Amicus Curiae Brief — Shell Oil Co. v. United States (Nos. 07-1607, 07-1601)

Supreme Gay U.S.

(6) | JUL 25 208

No. 07-1807 2 OFF BE THE CLERK

Jn the i

FJoupreme Court of the United tates

SHELL OIL COMPANY,

Petitioner,

Vv.

UNITED STATES OF AMERICA; DEPARTMENT OF TOXIC

SUBSTANCES CON'I'KOL, STA''E OF CALIFORNIA,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF OF THE CIVIL JUSTICE ASSOCIATION

OF CALIFORNIA AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

FRED J. HIESTAND

Counsel of Record

1121 LSrreet, Suire 404

SACRAMENTO, CA 95814

(916) 448-5100

Counsel for Amicus Curiae

The Civil Justice Association

of California

July 25, 2008

Becker Gallagher - Cincinnan, OH - Washington, D.C. - 800 890.5001

i

TABLE OF CONTENTS

BARBERS OF AUTERRUREE EID 20 ccc cece cence il

INTEREST OF AMICUS CURIAE ............ 1

BACKGROUND AND PROCEEDINGS BELOW . 3

SUMMARY OF ARGUMENT ................. 7

REASONS FOR GRANTING THE WRIT ....... 8

I. THE OPINION EXPANDS “ARRANGER”

LIABILITY UNDER CERCLA IN WAYS THAT

EXACERBATE CONFLICTS WITH AT LEAST

FIVE OTHER CIRCUITS ON THE SAME

PE RS ax 9 ds AN 0 tae eee Oa NY 8

II. THE OPINION IMPOSES AN IMPRACTICAL

AND UNWORKABLE “ADEQUATE

RECORDS” REQUIREMENT FOR

APPORTIONMENT OF CLEAN-UP COSTS TO

OCCUR AT THE LIABILITY STAGE OF

CERCLA PROCEEDINGS. ............... 14

¢4 cb ewses dan ake nese ee ade 18

ii

TABLE OF AU'THORITIES

CASES

AM Int'l, Inc. v. International Forging Equip.

Corp.,

982 F.2d 989 (6th Cir. 1993) .............. 10

Amcast Indus. Corp. v. Detrex Corp.,

Pe fe ke 9,10

B.F. Goodrich v. Betkoshi,

ee ee ee I Es PED oc ec cern deec ues 14

Fla. Power & Light Co. v. Allis Chalmers Corp..,

893 F.2d 1313 (11th Cir. 1990) ............ 10

Freeman v. Glaxo Wellcome, Inc.,

i Fe & TN Le rr 10

In re Bell Petroleum Servs., Inc.,

Be Gow Coes Clk. IBGE) 2 nc ccc ccc cc eee. 15

Northern Securities Co. v. United States,

oe na a aan we © a6 oo 6-8 80 4a 7

O’Neil v. Picillo,

883 F.2d 176 (1st Cir. 1989), cert. denied

sub. nom, American Cyanamid Co. v. O’Neil,

PTT Tee ee TEST TT Tere 15

Pneumo Abex Corp. v. High Point, Thomasville &

Denton R.R.,

142 F.3d 769 (4th Cir. 1998) .............. 11

iil

U.S. v. Chem-Dyne, Corp.,

572 F. Supp. 802 (S.D. Ohio 1983) .......... 5

United States, et al. v. Burlington Northern &

Santa Fe Railway Co.,

520 F.3d 918 (9" Cir. 2008) ............ passim

United States v. Aceto Agric. Chems. Corp.,

872 F.2d 1373 (8th Cir. 1989) ............. 13

United States v. New Castle County,

727 F. Supp. 854 (D. Del. 1989) ........... 13

United States v. Shell Oil Co.,

294 F.3d 1045 (9th Cir. 2002) ............. 12

STATUTES

Tene a ie a wis ane 3

a ss 6 see ewe teeen baw 2

OTHER AUTHORITIES

Anderson, Jerry L., The Hazardous Waste Land, 13

Si ea od nw ees 4

Aronovsky, Ronald G., A Preemption Paradox:

Preserving the Role of State Law in Private

Cleanup Cost Disputes, 16 N.Y.U. ENVT’L. L.dJ.

a rs eat a leis 8

iv

Lannetti, David W., “Arranger Liability” Under the

Comprehensive Environmental Response,

Compensation, and Liability Act (CERCLA):

Judicial Retreat from Legislative Intent, 40 WM.

