Ins.

Corp. v. Reeves, 816 F.2d 130, 136 (4th Cir. 1987)

(emphasis added) (citing Restatement §433A cmt. d).

C. The Circuits are Further Divided

on The Appellate Standard of

Review

The Ninth Circuit’s decision also deepens an

acknowledged circuit split over the standard of

appellate review in CERCLA apportionment cases.

The Fifth and Eighth circuits first review de novo

whether there is a reasonable basis for apportioning

harm, and then examine the district court’s allocation

as a question of fact, reviewed under the clearly

erroneous standard. See Hercules, 247 F.3d at 718-19;

Bell Petroleum, 3 F.3d at 896, 902. The Sixth Circuit

reviews for clear error the district court’s finding of a

“reasonable basis for determining the contribution of

each cause to a single harm.” Township of Brighton,

153 F.3d at 318 (citation omitted).

The Ninth Circuit purported to adopt the Fifth and

Eighth Circuit standard, with “a refinement suggested

by Judge Parker’s dissent in Bell Petroleum.”

Pet.App.-35a. But as the dissent from denial of

rehearing en banc explained, in practice the Ninth

Circuit’s standard of review appears to involve “sleight

of hand.” Pet.App.-65a. The Ninth Circuit held that as

a legal matter the harm in this case was capable of

apportionment, and it largely agreed with the district

court’s fact-finding. See Pet.App.-38a (“[WJe do not

fault the district court’s factfinding—its numbers are

mostly correct ....”). With only one exception (and that

one an error, supra n.3) the Ninth Circuit did not hold

that any of the district court’s careful findings were

clearly erroneous. Instead it essentially held that the

district court erred as a matter of law by apportioning

liability based on “the simplest of considerations,”

without refuting (or, for the most part, even

acknowledging) the district court’s findings that made

those “simple” considerations a reasonable basis for

apportionment on the facts presented here. Jd.

Petitioners submit that the Sixth Circuit’s

deferential standard of review is more appropriate,

because whether a factual basis exists for a rough

practical approximation is an extremely fact-intensive

question. The Sixth Circuit’s standard is also

consistent with the Third Restatement’s view that

“(w]hether damages are divisible is a question of fact”

and “(t]he magnitude of each divisible part is also a

question of fact.” Restatement (Third) of Torts:

Appropriation of Liability §26 cmt. h (2000); see also

United States v. Alcan Aluminum Corp., 990 F.2d 711,

722 (2d Cir. 1993) (“As other courts have noted,

apportionment itself is an_ intensely factual

determination.”). As the dissenters from denial of

rehearing en banc correctly recognized, a reviewing

court giving appropriate deference to the district

court’s factual findings in this case would have affirmed

its apportionment decision.

II. THIS CASE PRESENTS ISSUES OF

NATIONAL IMPORTANCE THAT

REQUIRE GUIDANCE FROM THIS

COURT

Although Congress deliberately left all questions

involving the division or apportionment of response

costs under CERCLA to common law development,

this Court has never provided guidance to the lower

courts on these crucial issues. The need for national

uniformity in the rules governing the apportionment of

CERCLA liability has been recognized by every court

to address the issue, including the Ninth Circuit. See,

e.g., Chem-Dyne Corp., 572 F. Supp. at 802, 809 (“The

improper disposal or release of hazardous substances is

an enormous and complex problem of national

magnitude .... Federal programs that by their nature

are and must be uniform in character throughout the

nation necessitate the formulation of federal rules of

decision.”); Pet.App.-22a—23a. And the Ninth Circuit’s

decision is clearly irreconcilable with (at least) the

standards prevailing in the Fifth Circuit.

The appropriate standards for apportionment of

liability under CERCLA is also a question of great

national importance due to the large number of

Superfund sites and the extraordinary expenses of

remediation. According to the United States General

Accounting Office (“GAO”), “(t]he effort to clean up

federal hazardous waste sites is likely to be among the

costliest public works projects ever attempted by the

government.”? In 1997, the GAO estimated that

7 GAO, Federal Facilities: Agencies Slow to Define the Scope

and Cost of Hazardous Waste Site Cleanups, Report Ww the

Subcomm. on Investigations and Oversight, Comm. on Public

cleaning up Superfund sites “could amount to over $300

billion in federal costs and many billions more in

private expenditures.”® Some “peg ultimate cleanup

costs as high as $1 trillion.”? “One commentator has

described the resolution of insurance coverage for

clean-up costs under CERCLA as ‘a trillion-dollar

question.” Jill E. Fisch, Captive Courts: The

Destruction of Judicial Decisions by Agreement of the

Parties, 2 N.Y.U. Envtl. LJ. 191, 206 (1993) (citing

Roger Parloff, Rigging The Common Law, Am.

Lawyer 74, 76 (Mar. 1992)).

There are currently 1,255 final sites on the EPA’s

National Priorities List (“NPL”).!! See 42 U.S.C.

§9605(a)(8)(B). The Ninth Circuit contains 205.!2 EPA

may also bring CERCLA claims against PRPs for the

remediation of sites not on the list. The EPA’s

database lists over 10,000 active non-NPL sites, 1,737

Works and Transp. 7 (Apr. 1994), available at

http://archive.gao.gov/t2pbat3/151689.pdf.

8 GAO, Superfund Program Management, at 6 (Feb. 1997),

available at http://www.gao.gov/archive/1997/hr97014.pdf.

9 GAO, Consolidating and Restructuring the Executive

Branch: Hearing Before the Subcomm. on Gov't Mgmt., Info., &

Tech. of the Comm. on Gov't Reform and Oversight, 104th Cong. 55

(1995) (statement of Jerry Taylor, Director of Nat’l Res. Studies,

Cato Institute).

10 The A.M. Best Company and the American Society of

Actuaries insurance reported that “total estimated Superfund and

environmental cleanup costs (including transaction fees) estimate

liabilities at over $1 trillion.” Donald Sutherland, Superfund

Awakes in State Supreme Courts, RiskWorld, (Dec. 5, 1997),

available at http://www.riskweorld.com/news/97q4/nw7aa055. htm.

11 EPA, NPL Site Totals by Status and Milestone,

htt p://www.epa.gov/superfund/sites/query/queryhtm/npltotal.htm.

12 EPA, Superfund Site Information, http://cfpub.epa.gov/

supercpad/cursites/srchsites.cfm.

of which are located in the Ninth Circuit.!8 The Ninth

Circuit’s erroneous and unfair apportionment standard

has the potential to impose unwarranted joint and

several liability on thousands of PRPs who are actually

responsible for only a limited amount of contamination.

CERCLA clean-up costs on average exceed $30

million for a site on the NPL, and can be far higher. N.

States Power Co. v. Fidelity & Cas. Co. of N.Y., 523

N.W.2d 657, 660 (Minn. 1994). In one case, the Third

Circuit noted that remediation of chemical leakage at a

rail yard site would likely exceed $53 million. United

States v. Se. Pa. Transp. Auth., 235 F. 3d 817, 824 (8d

Cir. 2000). Remediation at the Helen Kramer Landfill

Superfund Site in New Jersey cost $123 million.

United States v. Kramer, 19 F. Supp. 2d 273, 276, 287

(D.N.J. 1998). Ohio’s Fields Brook Site could cost $100

million. United States v. Gencorp, Inc., 93 F. Supp. 928,

930 n.5 (N.D. Ohio 1996). Although CERCLA cases are

often settled through negotiated consent decrees, 42

U.S.C. §9622, the ability to impose joint and several

liability on minor parties will affect the value of those

settlements and will likely force many PRPs to accept

inequitable settlements.

Despite the importance of this issue, this Court has

never addressed the standard for CERCLA

apportionment in any context. Although this Court has

resolved questions regarding contribution under 42

U.S.C. §9613(f), see Atl. Research, 127 S. Ct. at 2333;

Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157,

161 (2004), contribution is entirely distinct from

apportionment. Contribution allows CERCLA

13 EPA, Superfund Site Information, http://cfpub.epa.gov/

supercpad/cursites/srchsites.cfm.

defendants to be reimbursed by other solvent PRPs

based on each party’s equitable share of the total

damages, and it occurs after joint and several liability

has been imposed. Contribution “is not a complete

panacea since it frequently will be difficult for

defendants to locate a sufficient number of additional,

solvent parties.” O’Neil v. Picillo, 883 F.2d 176, 179

(Ist Cir. 1989). “Orphan shares” of responsibility

attributable to absent or insolvent parties are a

common occurrence at CERCLA sites.14 Moreover,

contribution is unavailable against defendants who

have resolved their liability against the United States

or another state. 42 U.S.C. §9613(f).

This Court should grant review to establish sensible

and uniform rules for the apportionment of the

(conservatively) hundreds of billions of dollars of

cleanup liability imposed by CERCLA.

CONCLUSION

This Court should grant this petition as well as the

separate petition for certiorari filed by Shell, and

consolidate both petitions for argument.

14 In a 1993 EPA study of 78 sites, 52 sites (67 percent) had an

orphan share, and the average size of the orphan share was 26.9

percent. Ridgeway M. Hall, Jr. et al., Superfund Response Cost

Allocations: The Law, the Science and the Practice, 49 Bus. Law.

1489, 1503 n.74 (1994). The EPA has itself said that “{a]t almost

every Superfund site, some parties responsible for contamination

cannot be found, have gone out of business, or are no longer

financially able to continue cleanup efforts.” EPA, Superfund

Enforcement: Success in Enhancing Fairness and Expediting

Settlements, available at http://www.epa.gov/superfund/

accomp/17yrrept/report3.htm.

Respectfully submitted,

CHARLES G. COLE MAUREEN E. MAHONEY

BENNETT EVAN COOPER Counsel of Record

STEPTOE & JOHNSON J.SCOTT BALLENGER

LLP ERICA GOLDBERG

1330 CONNECTICUT AVE. LATHAM & WATKINS LLP

WASHINGTON, DC. 20036 555 11TH STREET, NW

SUITE 1000

WASHINGTON, DC 20004

(202) 637-2200

Counsel for Petitioners

APPENDIX

ie? OP oF =

(2) rere out. U.S. :

071601JUN 232008

No. OFFICE OF THE CLERK

= — == erk

In the

Supreme Court of the Anited States

THE BURLINGTON NORTHERN AND SANTA FE

RAILWAY COMPANY, AND UNION PACIFIC RAILROAD

COMPANY,

PETITIONERS,

Vv.

