Appendix — Shell Oil Co. v. United States (Nos. 07-1607, 07-1601)
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APPENDIX A
UNITED STATES COURT OF APPEALS,
NINTH CIRCUIT
Nos. 03-17125, 03-17153, 03-17169.
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
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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,
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,
Defendants,
and
SHELL OIL COMPANY,
Defendant-Appellant.
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Submission Withdrawn Sept. 14, 2005.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.
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
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was owned by two railroad companies (the Rail-
roads), 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 Comprehen-
sive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. §§ 9601 9675,' (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 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.*
' Unless otherwise noted, all statutory citations are to Title
42 and the 2000 edition of the U.S.Code.
* 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
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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 parcel (the Railroad parcel)
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 Transporta-
tion Co. B & B used the Railroad parcel principally to
park fertilizer rigs.
The Railroad parcel comprised the western portion
of the Arvin site.’ 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.
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 chemi-
cal 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
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 Citizens Council v.
Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992) (citation omitted).
We therefore deny the Railroads’ request for judicial notice.
' We refer to the B & B and Railroad parcels together as the
“Arvin site.”
5a
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.“ 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.
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.
* “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).
* 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 personne! should
instead do the unloading.
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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 because of an impermeable
layer of soil. The next highest level, however, is a
potential source of drinking water, and contamina-
tion 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
costs. In 1991, the EPA ordered the Railroads to take
specific preventative steps on the Railroad parcel,
including installing groundwater monitoring wells.
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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.° 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 faciléty 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 provided little
assistance on the apportionment issue. The district
court nonetheless proceeded to “perform the equitable
* The relevant statutory sections covering contribution and
reimbursement actions, § 9613(f) and § 9607, are quoted later in
this opinion.
" 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.
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apportionment analysis demanded by the circum-
stances 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%;° (2) the
percentage of time that the Railroads leased the
parcel in relation to B & B’s total operations, 45%;°
and (3) the fraction of hazardous _ products
attributable to the Railroad parcel, 66%." 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,
* 0.9 acres / 4.7 acres = 0.191 (19.1%).
°*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 the time B & B opcrated the facility.
’ 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 jon 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.
" B & B, albeit insolvent, was assigned 100% joint and
several liability.
9a
6% of the costs incurred by the Railroads in their
cleanup effort.”
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 uv.
Sequa Corp. (In the Matter of Bell Petroleum Seruvs.,
Inc.), 3 F.3d 889, 897 (5th Cir.1993) (citing United
States v. Chem-Dyne Corp., 572 F.Supp. 802, 805-06
(S.D.Ohio 1983)).
In accord with this purpose, CERCLA 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,
" The Railroads do not challenge the percentage of liability
assigned to Shell.
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(2) any person who at the time of disposal of any
hazardous substance owned or operated any
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.””
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,
" 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.
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unless they can establish the third-party defense set
out in § 9607(b)(3).“
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.
'* 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—
(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).
12a
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 responsible 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 ap-
portionment); Carson Harbor Vill., 270 F.3d at 871
(stating that once liability has been found, “the
defendant may avoid joint and severai 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
" 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, e.z.,
Fireman’s Fund, 302 F.3d at 945 (analyzing the possibility that
CERCLA preempts state laws).
* 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 tral 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
13a
every circuit that has addressed the issue, we hold
that apportionment is available at the liability stage.
In so ruling we rely, as 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
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)
(noting 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 “den|lied] that they are jointly and severally liable for
the response costs claimed by the Government” but argued that,
if liable, they 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.
l4a
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-PAS), 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 several liability, it did not intend by doing so “a
rejection of joint and severable liability.” Chem-Dyne,
572 F.Supp. at 808. Instead, recognizing the dif-
ficulties inherent “ ‘in prescribing in statutory terms
liability standards which will be applicable in
individual cases,’ ” id. at 806 (quoting 126 CONG.
REC. S14964 (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.
15a
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 S.Ct. 577, 160 L.Ed.2d 548 (2004); United
States v. 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 policy favoring
national uniformity so as to discourage “illegal
dumping in states with lax liability laws.” Chem-
Dyne, 572 F.Supp. at 809."
" 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
U.S. 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
16a
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."
Because CERCLA’s statutory liability scheme dif-
fers from the common law in important respects,
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.
'* 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 shuw 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}Jpproaches to divis-
ibility 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.
17a
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 Re-
statement 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 com-
mon 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 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.
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1. Causation
Section 433A of the Restatement allows for ap-
portionment of damages where “(a) there are distinct
harms,’ or (b) there is a reasonable basis for de-
termining the contribution of each cause to a single
harm.” “ RESTATEMENT (SECOND) OF TORTS
§ 433A(1) (1965) (emphasis added). CERCLA, how-
ever, does not require causation as a prerequisite to
" 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 hospital, 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 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.
* 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 plaintiff's 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.
19a
liability (except with regard to the _ third-party
defense, see § 9607(b), not at issue here). None-
theless, most of the leading cases on joint and several
liability under CERCLA have addressed divisibility
under § 433A(1)(b).” See, e.g., Bell Petroleum, 3 F.3d
at 902-03; 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 appor-
tionment 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 Restate-
ment standard is indeed a relatively straightforward
analysis, and one in which traditional causation
concepts are useful. If the court can estimate with
* 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, 247 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 declining 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, and Bell Petroleum, 3 F.3d at 896,
with RESTATEMENT (SECOND) OF TORTS 8 433B(1).
20a
some confidence the amount of waste that each
defendant disposed of and has a basis for deter-
mining 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
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 allow 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
“ 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).
2la
§ 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 dem-
onstrating 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, arranged disposals in light of other
contamination at the facility.
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
Restatement, as applied to CERCLA. See RESTATE-
MENT (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
* 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.
22a
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.” 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 con-
tamination can vary with geographical considera-
tions, 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 con-
tamination—we conclude that it is most useful for
“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 share of the hazardous waste disposed of and
of the resulting contamination is the same. See also Bell
Petroleum, 3 F.3d at 903.
23a
purposes of determining divisibility to view the
“harm” under CERCLA as the contamination trace-
able 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
in the statute directly addresses the question
whether equitable factors are appropriate for pur-
poses of apportioning liability among joint tort-
feasors, 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
* 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 varicus 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.
24a
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 con-
tribution from the other, unless the other previously
had a valid settlement and release from the plain-
tiff.”). 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 suf-
ficient 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 considera-
tions applicable in a contribution action for deter-
mining 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).” In con-
* 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
25a
trast, 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.” 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 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 perti-
nent to contribution under § 9613(f) and the objec-
tive 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
contribution cases, they are not, for the reasons discussed in the
text, appropriate considerations at the liability stage.
* The only mention of equity in Restatement § 433A is in
comment h, regarding “le]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.
26a
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.” Jd. 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 fair-
ness 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. E.]. 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 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 re-
frained from using an equity-based allocation anal-
ysis, so as not to weaken further the strict liability
principle basic to CERCLA.
27a
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 straight-
forward 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 sub-
stances 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.”
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 appel-
late review for such an issue. Three circuits have
addressed the question, and two separate approaches
have emerged.
28a
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 retinement
suggested by Judge Parkers dissent in Bel/
Petroleum. Judge Parker thought that the majority
confused the distinction between the “legal burden
that the single harm at isswe caused is of a type
capable of apportionment, and the factual burden of
proving the amount of harm attributable to a
particular party.” Bell Petroleum, 3 F.3d at 909
(Parker, J., concurring in part and dissenting in
part). We are not swre that there was any such
confusion. Rather, an aspect of clear error review is
the legal determination whether the party with the
29a
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 appor-
tionment, the harm may not actually be apportion-
able 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 apportion-
ment. 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’ parce!
became part of the facility. Only some of the texic
substances were stored on the Railroads’ parcel, and
only some of the water on the facility washed over the
30a
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, con-
ceptually, the contamination traceable to the Rail-
roads 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 divisibilitv. 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
neted, 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
3la
be a reasonable basis for calculating the connection
between the Railroads’ PRP status and the relevant
harms. Again, the harm we consider is the con-
tamination 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.” 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
* We emphasize that our conclusion does not rest simply on
the faet that the distmet 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
32a
analogous CERCLA divisibility case to this one, the
Third Circuit held, as do we, that “simply showing
that one owns only a portion of the facility in
question is [not] sufficient to warrant apportion-
ment.” 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 appor-
tionment, as it does not provide a minimally reliable
basis for tracing the proportion of leakage, con-
tamination, or cleanup costs associated 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.” We agree with
Rohm and Haas that this approach, seemingly
straightforward though it is, fais in most cir-
cumstances 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
~ 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.
33a
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 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 ex-
ponential 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 sug-
gest, nothing in the record supports a conclusion that
the leakage of contaminants that ended up on the B
* 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 958-60.
34a
& 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 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 weuld have had little utility to B
& B, the operator «* the facility, and none to the
Railroads, the owner 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 divis-
ibility issue, premised on _ percentages of land
ownership, aS a means of adjusting for the difficulties
of proving divisibility with precision when PRP
35a
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, 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.
c. 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
36a
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 te rely on the proportion of hazardous
products present on the Railroad parcel.
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 liability, 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
difficult for defendants to locate a sufficient number
of additional, solvent parties.” O’Neii 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 con-
nection to the contaminated facility, is the norm,
designed to assure, as far as possible, that some
entity with connection to the contamination picks up
37a
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 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. Sh» 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, cither
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 contam-
ination. Indeed, Shell produced only evidence con-
cerning 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,
38a
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. Jd. at 172 n. 26.
Alternatively, volumetric calculations of contami-
nating chemicals—those remaining in the environ-
ment and requiring cleanup—could be sufficiently
specific for apportionment. See Hercules, 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 battie in
attempting to demonstrate that volumetric contribu-
tion 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.
39a
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. Id. The defendant could not prove,
however, that it was responsible only for those eighty
drums, and therefore was not entitled to ap-
portionment. Jd. 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. Jd. at 260.
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
” For the quantity of D-D that spilled during transfer from
Shell's carners’ trucks to the D-D mgs, 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.”
46a
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.”
Again, Shell’s harm was capable of apportionment.
Shell could have provided data showing the volume of
chemicals shipped to B & B every year, or more
precise estimates of the average volume of leaked
chemicals during the transfer process. Data
connecting the properties of the various chemicals
leaked at the site to the likelihood that they
contributed to the contamination could have been
“ 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.3d at 260.
In contrast, other courts have permitted informal estimates or
data rather than more exact calculations. See Bell Petroleum, 3
F.3d at 903-04 (allowing estimation of the proportion of
contamination produced by each of a series of successive
operators of a facility, where reliable approximations were
simple because there was a single chemical produced by the
successive operators each of whom operated the facility
similarly); see also Hercules, 247 F.3d at 719 (relying on Bell
Petroleum, 3 F.3d at 895-96, and holding that the defendant
need not show that there was no possibility that it contributed
to the harm, because certain approximations can suffice). Aside
from noting, as we have, supra n. 27, that logical, supportable
inferences from the record facts are, as always, permissible, we
need not weigh in on this dispute, as the district court's
extrapolations could not be upheld under even a forgiving
standard.
4la
presented and considered. But the record before us
provides none of that information, most likely
because Shell put its eggs in the no-liability basket.
In the end, the district court’s apportionment
analysis with regard to Shel! came closer to meeting
the legal standard than the method it used with
respect to the Railroads. We hold, nonetheless, that
on the facts of this case as the district court found
them, there was no reasonable basis for apportioning
the pertinent harm caused by Shell.