& MARY L. REV. 279 (1998) ...............

McCrory, Martin A., The Equitable Solution to

Superfund Liability: Creating a _ Viable

Allocation Procedure for Businesses at

Superfund Sites, 23 VT. L. REV. 59 (1998) ....

Ronan III, John T., A Clean Sweep on Cleanup,

THE RECORDER, Sept. 30, 1992, available in

LEXIS, News Library, Recrdr File ..........

Stevenson, Sarah E., Broadening Arranger

Liability under Alaska State Law: the Ninth

Circuit’s Interpretation of Berg v. Popham, 17

VILL. ENVTL. L.J. 76-77 (2006) ............

Thrailkill, Melissa, The Third Circuit Clarifies

Arranger Liability under CERCLA, 31 ECOLOGY

Se RS i k'6 eee ws wes 65K GR OES ue

RESTATEMENT (SECOND) OF TORTS § 433A(1) ....

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13

14

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1

INTEREST OF AMICUS CURIAF'

The Civil Justice Association of California (CJAC or

amicus) is a 30-year old non-profit organization

dedicated to educating the public about ways to make

our civil liability laws more fair, efficient, uniform and

economical. CJAC’s hundreds of members are

businesses, professional associations and _ local

government groups who, in response to the vicissitudes

of economic life, too often become embroiled in

litigation over who gets how much, from whom, and

under what circumstances when unlawful conduct is

charged. Accordingly, CJAC has, since its inception,

petitioned the three co-equal and co-ordinate branches

of the federal and California governments to provide

greater clarity and fairness to the laws that inform the

answers to these questions.

Amicus is vitally interested in two issues this case

presents: (1) whether a manufacturer who merely

“sells” a useful product (i.e., agricultural fertilizer) to

a purchaser who, upon delivery acquires ownership

' Counsel of record for all parties consent to the filing of this

amicus brief. Counsel either received notice at least 10 days prior

to the due date of the amicus curiae’s intention to file this brief or

Counsel waived their right to receive at least 10 days notice. The

parties’ consent to the filing of this brief and the 10-day waivers of

notice (where applicable) are being filed concurrently with this

brief. No counsel for a party authored this brief in whole or in

part, and no counsel or party made a monetary contribution

intended to fund the preparation or submission of this brief. No

person or entity other than amicus curiae, its members or its

counsel made a monetary contribution to its preparation or

submission.

2

and control of it, can be held liable as an “arranger”

under the CERCLA (42 U.S.C. § 9607 (a)(3)) for the

purchaser’s “spillage” of the product; and (2) whether

judicial “apportionment” of remedial clean-up costs

under CERCLA at the liability stage can be decided on

the basis of a “reasonable estimate” of the comparative

responsibility of the parties, or requires more exacting

information tracing and tying specific contamination

at the site to each party responsible for it.

The Ninth Circuit answered “yes” to the first

question about “arranger” liability under CERCLA

and, while paying “lip service” to the “reasonable

estimate” of apportioned clean-up costs amongst

responsible parties for contamination of the site,

imposed a more difficult and burdensome threshold

requirement on defendants that, as a practical matter,

makes apportionment impossible at the liability stage

of CERCLA proceedings.” These two holdings are

harshly unfair and conflict with opinions from other

circuits. Loft intact this opinion will exacerbate

confusion from inconsistent judicial holdings about key

aspects of CERCLA administration and enforcement.

Uniformity as to the scope of CERCLA liability is

essential for potentially responsible parties to

adequately protect themselves by complying with legal

requirements. Lack of uniform federal CERCLA

arranger liability and apportionment decisions results

in uncertainty, increases litigation, creates questions

? United States of America v. Burlington Northern & Santa Fe

Railway Company, 520 F.3d 918 (9" Cir. 2008). (“Burlington

Northern”)

3

of legal complexity, promotes forum shopping, and

produces unreasonable burdens and costs on litigants.

The Court’s guidance on the two important issues

presented is urgently needed to bring clarity and

consistency to what is now a confused and confounded

state of CERCLA law.