UNITED STATES OF AMERICA

AND

DEPARTMENT OF TOXIC SUBSTANCES CONTROL, STATE

OF CALIFORNIA,

RESPONDENTS.

ON PETITION FOR A WRIT OF CERTIORARI 70 THE

UNITED STATES COURT OF APPEALS FOR THE NINTH

CIRCUIT

APPENDIX TO PETITION FOR A WRIT OF

CERTIORARI

CHARLES G. COLE MAUREEN E. MAHONEY

BENNETT EVAN COOPER Counsel of Record

STEPTOE & JOHNSON J. SCOTT BALLENGER

LLP ERICA GOLDBERG

1330 CONNECTICUT AVE. LATHAM & WATKINS LLP

WASHINGTON, DC 20036 55511TH STREET, NW

SUITE 1000

WASHINGTON, DC 20004

(202) 637-2200

Counsel for Petitioners

—_—_—_—_——————— Oe e_—_—_—————————— SS

—_—_—————— a - - —— SN —— TT TTT — SS

TABLE OF CONTENTS

United States v. Burlington Northern & Santa

Fe Railway Co.,

520 F.3d 918 (9th Cir. Mar. 25, 2008)...................00- la

United States v. Atchison, Topeka & Santa Fe

Railway Co.,

Nos. CV-F-92-5068 OWW, CV-F-96-6226

OWW, CV-F-96-6228 OWW, 2003 WL

25518047 (E.D. Cal. July 15, 20038) ...............0..cec008 82a

United States v. Burlington Northern & Santa

Fe Railway Co.,

502 F.3d 781 (9th Cir. Sept. 4, 2007) ..............000 263a

EE BD asec ttccccsnccstensncserennnnscesnnesesii 3lla

BD WE IBAD. § GRO ccreerecscecescovesnssesnesssisnsernecesenenesesnnaunts 317a

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES of America, Plaintiff

and

Department of Toxic Substances Control, State of

California, Plaintiff-Appellant,

Vv.

BURLINGTON NORTHERN & SANTA FE

RAILWAY COMPANY, as successor in interest to the

Atchison, Topeka & Santa Fe Railway Company;

Union Pacific Transportation Company, as successor in

interest to the Southern Pacific Transportation

Company; Shell Oil Company, Defendants-Appellees.

United States of America, Plaintiff-Appellant,

and

Department of Toxic Substances Control, State of

California, Plaintiff,

Burlington Northern & Santa Fe Railway Company, as

successor in interest to the Atchison, Topeka & Santa

Fe Railway Company; Union Pacific Transportation

Company, as successor in interest to the Southern

Pacific Transportation Company; Shell Oil Company,

Defendants-Appellees.

United States of America; Department of Toxic

Substances Control, State of California, Plaintiffs-

Appellees,

Burlington Northern & Santa Fe Railway Company, as

successor in interest to the Atchison, Topeka & Santa

Fe Railway Company; Union Pacific Transportation

Company, as successor in interest to the Southern

Pacific Transportation Company, Defendants,

and

Shell Oil Company, Defendant-Appellant.

Nos. 03-17125, 03-17153, 03-17169.

Argued and Submitted Sept. 12, 2005.

Submission Withdrawn Sept. 14, 2005.

Resubmitted March 16, 2007.

Filed March 16, 2007.

Amended Sept. 4, 2007.

Second Amendment March 25, 2008.

520 F.3d 918; 2008 WL 763257

Before: B. FLETCHER, JOHN R. GIBSON,” and

MARSHA S. BERZON, Circuit Judges.

The Honorable John R. Gibson, Senior United States Circuit

Judge for the Eighth Circuit, sitting by designation.

ORDER

The full court has been advised of the petitions for

rehearing en banc. A judge of the court requested a

vote on en banc rehearing. The majority of the active

judges have voted to deny rehearing the matter en

banc. Fed. R.App. P. 35(f).

The panel has voted to amend its opinion and to

deny appellees’ petitions for rehearing with the

following amendments.

The opinion filed March 16, 2007 and amended

September 4, 2007, published at 502 F.3d 781 (9th

Cir.2007), is hereby further amended as follows:

1. On page 790, add a new footnote 5 after <When

the trucks carrying D-D ... large tanks by hoses.>

reading:

Shell was deeply involved in the delivery

process: The district court found that Shell

determined and arranged for the means and

methods of delivery of D-D to the Arvin plant

and detailed loading and unloading procedures.

It also found that the trucking companies with

which Shell contracted for delivery did the

transfers for most of the relevant period. It was

only in the early 1980s that Shell dictated that B

& B personnel should instead do the unloading.

2. Renumber footnote 7 on page 792 as footnote 8

and replace its text with <0.9 acres 4.7 acres = 0.191

(19.1%).>.

3. In the last paragraph on page 792, replace <In

accord with this purpose, CERCLA is a “super-strict”

liability statute.> with <In accord with this purpose,

CERCLA creates a system of strict liability.>.

4. In the first paragraph on page 793, replace

<make out> with <establish>.

5. In the first full paragraph on page 794, replace

<other indications of federal common law> with <other

sources of federal common law>.

6. Replace <the “super-strict” nature of> with

<the reach of> in the second-to-last sentence of

footnote 16 on page 795.

7. Replace the paragraph beginning on page 795

and continuing to page 796 with:

The question, then, is what the uniform federal

law should be. Once again, all the circuits that have

addressed this question have followed Chem-Dyne,

holding that the appropriate starting point for a

common law rule of apportionment applicable to

CERCLA cases is Section 433A of the Restatement

of Torts. See Hercules, 247 F.3d at 716 & n. 9, 717

(noting that courts support the divisibility doctrine

as borrowed from the Restatement); Bell

Petroleum, 3 F.3d at 895 (relying on the

Restatement); Chem Dyne, 572 F.Supp. at 810

(establishing this method). We agree that harm

may be apportioned when “there exists a

reasonable basis for divisibility” of a single harm or

when several “distinct harms” are _ present.

Hercules, 247 F.3d at 717.18

18 We of course agree with our sister circuits that, if adequate

information is available, divisibility may be established by

“volumetric, chronological, or other types of evidence,” Hercules,

247 F.3d at 719 (citing Bell Petroleum, 3 F.3d at 895-96), including

appropriate geographic considerations, see United States v.

Township of Brighton (“Brighton IT’), 282 F.3d at 919-20 (6th

Cir.2002), Beli Petroleum 3 F.3d at 903-04. We hold only that, in

this case, Shell and the Railroads failed to show that “expert

testimony and other evidence establishes a factual basis for

making a reasonable estimate that will fairly apportion liability.”

Bell Petroleum, 3 F.3d at 903. “{A}pproaches to divisibility will

Because CERCLA’s statutory liability scheme

differs from the common law in important

respects, however, our sister circuits have

recognized that its principles must be somewhat

modified to fit the CERCLA context. See, e.g.,

Bell Petroleum, 3 F.3d at 902 (“Restatement

principles must be adapted, where necessary, to

implement congressional intent with respect to

liability under the unique statutory scheme of

CERCLA.”); Hercules, 247 F.3d at 717 (The

Restatement is “the starting point ....[but] only to

the extent that it is compatible with the

provisions of CERCLA.”). We concur in this

general conclusion and acknowledge, in particular,

that there are two areas where the Restatement

approach is a somewhat poor fit and requires

slight modifications to ensure that its approach

comports with the liability and remediation

scheme of CERCLA. First, as we describe infra,

there are important distinctions between

causation as conceived in the Restatement and

causation in the context of CERCLA. Unlike the

Restatement’s common law causation, CERCLA

affixes liability based upon its PRP provisions,

which define classes of liable parties based upon a

party’s statutorily-defined nexus to the

contaminated site. And second, the concept of

“harm” in the Restatement as actual injury does

not correspond easily to CERCLA’s priorities.

Contamination and the cost of remediation are

both relevant for the “harm” analysis under

CERCLA. Finally, we recognize that the

vary tremendously depending on the facts and circumistances of

each case,” Hercules, 247 F.3d at 717, and approaches that were

inappropriate or inadequately supported in this case may be

available in other circumstances.

Restatement’s emphasis on objective

considerations to determine whether

apportionment is justified in a given case

comports with CERCLA’s strict liability scheme.

Equitable considerations may play a role in a later

contribution action amongst liable parties, but not

in an action such as this where the only relevant

issue is whether there is a reasonable basis,

founded in record evidence, to apportion damages

amongst defendants.

8. In the first full paragraph on page 796, replace

<§ 433A(1)(b) and thereby incorporated a modified

concept of causation.> with <§ 433A(1)(b).>.

9. Add <traditional> before <causation concepts

are useful> in the paragraph beginning on page 796 and

continuing to page 797.

10.In the second full paragraph on page 797,

replace <We therefore adjust .... time of the disposal>

with:

The statute thus departs from Restatement

principles by abjuring the traditional “causation”

principles in favor of a nexus concept defined by

its PRP provisions. Where, as here, the pertinent

PRP status is as landowner, the landowner can

establish divisibility by demonstrating a

reasonable basis for concluding that a certain

proportion of the contamination did not originate

on the portion of the facility that the landowner

owned at the time of the disposal.

11. Add the following text after the last full

paragraph on page 798:

In so holding, we begin from the fundamental

difference between apportionment and

contribution. Apportionment, which is_ the

relevant question in this case, looks to whether

defendants may avoid joint and several liability by

establishing a fixed amount of damage for which

they are liable. Section 433A of the Restatement

speaks to this issue. Contribution is a distinct

concept. If there is insufficient evidence to

support apportionment, jointly and severally

liable PRPs may still seek to recover from each

other in a later contribution action. See, e.g.

RESTATEMENT (THIRD) OF TORTS § 23(a)

(2000) (“When two or more persons are or may be

liable for the same harm and one of them

discharges the liability of another by settlement

or discharge of judgment, the person discharging

the liability is entitled to recover contribution

from the other, unless the other previously had a

valid settlement and release from the plaintiff.”).

As we explain below, CERCLA permits equitable

considerations to be taken into account in a

contribution action amongst PRPs, but

CERCLA’s strict liability scheme does not permit

equitable considerations to have any bearing in an

action to determine whether defendants have

presented sufficient evidence to apportion

liability.