B. “Arranger” Liability
Under CERCLA, “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” is
liable. § 9607(a)(3). Shell claims that (1) the district
court applied the wrong legal standard in de-
termining whether Shell was an “arranger” under
§ 9607(a); (2) the “useful product” doctrine precludes
imposition of “arranger” liability on Shell; (3) Shell
lacked ownership and control over the chemicals at
the time of the transfers and thus the district cowrt
could not find that it had arranged them; and (4)
because D-D evaporates or disperses rather than
remaining in toxic form in the soil, the district cowrt
erred when it determined that Shell contributed to
the groundwater contamination. We reject these
contentions and affirm the district court’s ruling on
the “arranger” issue.
We review the district court's imterpretation of
CERCLA to determine the legal standard for ar-
ranger liability as a question of law, reviewed de
novo. Carsen Harbor Vill., 270 F.3d at 870. We
42a
review the district court’s factual determinations
regarding Shell’s operations for clear error. W. Prop.
Serv. Corp. v. Shell Oil Co., 358 F.3d 678, 685 (9th
Cir.2004).
1. Requirements for “Arranger” Liability
CERCLA does not define “arrange[ |.” We have
avoided giving the term “arranger” too narrow an
interpretation to aveid frustrating CERCLA’s goal of
requiring that companies responsible for the intro-
duction of hazardous waste into the environment pay
for remediation. Pakootas v. Teck Cominco Metals,
Lid., 452 F.3d 1066, 1081 (9th Cir.2006); Cadillac
Fairview /Cal., Inc. v. United States, 41 F.3d 562, 565
n. 4 (9th Cir.1994) (per curiam) (citing with approval
United States v. Aceto Agric. Chems. Corp., 872 F.2d
1373, 1380 (8th Cir.1989)); see also Jones-Hamilton
Co. v. Beazer Materials & Servs., Inc., 973 F.2d 688,
694-95 (9th Cir.1992) (discussing Aceto, 872 F.2d at
1384). Accordingly, we have recognized, in addition to
“direct” arranger liability, a “broader” category of
arranger liability, see United States v. Shell Oil Co.,
294 F.3d 1045, 1054-55 (9th Cir.2002), in which
disposal of hazardous wastes is a foreseeable byprod-
uct of, but not the purpose of, the transaction giving
rise to PRP status.
“Direct” arranger liability—also referred to as “tra-
ditional’ direct” arranger liability—involves transac-
tions in which the central purpose of the transaction
is disposing of hazardous wastes. See id.; see, e.g.,
Cadillac Fairview, 41 F.3d at 563-65 (involving
rubber companies that transferred contaminated
styrene to Dow Chemical for reprocessing); Catellus
Dev. Corp. v. United States, 34 F.3d 748, 749-50
(9th Cir.1994) (involving a company that sold used
automotive batteries to a lead reclamation plant). In
- Dh ee = =— — — —_— —— SS EEE ee ——eEe———
43a
contrast, “broader” arranger liability involves trans-
actions that contemplate disposi as a part of, but net
the focus of, the transaction; tite “arranger” is either
the source of the pollution @ manages its disposal.
See Sheil Oil, 294 F.3d at 1058. In the “broader”
arranger liability cases, smwch as Sheil Oil, we
examined the connection between the alleged ar-
ranger transaction and the disposal and decided
whether the transaction necessarily constituted an
arrangement for disposal of hazardous substances,
whatever immediate form it may have taken.
These broader arranger cases can involve sit- |
uations, like the present one, in which the alleged |
arrangers did not contract directly for the disposal of
hazardous substances but did contract for the sale or
transfer of hazardous substances, which were then
disposed of. See, e.g., Fla. Power & Light Co. v. Allis |
Chalmers Corp., 893 F.2d 1313, 1315, 1318 (11th
Cir.1990) (involving purchaser and recycler that sued
manufacturer of transformers for cleanup costs
from later disposal); Mathews v. Dow Chemical Co.,
947 F.Supp. 1517, 1519-20 (D.Colo.1996) (involving
neighbors of chemical company who sued manu-
facturer of paint thinner for contamination resulting
from packaging paint thinner); Courtaulds Aerospace,
Inc. v. Huffman, 826 F.Supp. 345, 347-48, 353-54
(E.D.Cal.1993) (involving neighbor of smelting plant
who sued companies that contracted with plant for
burning and smelting of copper wire for resulting
contamination). There are no Ninth Circuit cases in
this category.”
“ Although Shell Oil involved “broader” arranger liability, it
concerned “arranger” liability of a customer, rather than a
producer, of hazardous materials. 294 F.3d at 1056. There, the
defendant oil companies sought to hold the United States liable
_ a ee ee
44a
The inclusion of such circumstances within the
“arranger” concept, however, accords with the
statutory language and structure as a whole. To be
an “arranger.” one must “arrange[ ] for disposal or
treatment, or arrange { | with a transporter for
transport for disposal or treatment, of hazardous
substances... .” § 9607(a)(3). CERCLA’s definition of
“disposal,” in turn, includes “the discharge, deposit,
injection, dumping, spilling, leaking, or placing of any
solid waste or hazardous waste into or on any land or
water so that such solid waste or hazardous waste or
constituent thereof may enter the environment or be
. . . discharged into any waters, including ground
waters.” § 6903(3) (referred to by § 9601(29)). That
“disposal” includes such unintentional processes as
“leaking” indicates that “disposal” need not be
purposeful. See Carson Harbor Vill., 270 F.3d at 880
(holding that “leaking” may not “require affirmative
. conduct” (internal quotation marks omitted)
(quoting and adopting interpretation of United States
v. CDMG Realty Co., 96 F.3d 706, 714 (3d Cir.1996))).
Thus, an entity can be an arranger even if it did not
intend to dispose of the product. Arranging for a
transaction in which there necessarily would be
leakage or some other form of disposal of hazardous
substances is sufficient.
as an “arranger” because the federal government had purchased
large quantities of high octane fuel for military use; the process
used by the oil companies to refine the fuel resulted in toxic
waste that the oil companies later dumped at a site in
California. Jd. Because the United States was the end
purchaser, never owned the intervening toxic products used in
the refining process, and did not contract out the crucial, waste-
producing intermediate step, we held that it was not an
arranger under § 9607(a\(3). Jd. at 1056-59.
Klee Ul — a — — ~
45a
2. “Useful Product” Doctrine
While adopting a generally expansive view of
arranger liability, we have refused to hold manu-
facturers liable as arrangers for selling a useful
product containing or generating hazardous swb-
stances that later were disposed of. See, e.g., 3550
Stevens Creek Assocs. v. Barclays Bank ef Cal., 915
F.2d 1355, 1362-65 (9th Cir_1999). As Stevens Creek
and other “useful product” cases recognize, liability
cannot extend so far as to include a// mamufacturers
of hazardous substances, on the theery that there will
have to be disposal of the substances some time down
the line, after it is used as intemded. See, e.g.. Stevens
Creek, 915 F.2d at 1362-65 (refusing to hold
manufacturer liable for costs of removing asbestos
from building); Fla Power & Light, 893 F.2d at 1318-
19 (refusimg to hold manufacturer of transformers
liable for subsequent release of chemicals upon
disposal of transiermers). Also, the asserted liability
in “useful product” cases generally involved only the
normal use of those chemicals. See, e.g., Jordan v. S.
Wood Piedmont Co., 805 F.Supp. 1575, 1577
(S.D.Ga.1992) (imvolving the sale of chemicals to treat
wood and the comtamination from the wood treat-
ment process); Edward Hines Lumber Co. v. Vulcan
Materials Co., 685 F Supp. 651, 653 (N.D.Tl. 1988)
(same).
The useful product cases have no applicability
where, as here, the sale of a _ useful product
necessarily and immediately results in the leakage of
hazardous substances. In that circumstance, the
leaked portions of the hazardous substances are
never used for their intended purpose. See Zands
v. Nelson, 779 F.Supp. 1254, 1262 (S.D.Cal.1991)
(stating that “gasoline is no longer a useful product
46a
after it leaks into, and contaminates, the soil”); see
also Aceto, 872 F.2d at 1381 (rejecting application of
the useful product doctrine where “waste is generated
and disposed of contemporaneously with the process”
(emphasis added)).
Here, although Shell sold B & B a useful product,
leakage of some of that product before B & B could
use it was both inherent in the transfer process
arranged by Shell and contemporaneous with that
process.“ Shell arranged for delivery of the
substances to the site by its subcontractors; was
aware of, and to some degree dictated, the transfer
arrangements; knew that some leakage was likely in
the transfer process; and provided advice and
supervision concerning safe transfer and storage.
Disposal of a hazardous substance was thus a
necessary part of the sale and delivery process.
Put another way, the district court did not assign
arranger liability to Shell for contamination resulting
from the application of Shell’s useful products to the
soil as fertilizers or fumigants, or for disposal of
contaminated soil after the products were used.
Instead, the district court assigned arranger liability
on the portion of product that never made it to the
fields for its intended use but was disposed of prior to
use. Because Shell’s liability here stems from the
leaked chemicals rather than the fertilizer that was
“ For this reason, we also reject Shell's argument that,
because manufacturers are taxed to provide money for the
Superfund, Congress could not, without more, have intended for
them to be subject to liability as arrangers. See 26 U.S.C.
§§ 4661, 4662. Shell's liability derives not from its role as a
manufacturer of a useful product but rather from its role in
leakage prior to use. The Superfund tax is wholly irrelevant to
the latter imposition of liability and certainly does not bar it.
47a
used as fertilizer, the useful product doctrine is not
applicable.
3. Control and Ownership
Much of the district court’s analysis relies on the
factual determination that spills would necessarily
occur during the transfer of Shell’s chemicals to
B & B. Shel! maintains that this finding was
inadequate, because Shell did not itself transport the
chemicals or participate in transferring the chemicals
to B & B’s coniainers. Central to this contention is
Shell’s insistence that it lacked ownership and
control of the chemicals at the time of transfer and so
could not be an “arranger.” We do not agree that the
district court’s findings about Shell’s involvement
were insufficient to support “arranger” liability.
There was evidence before the district court that:
(1) Spills occurred every time the deliveries were
made; (2) Shell arranged for delivery and chose the
common carrier that transported its product to the
Arvin site; (3) Shell changed its delivery process so as
to require the use of large storage tanks, thus
necessitating the transfer of large quantities of
chemicals and causing leakage from corrosion of the
large steel tanks; (4) Shell provided a rebate for
improvements in B & B’s bulk handling and safety
facilities and required an inspection by a qualified
engineer; (5) Shell regularly would reduce _ the
purchase price of the D-D, in an amount the district
court concluded was linked to loss from leakage; and
(6) Shell distributed a manual and created a checklist
of the manual requirements, to ensure that D-D
tanks were being operated in accordance with Shell’s
safety instructions.
48a
The parties vigorously dispute whether, given
these facts, Shell owned the pesticide during the
transfer and controlled the transfer process.
Although the district court addressed these questions
and resolved them against Shell, we do not enter this
controversy. The text of the statute does not require
that the arranger own the hazardous wastes, either
at the time the “arranger” arranged for the
transaction or at the time of transfer of ownership.