BACKGROUND AND PROCEEDINGS BELOW

Under the Comprehensive Environmental

Response, Compensation, and Liability Act

(“CERCLA”, 42 U.S.C. § 9601), federal and state

governments can clean up hazardous waste sites and

later sue potentially responsible parties for

reimbursement. Since CERCLA’s 1980 enactment, its

effect on businesses in the United States has been

tremendous.

“Businesses spend over thirty million dollars

cleaning up an average Superfund site, with

larger sites costing businesses over 100 million

dollars. By 1991, businesses spent over 11.3

billion dollarson CERCLAcleanups. Obviously,

liability for even a single Superfund site has

disastrous effects on a business, and the cost to

businesses is going up. By even the most

conservative estimates, the total cost of cleaning

all Superfund hazardous waste sites in the

United States will be well over 100 billion

dollars.”

* Martin A. McCrory, The Equitable Solution to Superfund

Liability: Creating a Viable Allocation Procedure for Businesses at

Superfund Sites, 23 VT. L. REV. 59 (1998).) While the estimates of

4

In 1983, the Environmental Protection Agency

(EPA) and the California State Department of Toxic

Substances Control (DTSC) separately investigated an

agricultural chemical storage and distribution facility

in Arvin, California to determine whether repeated

leaks and spills had caused soil and groundwater

contamination. Finding several violations of hazardous

waste laws, the agencies proceeded to clean up the site

and in doing so incurred substantial cost.

In 1996, the United States, acting through the EPA

and DTSC brought a CERCLA suit against Brown &

Bryant, Inc. (B & B), owner and operator of the

facility; Burlington Northern & Santa Fe Railway and

Union Pacific Transportation Co. (Railroads), part

landowners of the facility; and Shell Oil Company

(Shell), distributor of a soil fumigant called D-D — a

nematocide that, when injected into soil protects crop

roots from attack by microscopic worms. The district

court determined that the harin sustained at the site

was capable of apportionment and apportioned the

harm between the Railroads as “owners” and Shell as

an “arranger.” B & B was insolvent. For the

Railroads, the district court multiplied the percentage

of ownership, percentage of time owned in relation to

total operations, and fraction of hazardous products

attributable to the Railroads’ parcel to determine that

CERCLA cleanup costs vary, spending iscertainly exorbitant. The

cleanup of an individual CERCLA site may range from $26 million

to $50 million. See Jerry L. Anderson, The Hazardous Waste Land,

13 VA ENVTL. L.J. 1, 10 n.50 (1993). Total nationwide cleanup

costs could be as high as $750 billion. See John T. Ronan III, A

Clean Sweep on Cleanup, THE RECORDER, Sept. 30, 1992, at 10,

available in LEXIS, News Library, Recrdr File.

5

the Railroads were liable for 9% of the total cleanup

costs. For Shell, the district court multiplied the

percentages of leaks attributable to Shell to determine

that Shell was liable for 6% of the total cleanup costs.

Both parties appealed the judgment: the EPA and

DTSC arguing that the Railroads and Shell are jointly

and severally liable for the entire judgment, and Shell

arguing that it is not an “arranger” under CERCLA

and therefore not a party on whom any cleanup

liability should be imposed.

The Ninth Circuit, relying heavily on U.S. v. Chem-

Dyne, Corp., 572 F. Supp. 802 (S.D. Ohio 1983), held

that liability may be joint and several at the liability

phase (thus allowing for apportionment of liability),

but ultimately disagreed with the district court’s

method of apportionment. (Burlington Northern supra,

520 F.3d at 946.) Regarding the Railroads, the Ninth

Circuit found that the factors the district court used

(percentages of land area, time of ownership, and types

of hazardous products) bore an insufficient logical

connection to the pertinent question: what part of the

contaminants found on the land in question were

attributable to the presence of toxic substances or to

activities on the Railroad parcel? The Ninth Circuit

rejected the district court’s apportionment calculation

and held that the Railroads had failed to prove a

“reasonable basis” for apportioning liability. With

regards to Shell, the Ninth Circuit found that because

the appropriate consideration for apportionment is

contamination, by presenting evidence of leakage Shell

failed to prove whether its chemicals that were leaked

had contaminated the soil in any specific proportion as

compared to other chemicals spilled at the site. The

Ninth Circuit held that Shell’s evidence concerning

6

leakage was insufficient to prove a “reasonable basis”

for apportionment of liability.