12. Beginning on page 798 and continuing to page

799, replace <Although CERCLA is not explicit on this

issue.... whittle their liability to zero:> with:

Section 9613(, added to CERCLA in 1986,

provides for contribution actions among PRPs

once liability to the plaintiffs has been

determined. That provision describes, quite

generally, the considerations applicable in a

contribution action for determining whether one

PRP can collect from another a portion of the

costs for which it has been held liable: “In

resolving contribution claims, the court may

allocate response costs among liable parties using

such equitable factors as the court determines are

appropriate.” §9613(f) (emphasis added).26 In

contrast, CERCLA contains no _ provision

explicitly providing for initial apportionment of

liability. And § 433A(1)(b) of the Restatement

and the appended commentary concerning

divisibility are silent as to equitable

considerations.27

As noted, this circuit heretofore has not

addressed divisibility analysis. But the

implication from our cases deciding § 9613(f

contribution issues is that the proper time to focus

on such factors is at the contribution phase, not

the liability phase. See, e.g., Carson Harbor Vill.,

270 F.3d at 871 (noting that the “contribution

provision aims to avoid a variety of scenarios by

which a comparatively innocent PRP might be on

26 Among the equitable factors used in CERCLA contribution

cases are the so-called “Gore factors.” See Hercules, 247 F.3d at

718. Those factors are derived from the amendment that then-

Representative Gore introduced in 1980 to alleviate the harshness

of mandatory apportionment, which at that time was a part of the

bill. See 126 CONG. REC. 26782 (1980) (statement of Rep. Gore).

Although these factors are appropriate in contribution cases, they

are not, for the reasons discussed in the text, appropriate

considerations at the liability stage.

27 The only mention of equity in Restatement § 433A is in

comment h, regarding “[e)xeceptional cases.” Comment h suggests

that im cases of insolvent defendants, when an “innocent plaintiff

would be forced to bear the share of the loss due to the defendant

from whom he could not collect damages,” courts may refuse to

allocate harm to avoid “injustice to the plaintiff.” Because we

determine that there is no reasonable basis for apportioning the

defendants’ harm, we do not reach the question of whether the

considerations of comment h are applicable here

the hook for the entirety of a large cleanup bill’’);

Pinal Creek, 118 F.3d at 1301 (“A PRP’s

contribution liability will correspond to that

party’s equitable share of the total liability and

will not be joint and several.”).

Other circuits have been careful to delineate

the difference between the equitable

considerations pertinent to contribution under

§9613(f) and the objective considerations

pertinent to divisibility under §9607(a). See

Hercules, 247 F.3d at 718; Township of Brighton,

153 F.3d at 318; Bell Petroleum, 3 F.3d at 901. As

the Sixth Circuit has noted, divisibility analysis,

unless carefully limited, has the potential to

eviscerate the strict liability principles of

CERCLA entirely, “because defendants who can

show that the harm is divisible, and that they are

not responsible for any of the harm” could whittle

their liability to zero.

13. In the paragraph beginning on page 799 and

continuing to page 800, replace <While it may seem

unfair ... liability scheme.> with <While it may seem

unfair to hold a partial owner liable for all of the

contamination cleanup costs, that perceived unfairness

is the result of CERCLA’s expansive statutory liability

scheme.>.

14. In the second full paragraph on page 801, strike

<, and the original ... from the Railroads>.

15. In the second full paragraph on page 801,

replace <perfect information> with <adequate

information>

16. In the paragraph beginning on page 801 and

continuing to page 802, replace <are in no respect

traceable to» with <did not originate on>.

10a

17. Renumber footnote 27 on page 802 as footnote

29 and replace <We do not go as far .... present in this

case.> with <We do not agree with Judge Moore in this

regard.>.

18. Add a new footnote 30 on page 803 following

<the single Arvin facility> reading:

In its discussion of the Railroads’ apportioned

liability, the district court found that B & B used

the Railroad parcel as part of its total

agricultural-chemical operations, and it earlier

cited approvingly to documents describing the

land as “an integral part of the adjacent farm

chemical distribution facility.” The dissent from

denial of rehearing en banc therefore wrongly

characterizes our description of the site as

“appellate fact-finding.” See Dissent at 2914-16

[520 F.3d 958-960}.

19. In the first full paragraph on page 804, replace

<excluded in its caleulations> with <excluded from its

calculations>.

20. Renumber footnote 32 on page 811 as footnote

35, strike following <include the $1.3 million>, and add

<Because we therefore do not hold Shell liable for this

Dow product, the dissent from denial of rehearing en

bane is wrong when it claims we err by holding Shell

liable for “contamination from products Shell did not

sell to B & B.” Dissent at 2921-22 n.22 (520 F.3d 962-

963).> after < calculation of Shell’s liability.>

21. Renumber all footnotes in sequential order.

exe * *

No further petitions for rehearing or rehearing en banc

will be entertained. The mandate shall issue in due

course.

lla

OPINION

BERZON, Circuit Judge:

A now-defunct company, Brown & Bryant, Inc.

(B & B), owned and operated a facility at which

toxic chemicals were stored and distributed. Part

of the land on which the chemical operation was

located was owned by two railroad companies (the

Railroads), and some of the chemicals used by B &

B were supplied and delivered to the facility by

Shell Oil Company (Shell). Because toxic chemicals

remaining at the facility threatened groundwater

and may continue to do so in the future, the United

States Environmental Protection Agency (EPA)

and the State of California’s Department of Toxic

Substances Control (DTSC) spent a considerable

amount of money to clean up the site and may need

to spend more in the future. The two agencies

sought to recover these response costs under the

Comprehensive Environmental Response,

Compensation, and Liability Act, 42 USC.

§§ 96019675, (CERCLA), but the district court

held the Railroads and Shell liable for only a minor

portion of the total cleanup costs. B & B was

defunct by that time, and so could not contribute to

the cleanup costs. The agencies were thus left

holding the bag for a great deal of money.

Seeking to hold the Railroads and Shell jointly

and severally liable for the entire judgment, the

agencies appeal. Shell cross-appeals, claiming that

it was not an “arranger” under CERCLA,

§ 9607(a)(3), and therefore is not a party on whom

| Unless otherwise noted, all statutory citations are to Title 42

and the 2000 edition of the U.S. Code.

12a

any cleanup liability can be imposed. We reverse

the portion of the judgment that declined to impose

full joint and several liability on the Railroads and

Shell and affirm the portion of the judgment that

imposed liability on Shell as an arranger.?

I. Background

Beginning in 1960, B & B operated an agricultural

chemical storage and distribution facility in Arvin,

California on a 3.8-acre parcel of land (the B & B

parcel). In 1975, B & B’s agricultural chemical

distribution business outgrew that parcel, and B & B

began leasing a 0.9-acre parcel of land adjacent to its

own parcel. The 0.9-acre parce) (the Railroad parce!)

was jointly owned by the Railroads—Atchison, Topeka

& Santa Fe Railroad Co., the predecessor in interest to

Burlington Northern & Santa Fe Railway Co., and

Southern Pacific Transportation Co., the predecessor

in interest to Union Pacific Transportation Co.B & B

used the Railroad parcel principally to park fertilizer

rigs.

The Railroad parcel comprised the western portion

of the Arvin site.2 Directly to the east of the Railroad

parcel sat B & B’s warehouse. The Railroad parcel,

like the rest of the Arvin site, was graded toward a

drainage pond on the B & B parcel.

2 The Railroads have requested judicial notice of the EPA

proceedings concerning their suit for reimbursement from the

government and of the stay of those proceedings pending the

determination of joint and several liability in this case. These

proceedings do not “have a direct relation to matters at issue.”

United States ex rel. Robinson Rancheria Cilizens Council v.

Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992) (citation omitted).

We therefore deny the Railroads’ request for judicial notice

3 We refer to the B & B and Railroad parcels together as the

“Arvin site.”

“a

13a

B & B used the Railroad parcel as an integral part

of its overall agricultural chemical facility. From its

facility B & B sold local growers agricultural chemical

products produced by various manufacturers. In

particular, B & B purchased, received delivery of,

stored on the Arvin site, and distributed two Shell-

produced agricultural chemicals: the soil fumigants D-

D and Nemagon. D-D and Nemagon—members of a

class of chemicals called nematocides—are designed to

kill nematodes, microscopic worms that attack the

roots of crops. Nematocides work by penetrating the

soil and then dispersing. B & B also stored on the

Arvin site dinitro (dinoseb) weed killer, purchased

from Dow Chemical Company.

During the 1960s and 1970s, Shell strongly

encouraged its customers, including B & B, to purchase

D-D in bulk, a policy requiring customers to maintain

large storage tanks. Shell delivered the bulk D-D to B

& B “FOB Destination” via common carrier trucks.4

When the trucks carrying D-D arrived at the Arvin

facility, the contents of the trucks were transferred to

B & B’s large tanks by hoses. The process was quite

messy, with frequent spills.

4 “FOB Destination” means “free on board” and “when the

term is F.O.B. the place of destination, the seller must at his own

expense and risk transport the goods to that place and there

tender delivery of them.” U.C.C. § 2-319(1)(b) (2003).

5 Shell was deeply involved in the delivery process: The

district court found that Shell determined and arranged for the

means and methods of delivery of D-D to the Arvin plant and

detailed loading and unloading procedures. It also found that the

trucking companies with which Shell contracted for delivery did

the transfers for most of the relevant period. It was only in the

early 1980s that Shell dictated that B & B personnel should

instead do the unloading.

l4a

To apply D-D to growers’ fields, B & B used rigs

loaded with the chemical. The rigs were stored on the

Railroad parcel, as were bulk containers of dinoseb

and, occasionally, empty fertilizer cans. Chemicals also

reached the Railroad parcel through water flow from

the B & B parcel.

In 1978, after a windstorm destroyed the bulk D-D

storage tank used to store Shell D-D, B & B began

using converted stainless steel milk trailers to store

the bulk D-D. The chemical, which is highly corrosive

and eats through steel, can cause leakage in steel tanks

only a few years old. B & B kept these leak-prone

tanks all over the Arvin facility, including on the

Railroad parcel.

D-D, when it leaks, evaporates quickly if exposed to

air but is highly soluble in water. When D-D infiltrates

the ground, it moves through the soil by molecular

diffusion, dispersing in all directions. A slight pull from

gravity, however, makes the chemical a bit more likely

to flow downward into groundwater than laterally

through the soil. Dinoseb, similarly, tends to move to

the groundwater table if there is water movement in

that direction. No toxic chemicals can reach the

groundwater level currently used as a source of

drinking water becuse of an impermeable layer of soil.