See Pakootas, 452 F.3d at 1081. Indeed, to require
ownership at the time of disposal “would make it too
easy for a party, wishing to dispose of a hazardous
substance, to escape by a sale its responsibility to see
that the substance is safely disposed ot.” Catellus, 34
F.3d at 752. Nor is control a statutory requirement,
Cadillac Fairview, 41 F.3d at 565, although it has
been viewed as a pertinent consideration in cases
quite different from this one.
Where an owner of hazardous substances directly
“arranges” for disposal—by, for example, using a
hazardous substance disposal company—that owner
is plainly an “arranger” even if it has nothing more to
do with disposal. See, e.g., Catellus, 34 F.3d at 752.
In “broader” arranger liability cases, however, we
have tended to view control as a “crucial element” in
determining whether the party arranged for disposal.
Shell Oil, 294 F.3d at 1055. We also have viewed
ownership of hazardous substances at the time of
disposal as an important factor in nontraditional,
indirect arranger liability cases. See Jones-Hamilton,
973 F.2d at 695 (relying on Aceto, 872 F.2d at 1380).
None of these cases, however, indicates that
ownership or control at the time of transfer are the
sine qua non of nontraditional arranger liability.
49a
Instead, ownership and contro] at time of disposal are
useful indices or clues toward the end of “look[ing]
beyond defendants’ characterizations to determine
whether a transaction in fact involves an ar-
rangement for the disposal of a hazardous sub-
stance.” Aceto, 872 F.2d at 1381. In Shell Oil, for
example, the government never owned the chemicals
before disposal occurred, so control over the sub-
stances was an important factor in determining
whether or not the government could have “arranged”
for disposal. Shell Oil, 294 F.3d at 1057-59.
Here, ownership at the time of disposal is not an
informative considcration, and control is informative
only in light of additional considerations. Unlike in
Shell Oil, where the absence of any ownership or
control was a clue concerning whether the sales
transaction necessarily contemplated disposal as an
inherent part of the transaction, Shell here owned
the chemicals at the time the sale was entered into.
The statute requires nothing more in terms of
ownership. We therefore need not determine the
precise moment when ownership transferred to B &
B. As to the control question, the district court’s
findings, recited above, demonstrate that Shell had
sufficient control over, and knowledge of, the transfer
process to be considered an “arranger,” within the
meaning of CERCLA, for the disposal of the
chemicals that leaked.
4. Groundwater Contamination
Shell, finally, contends that the court erred when it
determined that it contributed to the groundwater
contamination, maintaining that D-D evaporates or
disperses rather than remaining in toxic form in the
50a
soil. The district court’s analysis on this issue is
factually complex and based on several weeks of
testimony. The district court made specific findings
that D-D can indeed enter groundwater. Those
findings are based on the testimony of experts whom
the court found persuasive. In light of the complexity
of the science and the substantial expert evidence
supporting the finding, the district court’s deter-
mination was not clearly erroneous.
IV. Conclusion
The district court erred in determining that the
harm in this case could be apportioned on this record.
Given the district court’s erroneous approach and the
paucity of record evidence, there is no reasonable
basis for apportioning the damages attributable to
the Railroads’ activity. Shell’s liability is a closer call,
but the evidence on the record in that regard is also
insufficient to support apportionment.
The district court followed the proper analysis in
finding that Shell is liable as an arranger. Shell
arranged for the sale and transfer of chemicals under
circumstances in which a known, inherent part of
that transfer was the leakage, and so the disposal, of
those chemicals.
We therefore reverse as to the district court’s
finding on apportionment. We affirm the district
court’s findings regarding both the Railroads’ and
Shell’s liability. The Railroads and Shell are jointly
and severally hable for the harm at the Arvin site,
except with regard to the so-called “Dinoseb hot
5la
spot.”” We remand for further proceedings not in-
consistent with this opinion.
REVERSED in part and AFFIRMED in part.
935
” The district court found that the “Dinoseb hot spot” was a
discrete area contaminated by Dinoseb (a Dow product) as the
result of a major spill in 1983, that Shell did not manufacture or
ship that product, and that Shell thus bore no responsibility for
any part of the $1.3 million cost of cleaning up this discrete
spill. The governments did not challenge this finding on appeal.
That finding therefore stands, and the district court should not
include the $1.3 million cleanup costs for the “Dinoseb hot spot”
in the calculation of Shell's liability. Because we therefore do
not hold Shell liable for this Dow product, the dissent from
denial of rehearing en banc is wrong when it claims we err by
holding Shell liable for “contamination from products Shell did
not sell to B & B.” Dissent at 962-63 n. 22.
52a
BEA, Circuit Judge, with whom KOZINSKI, Chief
Judge, O’SCANNLAIN, KLEINFELD, GOULD,
TALLMAN, CALLAHAN, and N.R. SMITH, Circuit
Judges, join, dissenting from the order denying the
petition for rehearing en banc:
The panel applies CERCLA’ in a novel and
unprecedented way to impose impossible-to-satisfy
burdens on CERCLA defendants. The panel’s inter-
pretation of CERCLA “arranger” liability’ creates
intra- and inter-circuit conflicts in an area of the
law where uniformity among circuits is of para-
mount importance. See Panel Op. at 935-36 (noting
CERCLA’s “policy favoring national uniformity so as
to discourage illegal dumping in states with lax
liability laws” (citation omitted)). Further, the panel’s
unreasonable application of CERCLA apportionment
law imposes joint and several liability on CERCLA
defendants where Congress did not so intend.
Our national policy on toxic spills or disposals is
quite clear; it does not allow for dithering. Anyone
who owned or used the land when or after the
pollution entered it is potentially liable for its clean-
up.’ It does not matter how the toxic materials
entered the land; that others may also be potentially
liable or that reasonable stewardship was exercised
are simply not defenses.
‘ Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§ 9601-9675...
* Under CERCLA, an entity that “arrange(s] for disposal or
treatment ... of hazardous substances” is strictly liable for the
clean-up costs. 42 U.S.C. § 9607(a)3).
a
In addition, CERCLA imposes liability on persons who
“arranged for disposal or treatment ... of hazardous substances,”
and persons who accepted “hazardous substances for transport
to disposal or treatment facilities.” 42 U.S.C. § 9607(a\(3), (4).
53a
But “potentially liable” does not mean “totally
liable.” Just as CERCLA allows the landowner or the
land user to prove the pollution entered the land
before he had anything to do with the land, he can
also prove others caused the pollution, in whole or in
part,‘ and that he is liable only for his apportioned
share of the pollution.
The panel’s recent amendments to its opinion do
take a step in the right direction by aligning the
Ninth Circuit with our sister circuits on CERCLA
apportionment law.’ As the amended panel opinion
notes, courts follow Restatement (Second) of Torts
(“Restatement”) principles in apportioning the harm
between defendants held strictly liable under
CERCLA. See Panel Op. at 939. Under the Re-
statement, and now the amended panel opinion,
apportionment is permissible so long as the evidence
allows the court to make “a reasonable estimate that
will fairly apportion liability.” Jd. at 936 n. 18
(citation omitted).
But although the panel’s amended opinion pays lip-
service to the Restatement test, the panel then
proceeds effectively to disregard it. Purporting to
require only a “reasonable estimate” for apportion-
* See 42 U.S.C. § 9607(b)(3).
* Henceforth, CERCLA apportionment in the Ninth Circuit
will be governed-not by a test that allows a landowner to avoid
joint and several liability only with “perfect information” that
portions of the contamination are “in no respect traceable” to its
land-but by a “reasonable basis” test under the Restatement
(Second) of Torts § 433A(1)\(b). See Panel Op. at 938 (holding a
landowner can “establish divisibility by demonstrating a reason-
able basis for concluding that a certain proportion of the
contamination did not originate” on its facility (emphasis
added)).
54a
ment, the panel imposes joint and several liability for
the entire clean-up cost of a contaminated facility on
an absentee landlord who leased a parcel: (1) that
constituted 19.1% of the facility that caused the
contamination; (2) for only 13 of the 29 years during
which the contamination occurred (45% of the time);
and (3) the contamination on which could have
caused no more than 10% of the overall contami-
nation. See United States v. Atchison, Topeka &
Santa Fe Ry. Co., Nos. CV-F-92-5068 OWW, CV-F-96-
6226 OWW, CV-F-96-6228 OWW, 2003 WL
25518047, at *88 (E.D.Cal. July 15, 2003). If this
evidence does not provide a “reasonable estimate” for
apportionment of liability, I do not see how—short of
“verfect information” sufficient to trace every mole-
cule of pollution to the landlord’s parcel’—appor-
tionment could ever be possible under CERCLA. The
panel’s amendments thus go only half way by
adopting the correct prism through which to look at
the evidence. But it is not enough to use new
spectacles. One must still look at the evidence. The
fact remains, and as the panel expressly holds, the
district court did not commit clear error in finding a
reasonable basis for apportionment of liability. See
Panel Op. at 943 (“[Wle do not fault the district
court’s factfinding . .. .”). Regardless, the panel
rejects the meticulous apportionment determinations
of the district court, issued in a 191-page opinion, as
* For the same result, albeit with a different, and now
abandoned, verbal formulation, see the panel's original opinion:
United States v. Burlington Northern & Santa Fe Ry. Co., 502
F.3d 781, 801 (9th Cir.2007) (allowing CERCLA apportionment
only with proof by “perfect information” “that portions of the
contamination are in no respect traceable” to the landowner's
facility), amended by order denying petition for rehearing en
banc.
55a
“legally insufficient” for relying on “the simplest of
considerations.” Jd. at 943, 945.
To denigrate by adjectives is not to reason, much
less to explain. Holding the district court’s calcu-
lations are “simple” does not even begin to determine
-whether those calculations were clear error, or
whether the calculations provide a “reasonable
estimate” to apportion liability. As Justice Oliver
Wendell Holmes, Jr., said, “I would not give a fig for .
the simplicity this side of complexity, but I would
give my life for the simplicity on the other side of
complexity.” " The panel turns Justice Holmes’s
eloquent statement on its head: Instead of com-
mending the district court for finding simplicity after
navigating 191 pages of complexity, the panel
rebukes the district court, contending that the
district court’s careful findings of fact—though not
clear error-are not worth a fig.
While at it, the panel imposes “arranger” liability
on Shell Oil for agricultural fertilizers that were
spilled on the site by the buyer of Shell’s product,
shipped by a common carrier in non-defective truck
tankers, F.O.B. delivery point.” The panel's imposi-
tion of arranger liability on a mere seller, which
relinquished control over its products upon delivery
and before spillage occurred, goes far beyond the
statutory language and creates inter- and intra-
circuit splits. See AM Int'l, Inc. v. Int'l Forging Equip.
Corp., 982 F.2d 989, 999 (6th Cir.1993) (“[Clourts ...
‘ http:// en. wikiquote. org/ wiki/ Oliver_ Wendell_ Holmes'_
Jr.
*“FOB” 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).
56a
have consistently held that the mere sale of a product
is not ‘arranging for disposal’ under [(CERCLA].”);
United States v. Shell Oil Co. (“McColl”), 294 F.3d
1045, 1055, 1057 (9th Cir.2002) (requiring “actual
control” over the hazardous products as a “crucial
element” of arranger liability). The panel further
holds Shell jointly and severally liable for the entire
contamination on the facility—including contamina-
tion from products Shell did not even sell. See Panel
Op. at 945-48.
True, the land on which the facility operator spilled
the toxic fluids encompassed only 4.7 acres. But the
panel’s legal errors will spread over this Circuit’s
nine states aiid 1.3 million square miles, to lots large
and small.