Finally, the Ninth Circuit agreed with the district

court that Shell was an “arranger” for purposes of

CERCLA. On appeal Shell claimed that the district

court used the wrong standard in determining whether

it was an “arranger,” that the “useful product” doctrine

precludes imposition of “arranger” liability on Shell,

that Shell lacked ownership and control over the

chemicals at the time of the transfers, and the district

court erred when it determined Shell contributed to

the groundwater contamination. The Ninth Circuit

rejected Shell’s arguments, finding that an entity can

be an “arranger” even if it did not intend to dispose of

the product because under CERCLA, “dispose” can

mean “spill”; the “useful product” doctrine does not

apply where the sale of a useful product immediately

results in the leakage of hazardous substances; Shell

had sufficient control over, and knowledge of, the

transfer process to be considered an “arranger” under

CERCLA; and the record was sufficient to support the

district court’s conclusion.

Upon denial of rehearing en banc, seven judges of

the Ninth Circuit, including Chief Judge Kozinski,

joined the dissent by Judge Bea stating that the

panel’s opinion on “arranger” liability creates .. .

circuit conflicts in an area of the law where uniformity

. . . is of paramount importance.” (Burlington

Northern, supra, 520 F.3d at 952-953.) The dissent

also criticized the opinion for imposing a “novel and

unprecedented” test for apportionment of liability that

was “impossible” for CERCLA defendant to “satisfy.”

7

SUMMARY OF ARGUMENT

The Ninth Circuit panel opinion in this case

directly conflicts with that of other circuits on the

scope of CERCLA “arranger” liability and what is

necessary for apportionment of clean-up costs at the

liability stage of CERCLA proceedings. These conflicts

create uncertainty and confusion amongst businesses

and governments as to what is required to avoid or

obtain CERCLA liability, resulting in excessive

litigation, forum shopping and exorbitant costs to

business, consumers who pay for products or services,

and the taxpaying public.

“Arranger” liability under CERCLA should not

attach to a bona fide seller of a useful product who

relinquishes ownership and control of the product

upon its delivery to the buyer. That is the law in every

jurisdiction except, as a result of this opinion, the

Ninth Circuit. Nor should apportionment of CERCLA

clean-up costs be denied at the liability phase of

litigation due to the absence of “adequate records” for

which there is no utility for anyone to maintain. That,

again because of this opinion, can now occur only in

the Ninth Circuit.

Bad law should be nipped in the bud lest it infect

future courts considering similar or analogous issues.

The opinion in this case is “bad” law, not because it is

animated, as Holmes intimated, by “hard facts;”* but

because it is at odds with better reasoned decisions

* “Great cases, like hard cases, make bad law.” Northern

Securities Co. v. United States, 193 U.S. 197, 400 (1904).

8

from other circuits and common-sense. The Court

should avail itself of the opportunity to reconcile

decisions from a majority of circuits on CERCLA

“arranger” liability and “apportionment” with this

outlier case subject to the writ petition for certiorari.

REASONS FOR GRANTING THE WRIT

I. THE OPINION EXPANDS “ARRANGER”

LIABILI’r'Y UNDER CERCLA IN WAYS THAT

EXACERBATE CONFLICTS WITH AT LEAST

FIVE OTHER CIRCUITS ON THE SAME

POINT OF LAW.

The opinion affirmed the district court’s imposition

of CERCLA “arranger” liability’ on Shell even though

it is undisputed that Shell sold and relinquished

control over a “useful product” (i.e., the agricultural

fertilizer “D-D”) upon its delivery and before any

spillage of the product occurred by the buyer. As the

°“CERCLA imposes status-based strict liability on four categories

of ‘covered persons’ identified in CERCLA section 107(a)1)-(4): (1)

the current owner and operator of contaminated property; (2) the

owner or operator of contaminated property at the time a

hazardous substance was disposed of at the property; (3) a

non-owner or operator of the contaminated property who arranged

to dispose of a hazardous substance at the property; and (4)

persons who transported hazardous substances to the

contaminated site. CERCLA liability is retroactive and does not

require proof of causation. CERCLA section 107(b) contemplates

three narrow defenses to liability: (a) act of God; (b) act of war;

and (c) act of a third party.” Ronald G. Aronovsky, A Preemption

Paradox: Preserving the Role of State Law in Private Cleanup Cost

Disputes, 16 N_Y.U. Envr’t. L.J. 236-237 (2008).