The next highest '+ el, however, is a potential source of

drinking water, a* contamination can reach that level.

After more than twenty years of leakage and

dissemination of hazardous materials, the DTSC in

1983 found B & B in violation of several hazardous

waste laws. The EPA investigated separately and

found evidence of substantial soil and groundwater

contamination at B & B’s Arvin facility. The EPA and

DTSC (the Governments) began to remedy the

contamination pursuant to their cleanup authority

under CERCLA, incurring substantial remediation

15a

costs. In 1991, the EPA ordered the Railroads to take

specific preventative steps on the Railroad parcel,

including installing groundwater monitoring wells.

None of the contamination requiring immediate

remediation was on the Railroad parcel.

In 1992, the Railroads filed an action against B & B

and certain of its principals for contribution for costs

incurred in the EPA-ordered cleanup. Four years

later, the Governments each filed CERCLA actions

against B & B, the Railroads, and Shell for

reimbursement of their investigation and cleanup

costs.6 The district court consolidated the three cases

and, after a twenty-seven day bench trial, issued an

exceedingly detailed 185-page Findings of Fact and

Conclusions of Law, thereafter slightly amended.’

The district court found the Railroads liable as

owners of the Arvin facility and as persons who “at the

time of disposal of any hazardous substance owned or

operated any facility at which such hazardous

substances were disposed of.” § 9607(a)(1), (2). Shell

was held liable as a “person who ... arranged for

disposal ... of hazardous substances.” § 9607(a)(3).

Turning to whether the Railroads and Shell were liable

for all or only a portion of the cleanup costs, the district

court found that the harm to the Arvin site was capable

of apportionment and proceeded to apportion it. The

Railroads and Shell had, by acknowledging no liability

at all, taken what the district court termed a “scorched

earth,’ all-or-nothing approach to liability,” and so

6 The relevant statutory sections covering contribution and

reimbursement actions, § 9613() and § 9607, are quoted later in

this opinion.

7 Quotations from and discussion of the district court’s ruling in

this opinion concern the district court’s Amended Findings of Fact

and Conclusions of Law unless otherwise noted.

l6a

provided little assistance on the apportionment issue.

The district court nonetheless proceeded to “perform

the equitable apportionment analysis demanded by the

circumstances of the case.”

For the Railroads, the court multiplied three

proportions: (1) the percentage of the overall site that

was owned by the Railroads, 19.1%;8 (2) the percentage

of time that the Railroads leased the parcel in relation

to B & B’s total operations, 45%;9 and (3) the fraction of

hazardous products attributable to the Railroad parcel,

66%.19 This calculation resulted in a determination of

6% liability. Then, to account for any “calculation

errors,” the district court assumed 50% error and

raised the Railroads’ proportion of the total liability to

9%.

For Shell, the district court approximated the

percentages of leakage from various activities

attributable to Shell and multiplied them together to

set Shell’s proportion of the total liability at 6%.!!

Shell was also assigned, in the contribution action, 6%

8 0.9 acres / 4.7 acres = 0.191 (19.1%).

9 B & B began operations in 1960. The Railroad parcel was

leased starting in 1975. In 1988, B & B ceased its operations at

Arvin. Thus, the Railroad parcel was part of the Arvin site for 13

of 29 years, or 45% of ithe time B & B operated the facility.

10 There were three pertinent chemicals: D-D, Nemagon, and

dinoseb. The district court found that although there was some D-

D contamination attributable to the Railroad parcel, that “slight

contamination is offset by the fact that the [Arvin] Site is graded

towards the southeast pond [on the B & B parcel] and the levels of

chemical contamination on the B & B parcel are substantially

higher than the reported detections on the Railroad parcel.” On

that reasoning, the district court removed all D-D from the

equation.

\l B & B, albeit insolvent, was assigned 100% joint and several

liability.

% i

17a

of the costs incurred by the Railroads in their cleanup

effort.12

DTSC and the EPA timely appealed the district

court’s judgment. Shell timely cross-appealed the

finding that it was liable as an “arranger” under

CERCLA.

II. Standards of Liability Under Cercla

CERCLA was enacted in 1980 to provide for

effective responses to health and environmental

threats posed by hazardous waste sites. See generally

Mardan Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454,

1455 (9th Cir.1986). Under CERCLA, state and

federal governments can first begin the cleanup of

toxic areas, see § 9604(a)-(d), and then sue potentially

responsible parties (PRPs) for reimbursement, see

§ 9607(a). A key purpose of this scheme is “shift[ing]

the cost of cleaning up environmental harm from the

taxpayers to the parties who benefited from the

disposal of the wastes that caused the harm.” EPA v.

Sequa Corp. (In the Matter of Bell Petroleum Servs.,

Inc.), 3 F.3d 889, 897 (5th Cir.1993) (citing United

States v. Chem-Dyne Corp., 572 F.Supp. 802, 805-06

(S.D.Qhio 1983)).

In accord with this purpose, CER ’.A creates a

system of strict liability. Under its provisions, parties

can be liable for cleaning up toxic chemicals if they fit

into one or more of the four PRP categories set out in

§ 9607(a):

(1) the owner and operator of ... a facility,

(2) any person who at the time of disposal of any

hazardous substance owned or operated any

12 The Railroads do not challenge the percentage of liability

assigned to Shell.

18a

facility at which such hazardous substances were

disposed of,

(3) any person who by contract, agreement, or

otherwise arranged for disposal or treatment, or

arranged with a transporter for transport for

disposal or treatment, of hazardous substances

owned or possessed by such person ..., and

(4) any person who accepts or accepted any

hazardous substances for transport to disposal or

treatment facilities...

A “facility” is defined in § 9601(9)(B) as “any site or

area where a hazardous substance has been deposited,

stored, disposed of, or placed, or otherwise come to be

located; but does not include any consumer product in

consumer use or any vessel.”!5 The statute’s basic

liability provision, in turn, provides that “subject only

to the defenses set forth in subsection (b) of this section

[PRPs shall be liable for|}—(A) all costs of removal or

remedial action incurred by the United States

Government or a State or an Indian tribe not

inconsistent with the national contingency plan ....”

§ 9607(a). Thus, PRPs can be responsible for the costs

of cleaning up hazardous waste sites without any

finding that they were negligent or that they caused

the contamination, unless they can establish the third-

party defense set out in § 9607(b)(3).14

13 The district court found that the entire Arvin site, including

the Railroad parcel, was a single facility for the purposes of § 9607.

The Railroads do not appeal that finding.

14 Section 9607(b) reads:

There shall be no liability under subsection (a) of this section

for a person otherwise liable who can establish by a

preponderance of the evidence that the release or threat of

release of a hazardous substance and the damages resulting

therefrom were caused solely by—

19a

A. Validity of Apportionment

CERCLA does not address the question whether,

as between PRPs who are liable for cleanup costs,

liability is joint and several—meaning that each PRP

responsible for all cleanup costs at a facility is liable for

such costs—or severable—meaning that cleanup costs

at a single facility can be apportioned among PRPs on

some basis.

In this circuit, liability is joint and several when the

harm is indivisible. Fireman’s Fund Ins. Co. v. City of

Lodi, 302 F.3d 928, 945 (9th Cir.2002); see also Carson

Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 871

(9th Cir.2001) (en banc). Thus, a defendant “may be

held fully liable for the entire clean-up costs at a site

despite the fact that the defendant PRP was in fact

responsibie for only a fraction of the contamination.”

Fireman’s Fund, 302 F.3d at 945.

We have also referred in general terms to the

possibility of apportioning liability. See id. (noting the

use of “federal common law principles” of

(3) an act or omission of a third party other than an employee

or agent of the defendant, or than one whose act or omission

occurs in connection with a contractual relationship, existing

directly or indirectly, with the defendant (except where the sole

contractual arrangement arises from a published tariff and

acceptance for carriage by a common carrier by rail), if the

defendant establishes by a preponderance of the evidence that

(a) he exercised due care with respect to the hazardous

substance concerned, taking into consideration § the

characteristics of such hazardous substance, in light of all

relevant facts and circumstances, and (b) he took precautions

against foreseeable acts or omissions of any such third party and

the consequences that could foreseeably result from such acts or

omissions.

(Emphasis added). Section 9607(b) also provides defenses for “an

act of God” and “an act of war.” § 9607(b)(1), (2).

20a

apportionment); Carson Harbor Vill., 270 F.3d at 871

(stating that once liability has been found, “the

defendant may avoid joint and several liability by

establishing that it caused only a divisible portion of

the harm”). Yet, in none of our cases has there been an

actual dispute regarding whether liability should be

apportioned among the liable PRPs. This case

squarely presents that question. To determine

whether the district court was correct to apportion

liability in this case, we thus must address, initially, the

general propriety of severability.!© In line with every

15 The major cases addressing division of PRP liability under

CERCLA in the Ninth Circuit instead have been contribution

cases among PRPs, decided after joint liability was established,

see, e.g., Carson Harbor Vill., 270 F.3d at 871;Pinal Creek Group

v. Newmont Mining Corp., 118 F.3d 1298, 1301 (9th Cir.1997), or

have addressed a different issue entirely, see, eg., Fireman’s

Fund, 302 F.3d at 945 (analyzing the possibility that CERCLA

preempts state laws).

16 DTSC argues that the apportionment question is not

properly before us because it was not properly raised in the

pretrial order, but we do not agree. To preserve a claim, a party

must put forward a position in the pretrial statement in a manner

sufficient to put the opposing party on notice and allow the trial

court to consider its merits. See Cripe v. City of San Jose, 261

F.3d 877, 886 n. 9 (9th Cir.2001) (refusing to hold that defendants

had waived an affirmative defense by mislabeling it, because the

court and plaintiffs were on notice of the real issue); Arizona v.

Components Inc., 66 F.3d 213, 217 (9th Cir.1995) (moting that

argument must be raised sufficiently for the court to rule on it).

Notice to the district court is not an issue in this case, as the final

decision addresses apportionment. While the Governments claim

to have been unaware that they needed to address the

apportionment issue, their assertion is not supported by the

record. Both the Railroads and Shell directly addressed the

apportionment issue in their pretrial orders. The Railroads

“denfied] that they are jointly and severally liable for the response

costs claimed by the Government” but argued that, if liable, they

2la

circuit that has addressed the issue, we hold that

apportionment is available at the liability stage.