I respectfully dissent from our decision not to
rehear this case en banc.
I.
This case involves environmental contamination
caused by a now-defunct company, Brown & Bryant
(“B & B”), which owned and operated an agricultural
chemical distribution facility (“B & B parcel”) from
1960 to 1989. Panel Op. at 930. In 1975, fifteen years
into its operation, B & B leased from the Defendant-
Railroads (“the Railroads”) a contiguous parcel of
land (“the Railroad parcel”) located west of the B & B
parcel. Jd. at 930. The B & B parcel comprised 3.8
acres; the Railroad parcel comprised 0.9 acres.
Id. At its facility, B & B stored the chemicals
D-D, Nemagon, and Dinoseb. Atchison, 2003 WL
25518047, at *4. Throughout its operation, B & B
discharged contaminated wastewater into a sump
that was used to wash agricultural equipment and
into a pond, both of which were located on the B & B
57a
parcel. Jd. at *12, *16. Neither the sump nor the pond
were, at first, lined so as to be impervious. See id.
at *8.
The government asserted B & B’s activities on the
Railroad parcel may have contaminated the ground-
water through: (1) focused infiltration of contami-
nants into the groundwater; and (2) drainage from
the Railroad parcel onto the pond located on the
B & B parcel. Jd. at *10-12. As to the first theory, the
government could not identify any areas on the
Railroad parcel where infiltration into the ground-
water actually occurred. Jd. at *11. Indeed, it was
“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.” Jd. at *12. As to the
second theory, the district court found a “substantial
dispute” remained over whether rainfall was “suf-
ficient to generate the quantity of runoff that would
have been necessary” for drainage of chemicals from
the Railroad parcel to the B & B parcel. /d. at *11.
The district court found “[t]he levels of chemical
contamination on and under B & B parcel are
substantially higher than any of the reported
detections on and under the Railroad parcel.” Z/d.
Specifically, the district court found:
{[Rjeleases at the Railroad parcel could not have
contributed more than ten [percent] (10%) of the
overall site contamination given the fact that the
predominant activities conducted on the Railroad
parcel through the years were storage and some
washing and rinsing of tanks, other receptacles,
and chemical application vehicles. Mixing, form-
ulating, loading, and unloading of ag-chemical
hazardous substances, which contributed most of
58a
the liability causing releases, were predomi-
nantly carried out by B & B on the B & B parcel.
Id. at *88.
B & B purchased the agricultural product D-D
from Shell pursuant to a non-exclusive marketing
agreement for the resale of Shell D-D. Id. at *4-5.
Shell shipped D-D to the B & B facility by common
carrier trucks “FOB Destination.” Jd. at *5. There
was no evidence the transportation caused any
leakage or that the tanks carried by the trucks
leaked. Upon arrival, the contents of the trucks were
transferred to B & B’s storage tanks, during which D-
D spills regularly occurred. Jd. at *20. The district
court found the “stewardship” of D-D passed to B & B
when the common carrier arrived at the B & B
facility, and before the transfer of D-D was attempted
to B & B’s storage tanks.” Jd. at *23. Nevertheless,
the panel holds Shell exercised control over the
transfer process.
Pursuant to their authority under CERCLA, the
California Department of Toxic Substances Control
(“DTSC”) and the U.S. Environmental Protection
Agency (“EPA”) cleaned up the contamination on the
B & B facility. Panel Op. at 931-32.
* The amended panel opinion notes the common carrier, and
not B & B employees, transferred the D-D from the trucks to the
storage tanks before the early 1980s. See Panel Op. at 931 n. 5.
The panel states it was only in the early 1980s that B & B
employees started conducting the transfer themselves. Jd. This
is of no material consequence. If, as the district court found, the
stewardship of the D-D passed to B & B before the transfer
occurred, it is irrelevant whether B & B employees or the
common carrier employees executed the transfer. In either case,
B & B, not Shell, retained “stewardship” over the D-D and the
transfer process.
59a
“None of the contamination requiring immediate
remediation was on the Railroad parcel.” Id.
Thereafter, EPA and DTSC filed this CERCLA action
against B & B, the Railroads, and Shell for
reimbursement of their clean-up costs.
The district court held the Railroads and Shell
liable under CERCLA. The district court apportioned
9% of the clean-up costs to the Railroads based on the
following: (1) the Railroad parcel constituted 19.1% of
the entire B & B facility; (2) the Railroad parcel was
leased to B & B for 13 of the 29 years the B & B
facility operated, or 45% of the time; and (3) the
fraction of the hazardous products attributable to the
Railroad parcel was 66%. Id. at 932. The multi-
plication of these three proportions, rounded up-
wards, resulted in 6% liability. Jd. at 932-33. To
account for any error, the district court assumed a
50% error rate and raised the Railroads’ liability to
9%." Id. at 932-33. The district court fixed Shell’s
liability at 6%, which represented the proportion of
D-D spills that occurred during deliveries to the total
amount of D-D spills on the facility. Jd. at 932-33.
DTSC and EPA appealed. Jd. Shell cross-appealed
the district court’s holding that it was liable under
CERCLA as an “arranger.” Jd. The Railroads did not
contest their liability on appeal. The panel affirmed
Shell’s liability under CERCLA as an “arranger” but
reversed the district court’s apportionment of
liability, holding the Railroads and Shell jointly and
severally liable for the entire clean-up cost. /d.
at 930.
Thus, if anything, the district court was over-generous to
the government in its apportionment calculations.
60a
Il.
The panel first holds the contamination on the B &
B facility is theoretically capable of apportionment.
Id. at 942. The panel reasons that some of the
contamination occurred before the Railroads leased
their parcel to B & B. Jd. Further, “[o]nly 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.” Jd.
Second, the panel addresses whether the district
court clearly erred in finding that the Railroads
actually established a basis for apportionment. See
id. at 942 (“[W]e review for clear error whether the
defendant submitted evidence sufficient to establish
a reasonable basis for the apportionment of
liability.”). The panel does not hold that the district
court’s findings are clearly erroneous. See id. at 943
(“[Wle do not fault the district court’s factfinding
.”); id. at 945 (“[MJany of the district court’s
calculations were factually correct. .. .”). Neverthe-
less, while baiting it would review for clear error
whether the district court found sufficient evidence to
justify apportionment, the panel switches, by char-
acterizing the issues as legal, to apply de novo
review. The panel achieves this sleight of hand by
holding, without any citation of authority, that the
district court’s reliance on “the simplest of consid-
erations” (i.e., “percentages of land area, time of
ownership, and types of hazardous products”) is
“legally insufficient” to support apportionment under
the Restatement’s reasonable basis test. Jd. at
942, 945.
Not so fast. Aren’t these so-called “simplest of
considerations” precisely the considerations the
panel’s amended opinion itself holds are sufficient for
6la
apportionment?: “We .. . agree . . . [that] divisibility
may be established by volumetric, chronological, or
other types of evidence, including appropriate
geographic considerations.” Jd. at 936 n. 18 (citations
omitted). Percentage of land ownership (a “geo-
graphic” consideration) and period of ownership (a
“chronological” consideration) provide a “reason-
able basis” to apportion liability to the Railroads,
which is all the Restatement, our sister circuits, and
indeed the panel’s amended opinion itself require. As
the district court observed:
The 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 be
strictly liable for the entire site remediation,
because no other responsible party is judgment-
worthy, takes strict liability beyond any rational
limit.
Atchison, 2003 WL 25518047, at *87.
This evidence is not good enough for the panel.
Instead, the panel requires “adequate _ records”
detailing “the amount of leakage attributable to
activities on the Railroad parcel, how that leakage
traveled to and contaminated the _ soil and
groundwater under the [B & B facility], and the cost
of cleaning up that contamination.”" Panel Op. at
944. In a feat of self-deprecating candor, the panel
... cost of cleaning up that contamination.”? How could B
& B, Railroads, or Shell have kept such records when it was the
government agencies that cleaned up the contamination, rather
than the facility operator, the partial lessor, or the materials
seller?
62a
then admits, “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.”
See id. at 944. Even though the panel recognizes “the
failure to keep these records is quite understand-
able,” the panel nonetheless saddles the defendants
with joint and several liability for lack of such
records.” See id. at 944.
* The panel also notes, “(wjhile 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.” Panel Op. at 940-41. The panel is
incorrect. CERCLA's “expansive” liability scheme, as the pancl
itself admits, is silent as to whether defendants held strictly
liable under the statute are also jointly and severally liable for
the entire harm, or only severally liable for the harm
attributable to them. /d. at 934-35. As the panel correctly notes,
Congress declined to mandate joint and several liability in
CERCLA and intended courts to follow Restatement principles
in apportioning the harm between defendants held strictly
liable. Id.
In this case, the panel was not asked to determine whether
the Defendant-Railroads were liable. Instead, the panel was
charged with deciding whether the Defendant-Railroads, who
were strictly liable under CERCLA, should be held jointly and
severally liable for the entire cleanup cost. By conflating the
establishment of liability and apportionment of liability
questions, the panel disregards a basic tort principle: Strict
liability is not mandatorily joint and several liability. Thus, the
“unfairness” of holding a partial owner liable for the entire
clean-up cost results, not from CERCLA’s strict liability scheme,
but the panel's unreasonable application of the Restatement
apportionment principles to the facts of this case, affected
perhaps by its confusion between strict (negligence free) liability
and joint and several (apportionment free) liability.
=s.
63a
A.
First, the panel holds that the district court’s
reliance on the percentage of the B & B facility owned
by the Railroads (19.1%) cannot support apportion-
ment. Id. at 943-44. The panel reasons that per-
centage of ownership does not “provide a minimally
reliable basis for tracing [the activities on the
Railroad parcel to] the proportion of leakage”
associated with the entire parcel because the B & B
facility, including the Railroad parcel, is an insep-
arable facility with a “dynamic, unitary Gee.
Id. at 944.
The panel’s conclusions are erroneous for two
reasons. First, the panel got the law wrong: The
district court’s reliance on percentage of land
ownership as a proper factor in apportioning dam-
ages finds support from the Restatement and our
sister circuits. A comment to Restatement (Second) of
Torts § 433A(1), which has been relied on by other
circuits to apportion CERCLA liability’ and which
the panel itself quotes, Panel Op. at 937 n. 20,
describes an analogous scenario:
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
" See, e.g., In re Bell Petroleum Servs., 3 F.3d 889, 903
(SthCir.1993) (relying on this Restatement comment to reject
the argument that absolute certainty is required for
apportionment of CERCLA liability).
64a
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.
Restatement (Second) of Torts § 433A(1) cmt. d.
Even though it is not possible to determine the
precise harm caused by each animal (e.g., one owner’s
cattle might have idly stood by while the rest
destroyed the crops; one owner’s cattle might have
more heavy-footed bulls, and less lightfooted heifers),
the Restatement would permit apportionment be-
cause there is a reasonable basis (i.e., the number of
cattle owned) to apportion liability. See Bell
Petroleum Servs., 3 F.3d at 903. Importantly, 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 Restatement specifically contemplates the use of the
cattle hypothetical in the context of pollution damages:
Such apportionment is commonly made in cases of private
nuisance, where the pollution of a stream, or flooding, or
smoke or dust or noise, from different sources, has
interfered with the plaintiffs use or enjoyment of his land.
Thus where two or more factories independently pollute a
stream, the interference with the plaintiff's use of the
water may be treated as divisible in terms of degree, and
may be apportioned among the owners of the factories, on
the basis of evidence of the respective quantities of
pollution discharged into the stream.