9

en banc dissent says of this holding, it “goes far

beyond the statutory language and creates inter- and

intra-circuit splits.” Burlington Northern, supra, 520

F.3d at 954.

One of these “splits” is with the Seventh Circuit. In

Amcast Industrial Corp. v. Detrex Corp., 2 F.3d 746

(7th Cir. 1993), the defendant, a chemical

manufacturer, allegedly contracted for transportation

of hazardous waste, which was subsequently spilled

while filling the purchaser’s storage tanks. The

Seventh Circuit held that the defendant was not liable

as an “arranger” because the defendant did not

contract with the transporter for the purpose of

spilling the hazardous waste on the premises. The

court found that the critical words in governing

liability as an arranger are “arranged for,” implying

“intentional action.” Judge Posner, writing for the

court, found that the words “arranged with a

transporter for transport for disposal or treatment”

appeared to contemplate a case in which an entity that

desired to rid itself of its hazardous wastes hired a

transporter to deliver the waste to a disposal site, not

a case in which the entity provided a useful product.

Therefore, the court concluded that a party does not

“arrange for” disposal of hazardous waste unless it

intentionally arranged for the disposal on the site.

The opinion here does not even cite, let alone

attempt to distinguish ordiscuss, Amcast. Instead, the

opinion asserts that because unintentional practices

like “leaking” are included within definition of

“disposal” under CERCLA, “disposal” need not be

purposeful. But as the dissent points out, echoing

Amcast:

10

[T]hough the definition of “disposal” may

include unintentional practices, mere “disposa!”

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

“arrange” as “to make preparations for”). It is

an oxymoron for an entity unintentionally to

make preparations for disposal.®

By holding that a defendant can be held liable as

an “arranger” for the mere sale of a product, the

opinion also directly conflicts with opinions from the

Sixth and Eleventh Circuits. See, e.g., AM Int'l, Inc. v.

International Forging Equipment Corp., 982 F.2d 989,

999 (6 Cir. 1993) (“[Clourts .. . 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.”).

The Ninth Circuit opinion conflicts too with

Freeman v. Glaxo Wellcome, Inc., 189 F.3d 160 (2d Cir.

1999), which explains why sellers of useful hazardous

substances are not subject to arranger liability. Glaxo,

upon closing a facility, sold chemical reactants used in

® Burlington Northern, supra, 520 F.3d at 961.

|

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11

its facility to Freeman Industries Incorporated (FIT) for

use in FII’s business. FII used some of the chemicals in

its business, stored some ot them, and sold some of

them. The stored chemicals became the source of a

remedial action by the EPA at the FII facility. FII

commenced a third party action for contribution

against Glaxo, claiming that Glaxo had arranged for

disposal of its chemicals at the FII facility. Glaxo’s

defense was, as Shell argued here, that it merely sold

the chemicals and did not arrange for their disposal.

After citing cases holding that one cannot circumvent

the Superfund Law by characterizing disposal as a

sale, the court noted that Glaxo sold valuable products

to FII for use or resale. The court determined that

these were virgin chemicals, not waste, and liability

for the arrangement for disposal requires the presence

of waste. Therefore, Glaxo did not arrange for disposal

at the FII facility.

Similarly, Pneumo Abex Corp. v. High Point,

Thomasville & Denton R.R., 142 F.3d 769 (4th Cir.

1998) provides further analysis of how to determine

whether a transaction is a sale or an arrangement for

disposal. The court explained that the key factors “[i]n

determining whether a transaction was for the discard

of hazardous substances or for the sale of valuable

materials” were the intent of the parties, the value and

state of the materials, and the usefulness of the

product. The transaction in Pneumc was for the sale

of used bearings to be processed into new bearings.

The processing generated waste, but the court found

that the essence of the transaction was payment in

exchange for bearings, not an attempt to dispose of

unwanted metal. Thus, the seller did not arrange for

disposal.