In so ruling we rely, a have the other circuits that

have analyzed the issue, on a seminal case decided in

1983 in the Southern District of Ohio, Chem-Dyne.

| After reviewing the evolution of the statute, Chem-

Dyne concluded that liability under § 9607(a) may be

joint and several even though the statute does not

expressly so provide. Chem-Dyne, 572 F.Supp. at 810.

Suggesting that Congress intended to leave the matter

to the usual common law rules, adjusted to CERCLA

as necessary, Chem-Dyne held that courts should look

to the Restatement (Second) of Torts, as well as to

other sources of federal common law, for the principles

of joint and several liability applicable under

CERCLA. See id. at 809-10. Later, circuit court cases

| endorsed this approach. See Chem-Nuclear Sys., Inc.

| v. Bush, 292 F.3d 254, 259-60 (D.C.Cir.2002); United

States v. Hercules, Inc., 247 F.3d 706, 717 (8th

Cir.2001); United States v. Township of Brighton, 153

F.3d 307, 318 (6th Cir.1998); Bell Petroleum, 3 F.3d at

895-96; United States v. Alcan Aluminum Corp.

(Alcan-P.AS), 990 F.2d 711, 721-22 (2d Cir.1993);

United States v. Alcan Aluminum Corp. (Alcan-

Butler), 964 F.2d 252, 268-69 (3d Cir.1992); United

| States v. Monsanto Co., 858 F.2d 160, 171-72 (4th

: Cir.1988).

As Chem-Dyne persuasively recounts, the history

of § 107(a) of CERCLA, 42 U.S.C. § 9607(a), indicates

that although Congress declined to mandate joint and

should only be responsible for that fraction of the total mass of

groundwater contamination proven to be traceable to their parcel.

Shell noted that joint and several liability is not mandatory and

cited cases regarding apportionment. As a result, we conclude

that the issue of apportioning liability was not waived and is

properly before us.

q % =

22a

several liability, it did net intend by doing so “a

rejection of joint amd severable liability.” Chem-Dyne,

572 F.Supp. at 808. Instead, recognizing the difficulties

inherent “ ‘in prescrifmg in statutory terms liability

standards which will be applicable in individual cases,”

id. at. 806 (qwoting 126 CONG. REC. $14964 (Nov. 24,

1980) (remarks of Sen. Randolph)), Congress meant “to

have the scope of liability determined under common

law principles, where a court performing a case by case

evaluation of the complex factual scenarios associated

.. Will assess the propriety of applying joint and

several liability on an individual basis,” id. at 808. We

agree with this account of Congress’s intent and hold

that apportionment can be appropriate under

CERCLA.

B. Standards for Apportionment

Because we hold that apportionment is available at

the liability stage in CERCLA cases, we must

determine the appropriate standards for determining

when apportionment is available and, when it is, how to

ascertain the proper division of damages among

defendants. Again, we draw on the experience of our

sister circuits.

The circuits that have addressed these questions

have looked to common law principles of tort in

general, and the Restatement in particular, for

guidance as to when and how to impose joint and

several liability under § 9607(a). We agree that this

approach is proper and adopt it here. We also follow

Chem-Dyne and all of the courts of appeals that have

addressed the question in holding that the resulting

standard must be a uniform federal rule. See, e.g.,

Aviall Servs., Inc. v. Cooper Indus., Inc., 312 F.3d 677,

684 (5th Cir.2002) (holding that apportionment of

CERCLA liability “is ... a matter of federal common

law”), reversed on other grounds by 543 U.S. 157, 125

23a

S.Ct. 577, 160 L.Fd.2d 548 (2008); United States ».

Burlington N.R. Co., 200 F.3d 679, 697 (10th Cir.1999)

(same); Township of Brighton, 153 F.3d at 329 (same);

Monsanto Co., 858 F.2d at 172 (same). As Chem-Dyne

noted, the legislative history of CERCLA supports

such an approach, as does its pelicy favoring national

uniformity so as to discourage “illegal dumping in

states with lax liability laws.” Chem-Dyne, 572

F.Supp. at 809.17

The question, then, is what the uniform federal law

should be. Once again, all the circuits that have

addressed this question have followed Chem-Dyne,

holding that the appropriate starting point for a

common law rule of apportionment applicable to

CERCLA cases is Section 483A of the Restatement of

Torts. See Hercules, 247 F.3d at 716 & n. 9, 717 (noting

that courts support the divisibility doctrine as

17 The parties here have assumed that the apportionment

standard must be one of uniform federal common law. As stated

above, every federal circuit to address the issue, including those

decided after O'Melveny & Myers v. FDIC, 512 U.S. 79, 114 S.Ct.

2048, 129 L.Ed.2d 67 (1994), and Atherton v. FDIC, 519 US. 213,

117 S.Ct. 666, 136 L.Ed.2d 656 (1997), has shared that

understanding. Although Atchison, Topeka & Santa Fe Ry. Co. v.

Brown & Bryant, Inc., 159 F.3d 358, 362-64 (9th Cir.1997),

questioned whether O’Melveny & Myers and Atherton upset

Ninth Circuit law with regard to the adoption of uniform federal

common law regarding successor liability under CERCLA, very

different considerations govern with respect to apportionment. In_

Atchison, resolution of the question of successor liability would

resolve who was liable under CERLA, an inquiry with roots in

state corporate law. Here, the inquiry diverges from state law

completely. As we explain in this section, the reach of CERCLA

liability is sui generis, so there is no state law directly applicable.

The resulting apportionment analysis therefore requires a

similarly unique set of considerations, married to the statute’s

functions and purpose.

24a

borrowed from the Restatement); Bell Petrolewm, 3

F.3d at 895 (relying on the Restatement); Chem-Dyne,

572 F.Supp. at 810 (establishing this method). We

agree that harm may be apportioned when “there

exists a reasonable basis for divisibility” of a single

harm or when several “distinct harms” are present.

Hercules, 247 F.3d at 717.18

Because CERCLA’s statutory liability scheme

differs from the common law in important respects,

however, our sister circuits have recognized that its

principles must be somewhat modified to fit the

CERCLA context. See, e.g., Bell Petroleum, 3 F.3d at

902 (“Restatement principles must be adapted, where

necessary, to implement congressional intent with

respect to liability under the unique statutory scheme

of CERCLA.”); Hercules, 247 F.3d at 717 (The

Restatement is “the starting point .... [but] only to the

extent that it is compatible with the provisions of

CERCLA.”). We concur in this general conclusion and

acknowledge, in particular, that there are two areas

where the Restatement approach is a somewhat poor

fit and requires slight modifications to ensure that its

18 We of course agree with our sister circuits that, if adequate

information is available, divisibility may be established by

“volumetric, chronological, or other types of evidence,” Hercules,

247 F.3d at 719 (citing Bell Petroleum, 3 F.3d at 895-96), including

appropriate geographic considerations, see United States v.

Township of Brighton (“Brighton II “), 282 F.3d at 919-20 (6th

Cir.2002), Bell Petroleum 3 F.3d at 903-04. We hold only that, in

this case, Shell and the Railroads failed to show that “expert

testimony and other evidence establishes a factual basis for

making a reasonable estimate that will fairly apportion liability.”

Bell Petroleum, 3 F.3d at 903. “{A)pproaches to divisibility will

vary tremendously depending on the facts and circumstances of

each case,” Hercules, 247 F.3d at 717, and approaches that were

inappropriate or inadequately supported in this case may be

available in other circumstances.

25a

rts with the liability and remediation

— of CE ROLA. First, as we describe infra, there

are important distinctions between causation as

conceived in the Restatement and causation in the

context of CERCLA. Unlike the Restatement’s

common law causation, CERCLA affixes liability based

upon its PRP provisiems, which define classes of liable

parties based upon a party's statutorily-defined nexus

t the contaminated site And second, the cencept of

“harm” in the Restatement as actual injury dees not

corréspond easily to CERCLA’s priorities.

Contamination and the cost of remediation are both

relevant for the “harm” analysis under CERCLA.

Finally, we recognize that the Restatement’s emphasis

on objective considerations to determine whether

apportionment 1s justified in a givem case comports

with CERCLA’s strict liability scheme. Equitable

considerations may play a role im a@ later contribution

action amongst liable parties, but met im an action such

as this where the only relevamé issue is whether there

is a reasonable basis, founded in record evidence, to

apportion damages amongst defendants.

1. Causation

Section 483A of the Restatement allows for

apportionment of damages where “‘(a) there are distinct

harms,"” or () there is a reasonable basis for

19 Comment b of section 433A notes:

) Distinct harms. There are other results which, by their

) nature, are more capable of apportionment. If two defendants

independently shoot the plaintiff at the same time, and one

wounds him in the arm and the other in the leg, the ultimate

result may be a badly damaged plaintiff in the hospii.!, but it

is still possible, as a logical, reasonable, and practical matter,

to regard the two wounds as separate injuries, and as distinct

wrongs. The mere coincidence in time does not make the two

wounds a single harm, or the conduct of the two defendants

lll EEE EO OO So —— =<

26a

determining the contribution of each cause to a single

harm.””. RESTATEMENT (SECOND) OF TORTS

§ 433A(1) (1965) (emphasis added). CERCLA,

however, does not require causation as a prerequisite

to liability (except with regard to the third-party

defense, see § 9607(b), not at issue here). Nonetheless,

most of the leading cases on joint and several liability

under CERCLA have addressed divisibility under

§ 433A(1)(b).2! See, e.g., Bell Petroleum, 3 F.3d at 902-

one tort. There may be difficulty in the apportionment of

some elements of damages, such as the pain and suffering

resulting from the two wounds, or the medical expenses, but

this does not mean that one defendant must be liable for the

distinct harm inflicted by the other.

20 Comment d of section 433A notes:

Divisible harm. There are other kinds of harm which, while

not so clearly marked out as severable into distinct parts, are

still capable of division upon a reasonable and rational basis,

and of fair apportionment among the causes responsible. Thus

where the cattle of two or more owners trespass upon the

plaintiffs land and destroy his crop, the aggregate harm is a

lost crop, but it may nevertheless be apportioned among the

owners of the cattle, on the basis of the number owned by

each, and the reasonable assumption that the respective harm

done is proportionate to that number. Where such

apportionment can be made without injustice to any of the

parties, the court may require it to be made.