Restatement (Second) of Torts § 433A(1) cmt. d.
65a
the individual cattle owners.” Indeed, this is
precisely what the “reasonable basis” standard is
designed to avoid: The whole point of Restatement
§ 433A is that no specific evidence is required for
apportionment so long as the evidence and method
used are “reasonable.”’* Further, the Restatement
embraces “simple” considerations rejected by the
panel—the number of cattle owned is a “simple,” yet
sufficient, basis for apportionment.
Even though it is impossible to determine the exact
proportion of the contamination attributable to the
Railroad parcel, the percentage of land ownership,
like the number of cattle, provides one reasonable
factor upon which to apportion liability under the
Restatement. See United States v. Twp. of Brighton,
282 F.3d 915, 919-20 (6th Cir.2002) (holding that
geographic divisibility may provide a basis for
apportionment of CERCLA liability); United States v.
Hercules, Inc., 247 F.3d 706, 717-18 (8th Cir.2001)
(same).
* Under the Restatement, the burden is on the plaintiff (i.e.,
the farmer) to prove each defendant was a “substantial factor”
in causing a single harm. See O'Neil v. Picillo, 883 F.2d 176, 179
n. 4 (1st Cir.1989). Under CERCLA, our sister circuits have
placed the burden of showing a reasonable basis for appor-
tionment on the defendant. Jd. Nevertheless, that the burden
rests with the CERCLA defendant to establish a reasonable
basis for apportionment, has no bearing on what the apportion-
ment test is and what proof is required to meet that test.
“Records” are not a required type of proof for apportionment
under the Restatement, unlike other areas of substantive law
where specific evidence is required—e.g., for conveyance of an
interest in land, a memorandum in writing signed by the party
to be charged is required, see, e.g., Cal. Civ.Code § 1624, and
treason requires the testimony of two witnesses to the same
overt act, U.S. Const. art. III, § 3, cl. 1.
66a
Second, the panel got its facts wrong, or more
precisely, invented convenient facts. The district
court's findings of fact, which the panel does not find
to be clearly erroneous, contradict the panel’s
appellate factfinding that the B & B facility was a
“dynamic, unitary operation.” See Panel Op. at 944;
see also Amadeo v. Zant, 486 U.S. 214, 228, 108 S.Ct.
1771, 100 L.Ed.2d 249 (1988) (rebuking the appellate
court for ignoring the dictates of the clear error
standard and engaging in “impermissible appellate
factfinding”). The panel’s labeling the operations on
the B & B facility as “dynamic” and “unitary” is a
convenient blanket under which to hide the failure to
look the facts in the face.
The facts found by the district court show quite
different operations took place on the Railroad parcel:
Relatively fewer activities that could result in
releases were conducted on the Railroad parcel.
Daily operations that resulted in releases of
hazardous substances occurred on the B & B
parcel. Past releases at the Railroad parcel could
not have contributed more than ten (percent/
(10%) of the overall site contamination given the
fact that the predominant activities conducted on
the [0.9 acre) Railroad parcel through the years
were storage and some washing and rinsing of
tanks, other receptacles, and chemical applica-
tion vehicles. Mixing, formulating, loading, and
unloading of ag-chemical hazardous substances,
which contributed most of the liability causing
releases, were predominantly carried out by B &
B on the [3.8 acre] B & B parcel.
Atchison, 2003 WL 25518047, at *88 (cmphasis
added). The district court’s findings not only un-
dermine the panel's assertion that the B & B site was
67a
an inseparable facility with a “dynamic, unitary
operation,” but also provide a reasonable basis for
separating the Railroad parcel from the rest of the
facility to apportion liability... The appendix, an
overhead image of the B & B facility, tellingly shows
how, as the district court found, substantially fewer
contamination-causing activities were conducted on
the Railroad parcel (labeled “Leased Property”), as
compared to the B & B parcel (labeled “Brown &
Bryant Property”).
I also note the panel’s original opinion held that
the B & B parcel “is distinct from the portion leased
from the Railroads,” which further supports the
district court’s apportionment calculations on the
basis of percentage of land ownership. See Burlington
Northern, 502 F.3d at 801. Recognizing, no doubt,
that this finding undermines its position, the panel
excises this finding from its amended opinion,
without explanation.
B.
Second, the panel holds that the period the
Railroads leased their parcel (13 years) as compared
'’ The panel contends apportionment is not possible because
the district court found “B & B used the Railroad parcel as part
of its total agricultural-chemical operations.” Panel Op. at 944
n. 30. That is painting with a broad brush over the details; the
details give the true picture. The panel's contention merely begs
the apportionment question. That B & B used the Railroad
parcel as part of its operations says nothing about whether
liability may be apportioned between the Railroad parcel and
the B & B parcel. The answer to that question lies in the
undisputed findings of the district court that different opera-
tions took place on each parcel and the contamination on the
Railroad parcel could have caused no more than 10% of the
overall contamination. See Atchison, 2003 WL 25518047, at *88.
68a
to the entire period of contamination (29 years) is a
legally insufficient basis for apportionment. Panel
Op. at 944, 945. The panel reasons there is an
“evidentiary vacuum” about the contamination
attributable to the pre-lease period, and no evidence
suggests contamination was constant over the entire
period. Jd. at 945.
The panel errs in concluding there is an “evi-
dentiary vacuum” regarding the pre-lease contami-
nation. The panel itself notes some contamination
occurred before B & B leased the Railroad parcel. Jd.
at 942. Further, B & B implemented procedures to
reduce contamination after it leased the Railroad
parcel.” Thus, the district court’s assumption of
constant contamination over the entire period not
only provides a reasonable basis to apportion lia-
bility, but, if anything, overestimates the contami-
nation attributable to the Railroad parcel.
Further, the district court’s reliance on period of
ownership finds support from the Restatement
hypothetical discussed above. Just as it is reasonable
to assume that each of the cattle caused an equal
amount of harm even though some of the cattle may
have done no harm to the land, it is also 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. See also Bell Petroleum Servs., 3 F.3d
“In the first twenty years of its operations (from 1960 to
1980), B & B “took almost no precaution to prevent the release
of hazardous agricultural chemicals into the environment.”
Atchison, 2003 WL 25518047, at *26. At trial, a B & B executive
testified that in 1980, B & B lined the sumps with concrete
boxes, and in 1984, B & B built a contained area for rinsing
equipment to prevent chemicals from draining to the sumps.
69a
at 903-04 (holding apportionment is possible among
the sequential owners of a chrome-plating site, even
though the records of the chrome-plating activities
were incomplete); Hercules, 247 F.3d at 718 (noting
apportionment is possible where “two defendants,
independently operating the same plant, pollute a
stream over successive periods of time” (citation
omitted)). Thus, the panel also errs in rejecting
apportionment based on period of ownership.” In
sum, despite two bases for apportionment of liability
approved by the Restatement and our sister cir-
cuits—percentage of land ownership and period of
ownership-the panel erroneously imposes joint and
several liability on the Railroads for the entire
clean—up cost of the B & B facility.
Ill.
Unlike the Railroads, Shell contested its liability
on appeal. The panel holds Shell liable as an
“arranger,” which is defined as any person who
“arranged for disposal or treatment . . . of hazardous
substances owned or possessed by such person.” 42
U.S.C. § 9607(a)(3) (emphases added). CERCLA
does not define “arranged for.” We have interpreted
“arranged for” to rest on two alternate bases for
liability: “direct” and “broader” arranger liability.
" The only clear error the pane! finds is the district court's
exclusion of D-D from the contamination attributable to the
Railroad parcel. Panel Op. at 945. The panel so holds because
there was evidence that D-D leaked on the Railroad parcel and
no evidence that it did not. Jd.; see Atchison, 2003 WL 25518047,
at *90. I do not disagree with this holding, but note that this
error merely alters the proportion of liability attributable to the
Railroads and perhaps may be a basis for remand. It has no
impact on the ultimate conclusion that the Railroads cannot be
jointly and severally liable for the entire clean-up cost
70a
McColl, 294 F.3d at 1054-55. The latter is at issue
here because no one claims Shell directed the
dumping of hazardous substances onto the B & B
facility.
Under “broader” arranger !iability, an entity need
not have direct involvement in an arrangement for
the disposal of waste; liability may be imposed if the
entity had “sufficient control over the process that
created the waste.” Jd. at 1055. We have no clear
test for establishing broader arranger liability. Jd.
at 1055-56. Nevertheless, “actual control” over the
hazardous substance is a “crucial element” of
broader arranger liability, and mere “authority to
control,” were it actually established by the evidence,
simply does not suffice. See id. at 1055, 1057.
The panel imposes arranger liability on Shell as a
seller of the agricultural product D-D to B & B, which
_then contaminated its facility in part with Shell’s
product. The panel notes that because unintentional
practices like “leaking” are included within the
definition of “disposal” under CERCLA, “disposal”
need not be purposeful. Panel Op. at 949. Thus,
according to the panel, “an entity [like Shell] can be
an arranger even if it did not intend to dispose of the
product.” Jd. at 949.
The panel’s statutory interpretation is unper-
suasive. Even though the definition of “disposal” may
include unintentional practices, mere “disposal” does
not constitute arranger liability. Instead, arranger
liability requires the defendant to have “arranged
for” such disposal (not just arranged for the sale).
This connotes an intentional action toward achieving
the purpose: disposal. See Webster’s Third New
International Dictionary 120 (1993) (defining “ar-
range” as “to make preparations for”). It is an
7la
oxymoron for an entity unintentionally to make
preparations for disposal.
Further, the statutory definition of “disposal” does
not cover the “sale” of a hazardous substance, which
was the exclusive purpose of the contract between
Shell and B & B. That leakage may occur during the
transfer of D-D from the common carrier to B & B’s
storage tanks cannot mean that Shell, as a seller,
arranged for such leakage.” By imposing arranger
liability on a mere seller, the panel stretches the
meaning of arranger liability beyond any cognizable
limit and creates inter-circuit splits. See, e.g., AM
Intl, 982 F.2d at 999 (“[Cjourts . . . have consistently
held that the mere sale of a product is not ‘arranging
for disposal’ under [CERCLA].”); Fla. Power & Light
Co. v. Allis Chalmers Corp., 893 F.2d 1313, 1317
(11th Cir.1990) (“If a party merely sells a product,
without additional evidence that the transaction
includes an ‘arrangement’ for the ultimate disposal of
a hazardous substance, CERCLA liability [can]not be
imposed.”).
Even assuming a defendant can be held liable as
an arranger for the mere sale of a product, the
panel’s holding is inconsistent with McColl, which
requires actual control over the hazardous product as
a crucial element of arranger liability. See McColl,
294 F.3d at 1055. In McColl, the United States was
sued under CERCLA for the clean-up costs of a site
contaminated with fuel. The site was used to
manufacture war supplies for the United States
under government contracts, and the United States
” The panel's conclusion is tantamount to saying that a
bartender “arranges for the disposal” of bourbon onto the bar
when he sells a glass of bourbon F.O.B. patron, who, while
carelessly lifting the glass, spills the bourbon.
72a
was aware that waste was being produced. Id. at
1050-51. We held the United States could not be
liable as an arranger because it did not exercise
actual control over the disposal of fuel, even though it
had the authority to control such disposal. Jd. at
1057-58. The panel creates an intra-circuit conflict by
reducing McColl’s actual control requirement from a
“crucial element” for arranger liability to a mere
“pertinent consideration,” which is “informative only
in light of additional considerations.” Panel Op. at
950-51.”