21 The sections of the Restatement that courts have used to

establish the rules of joint and several liability under CERCLA

are found in the negligence division of the Restatement. As these

courts recognize, CERCLA is a strict liability statute. See, e.g.,

Hercules, 2A7 F.3d at 716;Township of Brighton, 153 F.3d at 318.

Because there is no comparable divisibility rule in the strict

liability portion of the Second Restatement, courts have adapted

the negligence rules to strict liability by deciining to rely on the

portion of the Restatement section that places an initial burden as

to causation on the plaintiff. Compare Hercules, 247 F.3d at 717,

27a

03; Monsanto, 858 F.2d at 172; Chem-Dyne, 572

F.Supp. at 810.

Notably, these cases often dealt with simpler facts

than those we confront. Chem-Dyne, for instance,

assumed a case quite different from this one. There,

the court stated that “[t]ypically ... there will be

numerous hazardous’ substance’ generators or

transporters who have disposed of wastes at a

particular site.” 572 F.Supp. at 810. It was in that

context—that is, where the question was

apportionment among defendants who all disposed of

wastes themselves—that Chem-Dyne determined that

courts could follow the divisibility principles of the

Restatement and remain true to CERCLA. In a

situation in which the several defendants are all

polluters themselves,’ divisibility under’ the

Restatement standard is indeed a _ relatively

straightforward analysis, and one in which traditional

causation concepts are useful. If the court can estimate

with some confidence the amount of waste that each

defendant disposed of and has a basis for determining

that the extent of contamination of the site is

proportional to the amount of waste disposed of, then

the Restatement approach to apportionment works

nicely.

The situation here is different. The three

“responsible” parties are: the now-insolvent majority

and Bell Petroleum, 3 F.3d at 896, with RESTATEMENT

(SECOND) OF TORTS § 433B(1).

22 One commentator has noted that trying to apply the

Restatement to CERCLA in most cases is like “pushing a round

peg through a square hole. Traditional tort law principles falter in

the CERCLA context because CERCLA is so unlike a typical tort

law cause of action.” Lynda J. Oswald, New Directions in Joint

and Several Liability Under CERCLA?, 28 U.C. DAVIS L. REV.

299, 360 (1995).

28a

owner and operator of the site; the mostly absentee

landlord of a portion of the site; and a seller of

chemicals shipped to and stored at the site. Each party

had an entirely different role in the contamination

process, with overlapping effects, and not all “caused”

contamination in any meaningful sense.

Most notably, PRP status premised on ownership of

a facility does not require any involvement in the

disposal of hazardous substances. Thus, to speak of a

PRP “causing” contamination of its land simply by

owning land on which someone else disposes of

hazardous wastes is to indulge in metaphor. At the

same time, to alow CERCLA defendants, especially

landowner PRPs, to prove through traditional

causation analysis that they were not entirely liable

would be to undermine the premise on which the

statute designated them as PRPs to begin with.

CERCLA requires a connection—for example, that the

PRP be a landowner “at the time of disposal,” see

§ 9607(a)(2)—but no further causation. The statute

thus departs from Restatement principles by abjuring

the traditional “causation” principles in favor of a

nexus concept defined by its PRP provisions. Where,

as here, the pertinent PRP status is as landowner, the

landowner can establish divisibility by demonstrating a

reasonable basis for concluding that a certain

proportion of the contamination did not originate on

the portion of the facility that the landowner owned at

the time of the disposal. The arranger nexus is more

straightforward, with a focus not on ownership of the

facility but rather on the relevant, erranged disposals

in light of other contamination at the faciiity.

2. Harm

A second difficulty that results from relying on tort

principles in a scheme not based on tort law concerns

the application of the term “harm,” used in the

29a

Restatement, as applied to CERCLA. See

RESTATEMENT (SECOND) OF TORTS § 433A.

The CERCLA cost recovery section does not focus on

“harm,” but rather on “costs of removal or remedial

action” and “necessary costs of response.” § 9607(a).

Thus, when applying the Restatement in the context of

CERCLA, the question becomes: What is the “harm”

that we are attempting to divide?

There are three possible kinds of “harm” in actions

for remediation costs under CERCLA: | the initial

disposal, the resulting contamination, and the costs of

remediating the contamination. Actual injury to

individuals or to property, the usual “harms” in a tort

suit, are not a pertinent consideration; the statute is

concerned with averting future injury by remediating

contamination, not with compensation for past injuries.

If the harm were the disposal, then divisibility

based on volume of discharge by operators or by parcel

would always make sense, because disposal occurs in

specific amounts at specific places. If the harm were

contamination, then some attempt would have to be

made either to justify a direct correlation between

disposal and contamination under the specific

circumstances or to separate out the leakage that

remained as contamination from leakage that either

evaporated, was adequately diluted, or for other

reasons did not remain on the property in toxic form.”

23 The statute also mentions “damages for injury to, destruction

of, or loss of natural resources” and “costs of any health

assessment or health effects study.” § 9607(a)(C), (D). These

provisions may be informative with regard to the nature of the

harm in other cases but are not here applicable.

24 In many instances, of course—~as in Chem-Dyne—the various

polluters will dispose of the same substance in the same location,

so there will be a basis for assuming that each polluter’s pro rata

30a

If the harm is the cost of remediation, then divisibility

would have to be based on the pro rata cost of cleaning

up each defendant’s contribution to the contamination.

That pro rata cost will sometimes differ from the

proportion of contamination caused by each defendant,

because the cost of removing contamination can vary

with geographical considerations, degree of toxicity,

the means of extraction used for different toxic

substances, or other factors.

In light of a CERCLA liability suit’s central

purpose—recovering the cost of eradicating

contamination——we conclude that it is most useful for

purposes of determining divisibility to view the “harm”

under CERCLA as the contamination traceable to each

defendant. Disposal itself is not the focus of the

statute, unless it results in contamination. And the

cost of cleaning up the contamination is most analogous

to the damages recovered in a tort suit, not to the

injury on which liability is based.*°

3. Equity

Because this case is one in which the harms are not

distinct, apportionment must be under Restatement

§ 433A(1)(b) if it is to be allowed at all. That is, there

must be a reasonable basis for determining the

contribution of each PRP to the harm. While nothing

share of the hazardous waste disposed of and of the resulting

contamination is the same. See also Bell Petroleum, 3 F.3d at 903.

25 The cost of cleanup of different toxic substances or in

different areas of the facility will often be a useful measure of the

proportion of the pertinent contamination allocable to each

defendant. That cost will depend upon factors such as which

contamination was serious enough to merit remediation and how

thoroughly the soil was contaminated in various areas. Thus, the

“harm” allocation analysis may in some instances usefully focus

initially on the proportion of costs associated with remedying

various aspects of the contamination.

3la

in the statute directly addresses the question whether

equitable factors are appropriate for purposes of

apportioning liability among joint tortfeasors, all the

other circuits that have addressed the issue have held

that they are not. We again follow their lead.

In so holding, we begin from the fundamental

difference between apportionment and contribution.

Apportionment, which is the relevant question in this

case, looks to whether defendants may avoid joint and

several liability by establishing a fixed amount of

damage for which they are liable. Section 433A of the

Restatement speaks to this issue. Contribution is a

distinct concept. If there is insufficient evidence to

support apportionment, jointly and severally liable

PRPs may still seek to recover from each other in a

later contribution action. See, eg. RESTATEMENT

(THIRD) OF TORTS § 23(a) (2000) (“When two or

more persons are or may be liable for the same harm

and one of them discharges the liability of another by

settlement or discharge of judgment, the person

discharging the liability is entitled to recover

contribution from the other, unless the other

previously had a valid settlement and release from the

plaintiff.”). As we explain below, CERCLA permits

equitable considerations to be taken into account in a

contribution action amongst PRPs, but CERCLA’s

strict liability scheme does mot permit equitable

considerations to have any bearing in an action to

determine whether defendants have presented

sufficient evidence to apportion liability.

Section 9613(f), added to CERCLA in 1986,

provides for contribution actions among PRPs once

liability to the plaintiffs has been determined. That

provision describes, quite generally, the considerations

applicable in a contribution action for determining

whether one PRP can collect from another a portion of

32a

the costs for which it has been held liable: “In

resolving contribution claims, the court may allocate

response costs among liable parties using such

equitable factors as the court determines are

appropriate.” §9613(f) (emphasis added).2® In

contrast, CERCLA contains no provision explicitly

providing for initial apportionment of liability. And

§ 433A(1)(b) of the Restatement and the appended

commentary concerning divisibility are silent as to

equitable considerations.27 As noted, this circuit

heretofore has not addressed divisibility analysis. But

the implication from our cases deciding § 9613(f)

contribution issues is that the proper time to focus on

such factors is at the contribution phase, not the

liability phase. See, e.g., Carson Harbor Vill., 270 F.3d

at 871 (noting that the “contribution provision aims to

avoid a variety of scenarios by which a comparatively

innocent PRP might be on the hook for the entirety ofa

large cleanup bill”); Pinal Creek, 118 F.3d at 1301 (“A

26 Among the equitable factors used in CERCLA contribution

cases are the so-called “Gore factors.” See Hercules, 247 F.3d at

718. Those factors are derived from the amendment that then-

Representative Gore introduced in 1980 to alleviate the harshness

of mandatory apportionment, which at that time was a part of Lae

bill. See 126 CONG. REC. 26782 (1980) (statement of Rep. Gore).

Although these factors are appropriate in contribution cases, they

are not, for the reasons discussed in the text, appropriate

considerations at the liability stage.

27 The only mention of equity in Restatement § 433A is in

comment h, regarding “[e]xceptional cases.” Comment h suggests

that in cases of insolvent defendants, when an “innocent plaintiff

would be forced to bear the share of the loss due to the defendant

from whom he could not collect damages,” courts may refuse to

allocate harm to avoid “injustice to the plaintiff.” Because we

determine that there is no reasonable basis for apportioning the

defendants’ harm, we do not reach the question of whether the

considerations of comment h are applicable here.

33a

PRP’s contribution liability will correspond to that

party’s equitable share of the total liability and will not

be joint and several.”).

Other circuits have been careful to delineate the

difference between the equitable considerations

pertinent to contribution under §9613(f) and the

objective considerations pertinent to divisibility under

§ 9607(a). See Hercules, 247 F.3d at 718; Township of

Brighton, 153 F.3d at 318; Bell Petrolewm, 3 F.3d at

901. As the Sixth Circuit has noted, divisibility

analysis, unless carefully limited, has the potential to

eviscerate the strict liability principles of CERCLA

entirely, “because defendants who can show that the

harm is divisible, and that they are not responsible for

any of the harm” could whittle their liability to zero.