The panel holds Shell liable as an arranger
because:
(1) [D-D) [s]pills occurred every time the deliv-
eries were made; (2) Shell arranged for delivery
and chose the common carrier that transported
its product to the Arvin site; (3) Shell changed its
delivery process so as to require the use of large
storage tanks, thus necessitating the transfer of
large quantities of chemicals and causing
leakage from corrosion of the large steel tanks;
(4) Shell provided a rebate for improvements in B
& B’s bulk handling and safety facilities and
required an inspection by a qualified engineer;
(5) Shell regularly would reduce the purchase
” The panel's attempt to sidestep McColl is inapposite. The
panel notes that McColl viewed control as a “crucial element” of
arranger liability only because the United States in that case,
unlike Shell here, never owned the hazardous substances before
disposal. Panel Op. at 951. Even though the panel may have
wished it were otherwise, McColl’s holding is not so limited: “We
agree with the Oil Companies and the district court that control
ts a cructal element of the determination of whether a party ts
an arranger under § 9607(a\3).” McColl, 294 F.3d at 1055
(emphasis added).
73a
price of the D-D, in an amount the district court
concluded was linked to loss from leakage; and
(6) Shell distributed a manual and created a
checklist of the manual requirements, to ensure
that D-D tanks were being operated in ac-
cordance with Shell’s safety instructions.
Id. at 950-51 (emphasis in original).
This is insufficient to establish Shell’s “actual
control” of the D-D transfer from the tank-trucks to B
& B’s storage tanks. This evidence at best establishes
Shell’s influence over the transfer process (e.g.,
through rebates, the provision of manuals and
checklists, etc.?, which falls far short of the actual
control required by McColl. Shell did not own or
operate the B & B facility, nor did any Shell
employees play a role in the D-D transfer. The
evidence in fact establishes that Shell relinquished
control over the D-D once the common carrier arrived
at the B & B site and before the transfer of D-D.
The district court found, and the panel does not
dispute, “stewardship” of D-D passed to B & B when
the common carrier arrived at the B & B facility.
Atchison, 2003 WL 25518047, at *23. The Conditions
of Sale stated B & B would “furnish and maintain
facilities for receiving and storing all Products deliv-
ered, which are safe, adequate and in compliance
with all applicable governmental requirements and
shall unload each delivery promptly and at Buyer’s
own risk and expense.” See id. at *68 (emphasis
added). Thus, Shell did not have “actual control” over
the transfer of D-D and cannot be held liable as an
arranger.”
“ The panel also imposes joint and several liability on Shell,
rejecting as legally insufficient the district court's appor-
74a
IV.
En banc rehearing was necessary because the
panel’s broad definition of arranger liability and its
erroneous application of CERCLA apportionment
principles impose CERCLA liability where Congress
did not intend. The panel decision creates disorder in
CERCLA jurisprudence by causing intra- and inter-
circuit conflicts in an area where uniformity over the
interpretation of the federal statutory law, based on
commonlaw principles, is of the utmost importance.
Under the panel’s CERCLA apportionment anal-
ysis, a landowner who leases a lot to an outfit that
contaminates the land while going broke will be stuck
tionment calculations based on the amount of D-D spilled
during the transfer process. Panel Op. at 945-48. Even
assuming Shell can be held liable as a CERCLA arranger, the
panel errs in holding Shell jointly and severally liable for the
entire contamination, including contamination from products
Shell did not sell to B & B.
The panel notes it docs not hold Shell liable for the clean-up
of the “Dinoseb hot spot,” a discrete area on the east side of the
B & B parcel that was contaminated by a majer Dinoseb (a Dow
product) spill in 1983. See id. at 952 & n. 35. According to the
panel, this means Shell is not liable for contamination from
products it did not sell. Jd. The panel is quite incorrect. First,
the panel still holds Shell liable for Dinoseb spills outside the
discrete “Dinoseb hot spot” and elsewhere un the B & B facility,
even though Shell did not manufacture or sell Dinoseb. See
Atchison, 2003 WL 25518047, *91 (“Thle] [EPA’s] removal action
fon the “Dinoseb hot spot”) was intended to remediate only the
[D}inoseb that contaminated the [“Dinoseb hot spot”], not the
entire site.”); Panel Op. at 945-48. Second, Shell’s arranger
liability is premised solely on the D-D spills, not spills of
Nemagon or Dinoseb. See Panel Op. at 945-51. Regardless, the
panel holds Shell jointly and severally liable for the contami-
nation resulting from all three products-Nemagon, Dinoseb, and
D & D-spilled on the B & B facility. See id. at 945-48.
75a
with the entire clean-up bill—notwithstanding the
leased lot’s size compared to the overall facility at
which pollution disposal occurred, the length of the
lease compared to the period of the contamination, or
the contamination actually attributable to the leased
lot. That is, the lessor will pay all clean-up costs
unless he comes up with records that show how much
was spilled, where, and when—although the panel
candidly acknowledges that no one could be expected
to keep such records. The lessor will also pay unless
he can come up with records of the cleanup and the
cost thereof, even if he did not do the clean-up.
Further, under the panel’s novel definition of
“arranger” liability, sellers of chemical products will
be saddled with the entire clean-up cost of a facility
contaminated in part with their products, even if
they lacked control over the products spilled fol-
lowing the sale.
Accordingly, I respectfully dissent from the denial
of rehearing en banc.
BEST AVAILABLE COPY
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APPENDIX
Site Map
77a
APPENDIX B
UNITED STATES DISTRICT COURT,
E.D. California.
Nos. CV-F-92-5068 OWW, CV-F-96-6226 OWW,
CV-F-96-6228 OWW
UNITED STATES OF AMERICA AND
DEPARTMENT OF TOXIC SUBSTANCES CONTROL
OF THE STATE OF CALIFORNIA,
Plaintiffs,
Vv.
THE ATCHISON, TOPEKA & SANTA FE
RAILWAY COMPANY et al.,
Defendants.
and
Related Cross-Claims and Third Party Actions.
July 15, 2003
AMENDED FINDINGS OF FACT AND
CONCLUSIONS OF LAW
Fed.R.Civ.P. 52(a)
OLIVER W. WANGER, United States District Judge.
A bench trial was held in the above entitled matter
between March 3-May 14, 1999 in Fresno, California.
Plaintiff United States EPA was represented by
James MacAyeal, Esq., Victoria Lang, Esq. and
Stephanie Johnson, Esq. Plaintiff State of California
DTSC was represented by Reed Sato, Esq. Defen-
78a
dants Southern Pacific Transportation Co. and the
Atchison, Topeka & Sante Fe Railroad Co. (“Rail-
roads”) were represented by Ike Lasater, Esq., Nance
F. Becker, Esq., and Marc A. Zeppetello, Esq.
Defendant Shell Oil was represented by Randall
Heldt, Esq., Michael Johnson, Esq., and David Earle,
Esq. On May 24, 2002 the court issued Findings of
Fact and Conclusions of Law _ pursuant to
Fed.R.Civ.P. 52(a).
On August 22, 2002 the court issued an Order to
Modify Findings of Fact and Conclusions of Law, and
then on September 26, 2002 the court issued an
Order amending the Findings of Fact and Conclu-
sions of Law based on a stipulation by the parties.
The parties subsequently filed various motions to
amend the court’s Findings of Fact and Conclusions
of Law under Fed.R.Civ.P. 52(b) and 59(a). On May
28, 2003 the court issued a Memorandum Opinion
and Order ruling on the parties’ motions to amend
the Findings of Fact and Conclusions of Law, grant-
ing in part and denying in part the parties~-motions.
On June 13, 2003, the court issued an errata Order
on defendants’ motions to amend.
The following amended findings of fact and
conclusions of law are made pursuant to Fed.R.Civ.P.
52(a).
I. BACKGROUND
In 1975, Brown & Bryant, Inc. (“B & B”) began
leasing an acre of land adjacent to a four acre parcel
it owned in order to complement its agricultural
chemical distribution business in Arvin, California.
The leased acre was jointly owned by the Defendant
Southern Pacific Transportation Co. and the Atchison,
Topeka & Sante Fe Railroad Co. B & B commenced
79a
business at the Arvin property in 1960 and ceased
operations in 1989.
B & B used the leased acre (“Railroad Parcel”) over
the lease term to park the fertilizer and chemical
spray rigs used to transport various chemicals to its
customers, until 1989. In 1983, the State of Cali-
fornia’s Department of Health Services (“DTSC”)
found Brown & Bryant in violation of several
hazardous waste laws. A separate United States
Environmental Protection Agency (“EPA”) investiga-
tion found evidence of substantial soil and ground-
water contamination at B & B’s Arvin operations.
Pursuant to cleanup authority under the Com-
prehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. § 9601 et seq. (CERCLA),
the EPA and DTSC incurred remediation costs. A
bench trial was held before the court from March 30,
1999 to May 14, 1999. B & B is bankrupt. Its default
has been entered. B & B did not appear at trial. The
state and federal governments seek to recoup their
costs from the Railroads and Shell. All parties sub-
mitted proposed Findings of Fact and Conclusions of
Law on July 19, 1999. All parties responded to the
proposed facts and conclusions by August 18, 1999.
Closing arguments were held before the court on
September 28, 19 99.
II. PRELIMINARY MATTERS
A. Legal Standard
In trials without juries, Fed.R.Civ.P. 52(a) requires
a court to “find the facts specially and state sepa-
rately its conclusions of law thereon.” See Barnett v.
Sea Land Service, 875 F.2d 741, 744 (9th Cir. 1989).
j
®t
80a
B. Judicial Notice
Both the Railroads and Shell move for judicial
notice of EPA responses to June 1999 Freedom of
Information Act requests regarding the chemical
1,2,3-trichloropropane. Federal Rule of Evidence 201
provides in pertinent part:
A judicially noticed fact must be one not subject
to reasonable dispute in that it is either (1)
generally known within the territorial jurisdic-
tion of the trial court or (2) capable of accurate
and ready determination by resort to sources
whose accuracy cannot reasonably be questioned.
A court shall take judicial notice if requested
by a party and supplied with the necessary
information.
The EPA documents sought to be judicially noticed
state that EPA has concluded 1,2,3-trichloropropane
is not a hazardous substance under CERCLA and
that its listing in the Code of Federal Regulations
was an error. The letters are judicially noticed as to
their existence and the finding of non-hazardousness
as to 1,2,3-trichloropropane.
III, FINDINGS OF FACT
A. B & B’s Arvin, California Operations
l. B & B first began operating a fertilizer and
agricultural chemical storage, distribution and custom
ag-chemical applicator facility at 600 S. Derby Street,
Arvin, California in 1960 on a leased parcel of land
previously used as farmland. See Ex. G-1; Ex. G-2,
Pre-Trial Order, March 2, 1999, Undisputed Fact 1.
2. The B & B plant ultimately came to include
two parcels: (1) the original parcel leased in 1960 and
later purchased by B & B in 1976 (the B & B parcel);
8la
and (2) a smaller adjoining parcel to the west of the
first parcel owned jointly by The Atchison, Topeka &
Santa Fe Railway (now known as the Burlington
Northern and Santa Fe Railway Company) and
the Southern Pacific Transportation Company (now
known as the Union Pacific Transportation Com-
pany) (the “Railroads”) (the Railroad parcel). See Ex.