Township of Brighton, 153 F.3d at 318. Additionally, as

Township of Brighton also noted in rejecting a

fairness-based approach, divisibility analysis is not an

invitation to “split the difference” and come up with a

“compromise amount.” /d. at 319.

While it may seem unfair to hold a partial owner

liable for all of the contamination cleanup costs, that

perceived unfairness is the result of CERCLA’s

expansive statutory liability scheme. Assuring fairness

among PRPs is the proper subject of the contribution

stage, not of apportionment at the liability stage. See

United States v. Rohm & Haas Co., 2 F.3d 1265, 1280-

81 (3d Cir.1993), overruled on other grounds by United

States v. EI. DuPont De Nemours & Co., 432 F.3d 161,

162-63 (3d Cir.2005) (en banc). At the liability stage,

CERCLA simply assigns liability to statutorily

responsible parties so as to assure that, as between

those with some connection to the contamination—and

who have, it may be assumed, benefited from the

contamination-causing process—and those with none,

such as the taxpayers. Any court-created structure

34a

that would allow PRPs to whittle their share to little or

nothing and leave the taxpayers holding the bag may

seem more equitable to some PRPs but would violate

the basic structure of the CERCLA statutory scheme.

Because of such concerns, courts have generally

refrained from using an equity-based allocation

analysis, so as not to weaken further the strict liability

principle basic to CERCLA.

We agree that while joint and several liability need

not be universally applied, see Bell Petroleum, 3 F.3d

at 897, the inquiry as to whether such liability is

appropriate must focus strictly on whether there is a

reasonable basis for apportionment, see, e.g., id. at 901-

04. Consequently, in an action under § 9607(a), a court

is not to look to equitable considerations, such as

relative fault, in determining whether liability is to be

joint and several or apportioned.

III. Analysis of Railroads’ and Shell’s Cercla

Liability

We now proceed to apply’ these fairly

straightforward principles to the circumstances of this

case. Here, the Railroads were found to be PRPs

under § 9607(a)(2), as the owners of a “facility at which

.. hazardous substances were disposed of,” and Shell

was found to be a PRP under § 9607(a)(3), as a person

who “arranged for disposal ... of hazardous substances

owned or possessed by such person.” The first

question we address is whether the Railroads and Shell

are liable for all the cleanup costs at the Arvin site, or,

as the district court held, only some of them. The

second question, addressed later, is whether Shell is

liable for any of the harm, as an “arranger.”

35a

A. Apportionment of Liability

1. Standard of Review and Burden of Proof

Because we have not heretofore faced a CERCLA

apportionment issue directly, there is no Ninth Circuit

precedent concerning the standard of appellate review

for such an issue. Three circuits have addressed the

question, and two separate approaches have emerged.

The Fifth and Eighth Circuits look first to whether

there is a reasonable basis for apportioning the harm,

an inquiry they consider a question of law reviewed de

novo. See Hercules, 247 F.3d at 718-19; Bell

Petroleum, 3 F.3d at 896, 902. These two circuits then

examine, as a question of fact reviewed under the

clearly erroneous standard, precisely how damages are

to be divided. See Hercules, 247 F.3d at 718 (holding

that “actual apportionment” of damages is a question of

fact); Bell Petroleum, 3 F.3d at 896 (same).

In contrast, the Sixth Circuit considers divisibility

as a whole a factual matter of causation, reviewed

entirely under the clearly erroneous standard.

Township of Brighton, 153 F.3d at 318 n. 13. This view,

however, disregards a distinction between conceptual

divisibility and actual allocation that we find both

persuasive and useful. The latter inquiry can involve

the resolution of credibility issues and of conflicting

evidence, while the former ordinarily does not.

We believe the most appropriate approach, and the

one we therefore adopt here, is the one adopted in

Hercules and Bell Petroleum, with a refinement

suggested by Judge Parker’s dissent in Bell

Petroleum. Judge Parker thought that the majority

confused the distinction between the “legal burden that

the single harm at issue caused is of a type capable of

apportionment, and the factual burden of proving the

amount of harm attributable to a particular party.”

36a

Beil Petroleum, 3 F.3d at 909 (Parker, J., concurring in

part and dissenting in part). We are not sure that

there was any such confusion. Rather, an aspect of

clear error review is the legal determination whether

the party with the burden of proof met that burden; if

the party did not and the district court nonetheless

ruled for it, then the district court clearly erred. See

Lloyd v. Schlag, 884 F.2d 409, 415 (9th Cir.1989)

(reviewing “whether the district court committed clear

error by holding that [plaintiff] had not met his burden

of proof’). Thus, although the harm may be capable of

apportionment, the harm may not actually be

apportionabdle in the particular case as a factual matter,

given the evidence produced, because the party

advocating apportionment has not come forward with

the minimum showing needed to meet its burden of

proof as to the proper division of liability.

We therefore proceed as follows: We inquire, first,

whether the particular harm at issue in the case is

theoretically capable of apportionment—i.e., whether it

could ever be apportioned or whether it is, by nature,

too unified for apportionment. That question is one of

law, reviewed de novo. Cf. Taisho Marine & Fire Ins.

Co. v. M/V Sea-Land Endurance, 815 F.2d 1270, 1274

(9th Cir.1987). Second, we review for clear error

whether the defendant submitted evidence sufficient to

establish a reasonable basis for the apportionment of

liability, taking into account that the burden of proof is

on the party seeking allocation, as well as the district

court’s actual division of liability.

There is no dispute here on the first, purely legal

question—whether the harm is’ capable of

apportionment. See Bell Petroleum, 3 F.3d at 896;

Chem-Dyne, 572 F.Supp. at 810. Some of the

contamination on the B & B site occurred before the

Railroads’ parcel became part of the facility. Only

37a

some of the toxic substances were stored on the

Railroads’ parcel, and only some of the water on the

facility washed over the Railroads’ site. As to Shell,

only some of the toxic substances spilled on the facility

were sold by the company. The different toxic

substances vary in their likelihood to leak and in the

manner and speed in which they disseminate in ground

water. So, conceptually, the contamination traceable to

the Railroads and Shell, with adequate information,

would be allocable, as would be the cost of cleaning up

that contamination.

The questions, then, are whether the district court

clearly erred in finding that the Railroads and Shell

established a “reasonable basis” for apportionment,

Bell Petroleum, 3 F.3d at 901, and whether, having so

found, the district court properly apportioned the

harm.

We recognize that the district court at one point

stated that the Railroads failed to “meet their burden

of proof” as to divisibility. But its overall ruling was

necessarily to the contrary, as the court also stated

that it “independently found [in the record] a

reasonable basis for apportionment in spite of the

parties[’] presentations.” Thus, while the district court

rejected both defendants’ theories as to divisibility, it

used record evidence it found persuasive to determine

apportionment. Whether the district court was correct

in this regard is, as we have noted, part of the review

of the factual decision regarding apportionment,

discussed hereafter. The burden of proof issue thus

melds with the merits of the apportionment issue,

rather than barring us from considering it.

2. The Railroads

As we have established, if apportionment is to be

allowed under the Restatement approach, there must

38a

be a reasonable basis for calculating the connection

between the Railroads’ PRP status and the relevant

harms. Again, the harm we consider is_ the

contamination on the Arvin site. Where, as for the

Railroads, the PRPs’ responsibility under the statute

derives solely from their status as landowner, the

PRPs can establish divisibility by demonstrating that

discrete portions of the contamination did not originate

on land they owned at the time of the toxic disposal.

Here, the district court’s severability analysis—

after 191 pages of an amended opinion that included

over 80 pages of factual findings—ultimately relied on

the simplest of considerations: percentages of land

area, time of ownership, and types of hazardous

products. Although we do not fault the district court’s

factfinding—its numbers are mostly correct—its legal

conclusion that these three factors alone suffice to

support apportionment cannot stand.28 We address

each factor below to show why.

a. Land Area

The only court of appeals case that has fully

addressed divisibility of landowner liability takes a

relatively strict approach to apportionment on the

basis of land area. In United States v. Rohm and Haas

Co., 2 F.3d 1265 (3d Cir.1993), the most analogous

CERCLA divisibility case to this one, the Third Circuit.

held, as do we, that “simply showing that one owns

283 We emphasize that our conclusion does not rest simply on the

fact that the district court’s calculation of the Railroads’ share of

liability was, as the court recognized, “rough[ ].” It is neither

unusual nor fatal to the validity of the resulting allocation that an

apportionment determination includes estimates of contribution to

contamination based on extrapolation of record facts, as long as

the basis for the extrapolation is explained, is logical, and does not

disregard other record facts.

39a

only a portion of the facility in question is [not]

sufficient to warrant apportionment.” Jd. at 1280.

Like this case, Rohm and Haas concerned a

landowner PRP and changes in landownership over

time. Although the Third Circuit’s divisibility analysis

is fairly cursory, its reluctance to apportion landowner

liability on the basis of land boundaries is informative.

Rohm and Haas indicates that the mere percentage of

land owned by one PRP relative to the entire facility

cannot alone be a basis for apportionment, as it does

not provide a minimally reliable basis for tracing the

propertion of leakage, contamination, or cleanup costs

associ* ied with the entire parcel.

Contrary to Rohm and Haas, the district court’s

analysis gave star billing to the percentage of land

ownership, even in a unified facility.29 We agree with

Rohm and Haas that this approach, seemingly

straightforward though it is, fails in most

circumstances to comport with the “reasonable basis”

test, as the facts of this case illustrate.

The Arvin site was a single facility. CERCLA

premises landowner liability on ownership of a facility,

not on ownership of a certain parcel of land that is part

of a facility. The operations on the site were dynamic,

with fertilizer rigs stored on the Railroad parcel and

filled up on the B & B parcel. Empty pesticide cans

were stored on the Railroad parcel before they were

crushed and disposed of. After the 1978 windstorm,

tanks were stored all over the facility, including on the

Railroad parcel. A simple calculation of land ownership

29 Judge Moore, concurring in the result in Township of

Brighton, asserted that a court can never apportion liability for

contamination at a single facility on the basis of geography.

Township of Brighton, 153 F.3d at 331 n. 12 (Moore, J., concurring

in result). We do not agree with Judge Moore in this regard.