G-]; Ex. G-2.
3. The overall size of B & B’s Arvin operations
was 4.7 acres: the Railroad parcel is 0.9 acres and the
adjoining B & B parcel is 3.8 acres. See Ex. G-6, at 4
(B & B parcel is 3.8 acres); Ex. G-3, at 1 (B & B Arvin
Plant is 4.7 acre site).
4. Before the 1975 lease, the Railroads andB & B
entered into a 1960 rail spur agreement allowing B &
B to construct and use a rail spur along the west side
of the warehouse. See Ex. G-1; Testimony of John H.
Brown at 779 (“Brown”).
5. Generally, any property to the west of the
warehouse is Railroad parcel. Jd. at 778; Ex. G-28.2.
6. «ine exclusive purpose of the 1975 lease be-
tween the Railroads and B & B was for parking
“fertilizer rigs.” See Ex. G-19. A “fertilizer rig” is a
generic term that refers to any application rig,
whether for ag-chemicals, weed killer or fertilizer.
Brown at 1003.
7. During the lease, the Railroads inspected the
plant and knew that B & B was in the business of
distributing chemicals other than fertilizers and that
B & B used the leased parcel as a part of its total
agricultural chemical operations. See Ex. G-28.1
(“Fenced open storage of farm chemicals and miscel-
laneous equipment. This leased area was fully used
as an integral part of the adjacent farm chemical
82a
distribution facility.”); Ex. G-28.2 (“active site fully
used for handling & storage of farm chemicals”);
Brown at 1004 (Railroads inspected property); /d.
(B & B’s logo, prominently displayed on the large
UN-32 tank, stated: “Brown & Bryant Agricultural
Chemicals”); J. Stuart Ondeck Dep. at 67 (Railroad
inspector noted in 1978: “Fenced open storage of farm
chemicals and miscellaneous equipment. This leased
area is fully used as an integral part of the adjacent
farm chemical distribution facility.”).
B. Site Characteristics
8. The 4.9 acre property is located in an alluvial
fan characterized by vertically heterogeneous soils
including sands, silts, clays, and gravels of various
porosities. Average rainfall is approximately 6 inches.
ROD (Ex. 1466) at 6; Testimony of Don R. Woody
(“Woody”) at 393:9-24, RI/FS, Ex. 1464A, at RI-3-2.
9. The groundwater at the site is divided into
three zones: 1) the upper level, or A-zone, is a
perched aquifer encountered 60-80 feet below ground
surface (bgs): 2) the next level, or B-zone, is encoun-
tered at approximately 150 feet bgs; the A and B
aquifers are separated by a generally impervious, but
leaky, clay aquitard; 3) the deepest groundwater, the
C-zone, at about 200 feet bgs, is a regional confined
aquifer separated from the B-zone by an imperme-
able layer known as the Corcoran clay. Only the C-
zone is currently used as a source of drinking water.
Woody, 394:17-395:8; 499:1-9; RI/FS (Ex. 1464), Fig.
3-3; Testimony of Thomas Huetteman (“Huetteman”)
at 668:5-8 (no planned use of B-zone for drinking
water).
10. The water in the A-zone flows in a generally
west/southwest direction at a rate of 53’ per year. The
83a
flow direction varies at different locations under the
site.
11. The nearest drinking water well is Arvin
municipal well No. 1 (Arvin well), located 1700 feet
southwest of the site. This well draws water exclu-
sively from the C-zone aquifer.
12. Although there is no evidence that the C-zone
is at present risk of contamination from this Site, the
EPA is concerned about potential contamination of
this well due to the fact that the gravel packing
around the well may permit contaminated water to
infiltrate from the B-zone. No such contamination
has occurred to date.
13. To the parties’ knowledge, no additional do-
mestic wells are planned in the vicinity of the site.
Testimony of Robert Mandel (“Mandell”) at 265:1-17;
Woody, 400:1-403:8; Huetteman, 610:7-12, 615:24-
617:6; Testimony of Cynthia Wetmore (“Wetmore”) at
2074:1-5, 2076:8-14.
14. The B-zone flows in a southern or easterly
direction, away from the Arvin well. Testimony of Dr.
Daniel Stevens (“Stephens”) at 3699:7-14.
C. The Arvin Facility Stored the Chemicals D-D,
Nemagon, and Dinoseb.
15. B & B’s Arvin site business sold to and applied
to fields of local growers, agricultural chemical pro-
ducts manufactured by various companies. Brown
at 755. B & B stored and distributed several Shell
agricultural chemical products, including the soil
fumigants D-D and Nemagon. 7d. at 757.These pro-
ducts were designed to kill nematodes, which are
microscopic worms that attack the roots of crops.
Testimony of William Haverland (“Haverland”) at
2175-76.
84a
16. Shell D-D is a nematocide. Its dominant con-
stituents include a combination of 1,2-dichloropro-
pane and cis-1,3-dichloropropene, and _ trans-1,3-
dichloropropane with a small quantity of 1,2,3-
trichloropropane. Testimony of Dr. George Deeley
(“Dr.Deeley”) at 2738-39, 2741-42. Shell Nemagon
contains dibromochloropropane, or DBCP. 7/d. at
2748-49.
17. B & B also carried pesticide products (Vidden-
D, Telone, and Telone II) manufactured by the Dow
Chemical Company. B & B’s in-house policy was
to sell the Dow products out of B & B’s Shatter,
California location. Brown at 762-63. The Dow pro-
ducts B & B sold out of Arvin were generally products
that Shell did not make, such as dinitro (dinoseb)
weed killer. Jd. at 763.
18. D-D was available for purchase in either 55-
gallon drums or in bulk tank truckloads. Ex. 1080;
Haverland at 2249:9-2250:4. Prior to the mid-1960s,
B & B purchased D-D in 55 gallon drums. By the
mid-1960s, it purchased the D-D in bulk. Brown at
757:6-758:3.
19. D-D was manufactured at Shell’s refineries in
Norco, Louisiana and Deer Park, Texas and sent
by railcar to storage facilities which Shell leased
from GATX in San Pedro, California. Haverland at
2200:23-2202:1. When B & B wanted to purchase D-
D, it would place an order with Shell’s order desk
located in San Ramon, California. The order center
would then call the facility from which the product
was being shipped in order to release it and make
arrangements for shipment of the product to the
customer. Jd. at 2203:11-25.The amount of product
paid for by B & B was determined by weighing the
common carrier’s empty truck on the way into the
85a
GATX facility to obtain the tare weight and then
weighing the full truck on the way out. The tare
weight is deducted from the gross weight, to reach
the net weight of the product. Jd. at 2209:24-2211:5;
Ex. 1199, 3-4.
20. Shell’s D-D sales to B & B for 1972 were
106,000 gallons. 1973 Marketing Agreement, Rail-
roads’ Trial Ex. 1070, Bates No. S000266. B & B’s
Nemagon purchase for 1972 was 4,000 gallons. /d.
In 1979, the D-D sales was 125,000 gallons. 1980
Marketing Agreement, Railroads’ Trial Ex. 1071,
Bates No. 063502. In 1982, Shell’s D-D sales to B & B
were 141,000 gallons. 1983 Marketing Agreement,
Railroads’ Trial Ex. 1072, Bates No. 063323. In
1983, B & B’s D-D sales were 132,340 gallons. 1984
Marketing Agreement, Railroads’ Trial Ex. 154 Bates
No. 063126. Shell estimated its B & B D-D sales for
1984 were 26,000 gallons. /d.
21. D-D bound for the Arvin facility was shipped
by common carrier trucks from the GATX facility in
San Pedro. Jd. at 2207:12-17.There is no evidence D-
D was ever shipped by railcar to the Arvin facility. D-
D was shipped by tank truck to the Arvin facility
“FOB Destination.” It was Shell’s intent that B & B
take responsibility for the product when it arrived at
B & B’s facility. Jd. at 2207:15-2209:22, 2225:1-21; see
e.g., Exs. 1199, 2, 1080. Shell intended that B & B
should be responsible for handling D-D after the
common carrier tank truck arrived at Arvin. See, e.g.,
Ex. 1199, Conditions of Sale, at 7, section 3.
22. Shell did not sell D-D FOB shipping point
(Texas or San Pedro). No testimony was adduced that
Shell ever required B & B to take control of and be
responsible for all aspects of delivery from the
shipping point. Shell sold D-D as a new product. It
86a
was not a waste product. Shell did not sell D-D on
consignment to B & B at any time. B & B did not
have to formulate D-D for use.
23. A D-D pull rig was a 500-gallon or 600-gallon
tank mounted on a two-wheel trailer. Testimony of
Lonnie Merryman at 11-12, 83 (*Merryman”). The D-
D pull rig had 12 to 16 hollow shanks, or “tines,” with
hoses in each shank to pump the D-D soil fumigant
into the ground. Jd. at 12, 83.When used as a pesti-
cide, the product is injected into the soil about 6 to 12
inches below the surface, the soil is then sealed
with a drag ring roller or press wheel, and the D-D
volatilizes in the soil killing nematodes. Haverland at
2175-2176.
24. Dragging a D-D rig in the field generated a
great deal of dust. The D-D rigs had filters to trap
sediment. Merryman at 13. The D-D pull rigs had a
filter at the bottom of the D-D rig tank and a smaller
three-quarter inch filter for the pump that trans-
ferred D-D to the shanks on the back of the rig. Jd. at
13-14. Each of the 12 to 16 tubes in each shank had a
small strainer. Jd. at 12-14, 83.
25. Before taking D-D rigs to the field, B & B
servicemen put on rubber gloves, opened the strainer
caps and checked the filters and strainers to see if
they needed to be cleaned. Id. at 14-18, 81-82.
Checking filters resulted in spills of D-D onto the
ground of one quart or less. Jd. at 16, 81; Brown at
1005.
26. D-D rigs were parked on the Railroad parcel.
Id. at 15-16, 81, 113-14; Brown at 1003. Filters were
checked 20 times a month, at least. Merryman at
113.
87a
27. D-D rigs were used all year, but mostly in the
summer. /d. at 15, 114.
28. The D-D rigs were not usually washed out
unless they became full of sediment. Jd. at 14, 16,
110.
29. No Shell employee ever directed or assisted the
washing out of the D-D rigs. Jd. at 110.
30. D-D rigs had a plastic or “corlon” sight gauge
tube on the end of the tank. Jd. at 14-15; Brown
at 822. The D-D tank and the sight gauge were
connected so that if the tank were half full, the sight
gauge would read half full. Merryman at 15.
31. Exposure to sunlight made these tubes brittle.
Brown at 822; Ex. 1123, at Bates No. 5003566 (Shell
technical Lulletin: “sight tube, (a poor but acceptable
alternate)... Tube material must not be attacked by
tank contents or the natural environment (sun-
light).”).
32. Sight gauges regularly broke. A hard wind
would cause breakage of brittle gauges. When this
occurred the contents of a half-filled tank would
slowly spill on the ground through the sight gauge.
Merryman at 104; Brown at 823. B & B was not
always “quick enough to replace” sight gauges and
“would lose material.” Brown at 822.
D. D-D Spills Occurred from D-D Nurse Tanks
33. Nurse tanks were four-wheeled mobile tanks
that were generally of two sizes: 2,000 and 2,600
gallons. Merryman at 9, 69. Nurse tanks were sta-
tioned at the grower’s field to receive liquid product
from B & B’s tank truck into either kit tanks
mounted on tractors or into tanks on a pull rig. /d. at
88a
9; Brown at 841. B & B would move the nurse tank
from one farmer’s field to another. Jd. at 69.
34. B & B’s employees rinsed out nurse tanks at
the wash rack on the B & B parcel unless the nurse
tank was going back out to another job the next day
with the same material. Jd. at 16-17, 80.If the nurse
tanks were going to be idle, they would be washed out
and parked on the Railroad parcel. Sometimes too
many nurse tanks were lined up for washing, so the
D-D nurse tanks were parked west of the warehouse
on the Railroad parcel. Jd. at 16-17.
35. The D-D nurse tanks also had filters at the
bottom of the tank that had to be checked prior to
use. Jd. at 17, 80, 82.The process of checking nurse
tank filters sometimes caused spills of less than a
gallon of D-D rinsate. Jd. at 17, 81-82.Sometimes a
pint or a quart of D-D spilled. Jd. at 81.
36. The servicemen preferred to check the filters
near the wash rack due to the effect D-D could have
on the employees’ skin. Merryman at 82-83.
37. Nurse tanks also had sight gauges that broke
from time to time. /d. at 112.
E. Spillage and Transfers to D-D Bobtails During
Downloading Occurred All Over the Arvin Site
After a Windstorm Destroyed the Bulk Storage
Tank
38. A “bobtail” is a two-ton truck with a 1,800 to
2,000 gallon tank mounted on the truck. Merryman
at 9-10. The bobtail was used to transport fertilizer or
D-D over the roads to nurse tanks. Jd. at 9, 19, 69.
39. The transfer of liquid material by B & B
employees from bulk storage tanks located on the
B & B parcel to bobtails commonly resulted in leaks
ae
89a
and spills to the ground on a daily basis, wherever
transfer took place. Jd. at 34-37.
40. Sometimes 5-gallon buckets would be used to
catch material-not just D-D-when hoses were being
unhooked from tanks. The collected material would
be put back in the tank. Merryman at 36.
41. In 1978, the bulk D-D storage tank used to
store Shell D-D was destroyed in a windstorm. B & B
then used converted stainless steel milk trailers to
store bulk D-D. Merryman at 19-21, 61; Brown at
794-95, 798-99. These temporary tanks were kept
all over the Arvin site, including the area west of
the warehouse-the bobtails would download material
from the tanks. Merryman at 19-21.
F. Dinoseb Was Stored on the Railroad Parcel
42. B & B stored containers of Weed Killer D
(dinoseb) in 55-gallon drums and 5 gallon cans on a
concrete apron along the warehouse wall on the
Railroad parcel. Merryman at 31-32. B & B stored
the Weed Killer D outside because if the drums and
cans leaked, it was “real messy.” Jd. at 31-32, 101.
Moreover, B & B did not store Weed Killer D in the
warehouse because it was a low cost product “that
nobody . . . would steal.” By contrast Nemagon was
stored in the warehouse. /d. at 32.
43. B & B used a hose to wash off the apron when
the dinoseb leaked. Dinoseb washed on to the ground.
Id. at 32-33; see also Mandel at 263-64; Woody at 337,
441.
G. The Warehouse Occasionally Was Washed Out
44. Cans of products more valuable than dinoseb,
such as Nemagon, Fumazone and Round-Up, were
stored inside the warehouse. Merryman at 33-34.
90a
Before occasional company barbecues, B & B employ-
ees emptied the warehouse, swept the concrete floor
and hosed it out, washing the water out of all three
doors of the warehouse, including the doors that were
on the west side of the warehouse. Jd. The rinsate
was washed onto the ground.
H. Empty Cans were Stored on Railroad Parcel.
45. B & B retrieved used cans of pesticide products
from growers’ fields and stored the used, unrinsed
cans for as long as a year before crushing them and
sending them to a landfill. Brown at 829; Merryman
at 113.
46. B & B stored used 55 gallon drums of dinoseb
on the Railroad parcel. /d. at 31.
47. Every two or three months the cans would be
collected and crushed. Crushing the cans near the
UN-32 tank on the B & B parcel caused residual
liquid to spill on the ground. Merryman at 62-65. The
wet areas were two to three inches deep and as much
as six feet across. Jd. at 100.
48. Weed Killer-D (dinoseb) has a particular dark
yellow-orange color when it makes contact with the
ground. Merryman at 74.
49. Mr. Merryman, a B & B employee from 1972 to
1981, testified that there were always “small leaks.”
Id. at 75.
50. Shell Nemagon, which contained DBCP, came
to the Arvin plant in 30-gallon drums and 5-gallon
drums: /d. at 28.After the 30-gallon Nemagon drums
were emptied, they were stored on the Railroad
parcel. Jd. at 28-29. Residual contents of used
Nemagon containers leaked onto the ground. /d. at
97-99.
9la
51. Nemagon also came in 5-gallon cans. Id. at
29.After the 5-gallon cans were emptied, the cans
would be brought back in the yard and stored at the
can storage area marked as “D” on Exhibit G-100.
Id. at 29-30.The 5 gallon empty cans were trans-
ferred to the Railroad parcel, where the empty 30-
gallon Nemagon drums were stored, because the
small can storage area became flooded when it
rained. /d. at 30.
I. Interaction between Run-off from the Railroad
Parcel and the B & B Pond
52. The B & B parcel was graded towards the
southeast waste pond (pond). Merryman at 25, 45-46,
79, 92-93, 112; Brown at 779-80; Testimony of Gary
J. Leary (“Leary”) at 1833. Brown testified that a
small pipe under the railroad spur tracks allowed the
water on the Railroad parcel to drain to the pond.
Brown at 779-80. Although there was a small berm
around the pond before it was lined in 1979, a 12-inch
pipe buried in the ground allowed water from the low
area near the pond to drain into the pond. Merryman
at 93.
53. When the sump near the B & B wash rack was
lined in 1979, B & B installed a pipe to connect the
sump to a lined sediment sump near the pond.
Merryman at 25-27. B & B also connected this sedi-
ment sump to the pond, which was then lined. Jd.
Mr. Merryman testified that the purpose of the pond
prior to 1980 was simply to collect rainwater runoff
from the entire plant. Jd. at 777-78. EPA documenta-
tion, its consultant, and another B & B employee
suggest the pond was in fact connected to the sump
as early as 1960. (Canonie Environmental Closure
Plan-Arvin Facility [Ex. G-9, Vol. 2, AROO11, 5];
92a
Dickey Depo., Ex. 3051, 40:10-21. Mr. Dickey worked
at Arvin from 1970-77. Dickey Dep., 9:2-19.
54. The B & B plant was oiled with a dust binder,
except for areas near concrete or the gravel under the
tank farm. Merryman at 22-23, 78-80; Brown at 780;
Leary at 1832-34, 1859-60.
55. The oiled surface developed cracks and flaws
and showed exposed dirt. Merryman at 22-23; Leary
at 1834.
J. [Stricken]
56. That a release of a hazardous substance occurs
at the surface of the property does not per se
establish that the substance reached the subter-
ranean groundwater. See Testimony of Dr. Gary
Chirlin (“Chirlin”) at 1722:7-11, 1755:2-24.
57. To confirm a surface release migrated to
groundwater requires: (1) sampling results showing a
vertical trail of contamination from the surface to
the groundwater, and (2) increased concentrations of
contamination in the groundwater below and down-
gradient of the release point. Chirlin, 1678:17-
1679:14.
58. Such a combination of factors is present on the
B & B parcel. Dr. Chirlin did not observe it on the
Railroad parcel. He found no evidence of an inde-
pendent plume of groundwater contamination caused
by surface releases on the Railroad parcel. Chirlin at
1680:16-16°2:13, 1685:5-16; Chirlin Dep. at 70:11-
71:14; Stephens at 3658:12-25, 3660:13-3661:1 (no
continuous columns); 3701:4-11 (the groundwater
data does not suggest a source on the Railroad
parcel).
93a \
59. The remedial goal for the A-zone groundwater
was 10-100 times the applicable Maximum Contami-
nant Levels (MCLs) the EPA sets for 1,2-DCP and
the DTSC sets for chloroform, DBCP, 1,2-DCP,
dinoseb, and EDB. The theory behind this goal was
that, “at this level, you could leave the A-zone alone
and you could let natural processes occur and it
would not continue to impact the B-zone in a negative
way.” ROD, Ex. 1466, 12; Huetteman at 574:13-
575:15.
60. The levels of contamination reported in the A-
zone groundwater beneath the Railroad parcel above
gridline 14 on Ex. 687, above well WA-03, are too
low to require remediation. Huetteman 633:2-634:2;
Stephens at 3960:6-3966:6. Even if hazardous sub-
stances were released in this area, they will not cause
or contribute to the Governments’ incurrence of
response costs. See Huetteman at 634:23-637:12 (he
did not evaluate whether any Railroad parcel] [sic]
spills impacted groundwater); Walton at 35:23-36:23,
38:12-18 (his model is intended to show a range of
possibilities of a spill being followed by a runoff-
producing rainfall event; it does not show the prob-
ability that a spill will reach the groundwater);
115:18-21, 116:17-117:8, 132:18-25, 183:10-23; 4118:
22-4119:5 (he did not quantify the amount of any spill
that theoretically could have reached the pond as
runoff); Chirlin at 1583:1-20; 1671:4-10, 1672:2-11;
1692:11-18; 1716:2-19, 1717:2-13; 1718:4-11 (Dr.
Chirlin has no opinion whether the releases he
assumed occurred on the Railroad parcel reached
groundwater in sufficient quantities to cause the
concentration in the groundwater to exceed EPA’s
remediation goal of 10 times the MCLs).
94a
61. The parties agree that the most important
variable affecting the downward migration of any
chemical substance released at the Arvin Site ground
surface is the amount of water. Walton at 86:19-87:7;
88:5-9; Chirlin at 1747:15-25 (regardless of whether
we are talking about surface runoff or downward
migration, the flow of water containing dissolved
chemicals is the source of groundwater contamina-
tion at Arvin); ROD, Ex. 1466, at 9.
62. Other factors affecting contaminant transport
include: the wind and temperature (higher tempera-
ture and wind increase the rate of evaporation); the
porosity of the soil; the amount of organic carbon in
the soil; and the molecular weight and chemical
properties of the particular contaminant.
63. When a material is spilled on the soil, a dy-
namic process occurs whereby some of the material
volatilizes or evaporates into the air, and some of it
enters the soil. Materials absorbed into the soil will
continue to volatilize and, if water is present, will
dissolve, evaporate and move with the water. If
sufficient water is present, chemical material will
move downward until it reaches a “residual satura-
tion level,” at which the material is static. Deeley at
2769: 14-2773:12; 2795:13-2796:8; Stephens at 3762:5-
22.
64. Evaporation from siallower soils alters the
concentration gradient, which draws materials up
from deeper soils. This is particularly pronounced
beneath asphalt paving, which heats up more than
the air and draws moisture out of the upper soil
profile. This phenomenon is known as barometric
pumping. Stephens at 3628:14-3631:23; Deeley at
2778:25-2779:23, 2782:6-18.
95a
65. In 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 would be required on the Railroad parcel,
before a spill would reach groundwater in concen-
trations sufficient to require a remedial response.
Stephens at 3681:5-3686:5; See Walton at 86:2-4 (“If
you don’t have water with the spill and you don’t
have preferential pathways, it [1,2-DCP or D-D)
tends to evaporate and it tak
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