40a

does not capture any data that reflect this dynamic,

unitary operation of the single Arvin facility.*°

In addition, the synergistic use of different parts of

the Arvin site makes division based on percentage of

land ownership particularly untenable. The record

shows that B & B leased the Railroad parcel to

accommodate its expanding operations. The Railroad

parcel added an _ unquantifiable and _ perhaps

exponential amount to B & B’s soil contamination.

Were the Railroad parcel not part of the facility, there

would have been less overall storage capacity. One can

assume that a smaller amount of toxic chemicals would

have been delivered to, and spilled on, the Arvin site.

The fertilizer rigs, for example, were stored almost

exclusively on the Railroad parcel. Had that parcel not

been available, less fertilizer might have been

delivered to—and leaked onto—the Arvin parcel. As

these descriptions suggest, nothing in the record

supports a conclusion that the leakage of contaminants

that ended up on the B & B parcel occurred on each

parcel in proportion to its size.

Instead, given the circumstances of this case, more

pertinent comparisons would be the proportion of the

amount of chemicals stored, poured from one container

to another, or spilled on each parcel. For example,

were adequate records kept, it would be possible to

estimate the amount of leakage attributable to

activities on the Railroad parcel, how that leakage

30 In its discussion of the Railroads’ apportioned liability, the

district court found that B & B used the Railroad parcel as part of

its total agricultural-chemical operations, and it earlier cited

approvingly to documents describing the land as “an integral part

of the adjacent farm chemical disiribution facility.” The dissent

from denial of rehearing en banc therefore wrongly characterizes

our description of the site as “appellate fact-finding.” See Dissent

at 958-60.

4la

traveled to and contaminated the soil and groundwater

under the Arvin parcel, and the cost of cleaning up that

contamination.

But none of this data is in the record. It may well

be that such information is, as a practical matter, not

available for periods long in the past, when future

environmental cleanup was not contemplated. Unlike

records concerning the amount of toxic chemicals

produced by a given operator of a facility, records that

separate out, with any precision, the amount of toxic

chemicals stored on one part of a facility as opposed to

another would have had little utility to B & B, the

operator of the facility, and none to the Railroads, the

owners of the parcel. This observation is true in spades

for the more directly pertinent data, such as the

amount of leakage on the Railroad parcel, the amount

of that leakage that flowed onto the B & B parcel, and

the amount of that residue that remained as

contamination under the B & B parcel when the

cleanup began.

So the failure to keep these records is quite

understandable. But these practical considerations

cannot justify a “meat-axe” approach to the divisibility

issue, premised on percentages of land ownership, as a

means of adjusting for the difficulties of proving

divisibility with precision when PRP status is based on

land ownership alone. Such an approach would be

tantamount to a disagreement with the imposition of

no-fault land ownership liability. Congress, however,

created precisely such liability, placing the

responsibility to pay for environmental cleanup on

parties, such as the Railroads, that profited from the

circumstances giving rise to the contamination so that

the taxpayers are not left holding the tab. The risk of

lack of adequate information for meaningful division of

harm therefore must rest on the responsible parties,

42a

even when that information is extremely hard to come

by.

b. Period of Ownership

Just as the district court’s land area calculations did

not correspond to the harms in this case, its simple

fraction based on the time that the Railroads owned

the land cannot be a basis for apportionment. The

fraction it chose assumes constant leakage on the

facility as a whole or constant contamination traceable

to the facility as a whole for each time period; no

evidence suggests that to be the case. Again, if

adequate information were available, it would make

sense to eliminate the Railroads’ liability for the period

before B & B leased the Railroad parcel. See, e.g.,

Rohm and Haas, 2 F.3d at 1280. The evidentiary

vacuum concerning the amount of contamination

traceable to the pre-lease period, however, precludes

any such calculation here.

ce. Types of Hazardous Products

While many of the district court’s calculations were

factually correct but legally insufficient, its decision to

assign a two-thirds fraction to represent the present

types of hazardous products contains a basic factual

error. All three chemicals were on the Railroad parcel

at some time. There is no evidence as to which

chemicals spilled on the parcel, where on the parcel

they spilled, or when they spilled. Yet, there is

evidence that there may well have been leakage on the

Railroad parcel of D-D, the chemical the district court

excluded from its calculations. Given the record, the

district court clearly erred in its attempt to rely on the

proportion of hazardous products present on the

Railroad parcel.

43a

d. Conclusion

It will often be the case that a landowner PRP will

not be able to prove in any detail the degree of

contamination traceable to activities on its land. A

landowner PRP need not be involved at all in the

disposal of hazardous chemicals and so will often have

no information concerning that disposal or its impact.

The net result of our approach to apportionment of

hability, consequently, may be that landowner PRPs,

who typically have the least direct involvement in

generating the contamination, will be the least able to

prove divisibility. And contribution “is not a complete

panacea since it frequently will be difficuit for

defendants to locate a sufficient number of additional,

solvent parties.” O’Neil v. Picillo, 883 F.2d 176, 179

(1st Cir.1989).

While the result may appear to fault a landowner

PRP for failing to keep records proving the minor

connection of its land to the contamination on the

facility as a whole, CERCLA is not a statute concerned

with allocation of fault. Instead, CERCLA seeks to

distribute economic burdens. Joint and _ several

liability, even for PRPs with a minor connection to the

contaminated facility, is the norm, designed to assure,

as far as possible, that some entity with connection to

the contamination picks up the tab. Apportionment is

the exception, available only in those circumstances in

which adequate records were kept and the harm is

meaningfully divisible.

In sum, although most of the numbers the district

court used were sufficiently exact, they bore

insufficient logical connection to the pertinent question:

What part of the contaminants found on the Arvin

parcel were attributable to the presence of toxic

substances or to activities on the Railroad parcel? We

therefore reject the district court’s apportionment

44a

calculation and hold that the Railroads have failed to

prove any reasonable basis for apportioning liability for

the costs of remediation.

3. Shell

Shell’s contribution to the contamination of the

Arvin site is easier to isolate than that of the

Railroads’, as it involved ascertainable pollutants

entering the soil in a specific way. Shell thus had a

greater prospect of succeeding on divisibility than did

the Railroads, as there is some volumetric basis for

comparing its contribution to the total volume of

contamination on the Arvin site.

Nonetheless, the evidence actually produced was

insufficient to allow even a rough approximation of the

contamination remaining on the facility, either directly

or through the presumption that the pro rata cost of

remediating contamination is likely to be equivalent to

a PRP’s pro rata share of contamination. Indeed, Shell

produced only evidence concerning leakage.

Such leakage or disposal evidence cannot suffice in

the present circumstances as a basis for apportioning

the harm in question. As we have explained,

contamination—as distinct from leakage—is_ the

necessary consideration. Where there is disposal of

multiple contaminants, courts have demanded a

“showing [of] a relationship between waste volume, the

release of hazardous substances, and the harm at the

site.”. Monsanto, 858 F.2d at 172. Factors such as

“relative toxicity, migratory potential, and synergistic

capacity of the hazardous substances” are relevant to

demonstrating this relationship. /d. at 172 n. 26.

Alternatively, volumetric calculations of

contaminating chemicals—those remaining in the

environment and _ requiring cleanup—could be

sufficiently specific for apportionment. See Hercules,

45a

247 F.3d at 719; Bell Petroleum, 3 F.3d at 903. But

Shell provided no evidence regarding such factors. It

thus failed to prove whether its leaked chemicals

contaminated the soil in any specific proportion as

compared to other chemicals spilled at the site. See

United States v. Agway, Inc., 193 F. Supp.2d 545, 549

(N.D.N.Y.2002) (noting that defendants whose

products have become commingled in the soil “face an

uphill battle in attempting to demonstrate that

volumetric contribution is a reasonable basis for

apportioning liability of a single harm”).

To fill these evidentiary gaps, the district court

assumed equal contamination and cleanup cost from all

the chemicals’ leakage. This methodology entirely

failed to account for the possibility that leakage of one

chemical might contribute to more contamination than

leakage of another, because of their specific physical

properties. Similarly, the cost of cleanup depends upon

which contaminants are present; some contaminants

are more expensive than others to extract from the

soil.

Moreover, even as an approximation of leakage, the

district court’s calculations were too speculative to

support apportionment. Chem-Nuclear is informative

in this regard. In Chem-Nuclear, the defendant

disposed of drums of hazardous waste at several

facilities. 292 F.3d at 255. At least eighty drums found

at a single site were attributable to the defendant. /d.

The defendant could not prove, however, that it was

responsible only for those eighty drums, and therefore

was not entitled to apportionment. /d. at 259-61.

Although the defendant provided evidence supporting

inferences regarding where its drums went, the court

refused to accept these inferences as sufficient proof.

Id. at 260.

46a

Here, the court estimated the volume of Shell’s

chemicals that leaked from each transfer based on data

samples that do not readily extrapolate to total leakage

over the entire twenty-three-year period that Shell

supplied B & B with D-D. The court used figures from

only six years of B & B’s purchases of Shell D-D to

calculate the average D-D transferred at the Arvin site

each year, yet provided no basis for assuming equal

purchases each year. The court then based its estimate

of the amount of D-D spilled during each transfer on

guesses by witnesses.%! Also, although D-D was known

to leak when sight gauges on D-D rigs broke, the court

had no evidence of how much D-D leaked under these

circumstances and, therefore, did not add any quantity

for sight gauge leakage into the calculation. Even if

each of these estimates alone might have been

reasonable, the resulting combined estimate is too

speculative to serve as an accurate basis for

ascertaining leakage, let alone contamination or the

costs of cleaning up the contamination.82

31 For the quantity of D-D that spilled during transfer from

Shell’s carriers’ trucks to the D-D rigs, for example, the court

relied on estimates of witnesses that the spill was between a cup

and a quart. It then calculated “3 cups x 23 years = 2,691 cups =>

168 gallons of D-D.”

32 There is something of a circuit split on the degree of

specificity of proof necessary to establish the amount of liability

apportioned to each PRP. According to some courts, proving up

the precise proportion attributable to each PRP is a “very difficult

proposition,” Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930,

934 n. 4 (8th Cir.1995), requiring “concrete and specific” evidence

in support of any proposed apportionment, Hercules, 247 F.3d at

718. The defendant cannot rely on a “chain of possible inferences.”

Chem-Nuclear, 292 F.3

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