12

Finally, to reach the extraordinary expansion of

“arranger” liability that it did here, the Ninth Circuit

was forced to downgrade a previous opinion on the

importance of “actual control” over the hazardous

product as a “crucial element” and relegate it instead

to a mere “pertinent consideration.” Compare United

States v. Shell Oil Co., 294 F.3d 1045, 1055, 1057 (9th

Cir. 2002) (“We agree. . . that control is a crucial

element of the determination of whether a party is an

arranger.”) with the court’s statement herein that

“ownership and control at time of disposal are useful

indices” or “pertinent considerations” which are

“informative only in light of additional considerations”

for determining arranger liability. (Burlington

Northern, supra, 520 F.3d. at 950-951.)

Numerous courts and legal scholars have

commented on the split between circuits concerning

the scope and analysis of, and the “controlling” factors

necessary to determine, arranger liability under

CERCLA.

e “With arguably ambiguous statutory language

and inadequate legislative guidance, the courts

have resorted to their own perceptions and

interpretations regarding CERCLA. As a

result, copious case law exists concerning .. .

arranger liability .. .. It therefore should come

as no surprise that judicial approaches to

arranger liability have not been consistent.

Modern courts have adopted three

fundamentally dissimilar approaches: (1) a

strict liability approach; (2) a specific intent

approach; and (3) a “totality of the

circumstances,” case-by-case approach.” (David

13

W. Lannetti, “Arranger Liability” Under the

Comprehensive Environmental Response,

Compensation, and Liability Act (CERCLA):

Judicial Retreat from Legislative Intent, 40 WM.

& MARY L. REV. 279, 290-91 (1998); emphasis

added.)

“[A]Js a consequence of the unusually rapid

passage of [CERCLA], there is little legislative

history to guide the courts in interpreting the

statute. ‘Lacking direction from the traditional

tools of statutory construction, and unable to

wait for Congress to correct the errors, the

courts interpreting CERCLA muddle along.’

This has resulted in inconsistent decisions and

significant jurisdictional differences.” (Sarah E.

Stevenson, Broadening Arranger Liability under

Alaska State Law: the Ninth Circuit’s

Interpretation of Berg v. Popham, 17 VILL.

ENVTL. L.J. 76-77 (2006); emphasis added;

citations omitted.)

“Congress did not, to say the least, leave the

floodliights on to illuminate the trail to the

intended meaning of arranger status and

liability.” (United States v. New Castle County,

727 F. Supp. 854, 871 (D. Del. 1989); United

States v. Aceto Agric. Chems. Corp., 872 F.2d

1373, 1380 (8th Cir. 1989) (legislative history

“sheds little light on the meaning of the

intended p/irase”).)

“The Third Circuit found that . . . the most

important factors in determining ‘arranger

liability’ varied between courts. Some courts

14

\

required a showing of intent to dispose of or

treat hazardous waste, while others held that

the party could be liable as an ‘arranger’ even if

it merely owned and/or controlled the hazardous

substances at issue. The Third Circuit decided

that the ‘most important factors’ in the

standard for ‘arranger liability’ were ‘ownership

or possession’ and ‘knowledge[]; or control.”

(Melissa Thrailkill, The Third Circuit Clarifies

Arranger Liability under CERCLA, 31 ECOLOGY

L.Q. 739, 741 (2004).)

This case presents the Court with a unique

opportunity to provide much needed clarity and

uniformity between the circuits on what constitutes

“arranger” liability under CERCLA and how courts

should go about making that determination.

II. THE OPINION IMPOSES AN IMPRACTICAT.

AND UNWORKABLE “ADEQUATE

RECORDS” REQUIREMENT FOR

APPORTIONMENT OF CLEAN-UP COSTS TO

OCCUR AT THE LIABILI'Y STAGE OF

CERCLA PROCEEDINGS.

Liability under CERCLA is normally joint and

several where each defendant is potentially liable for

the entire amount of clean-up costs, with the

possibility of then seeking contribution from other

defendants. Some courts, however, have allowed

apportionment of responsibility on the basis of

equitable factors at the liability stage. See, e.g., B.F.

Goodrich v. Betkoski, 99 F.3d 505, 514 (2d Cir. 1996)

(“Liability under the Act is joint and several, unless

potentially responsible parties can prove that the harin

15

is divisible.”); O’Neil v. Picillo, 883 F.2d 176, 178 (1st

Cir. 1989) (“[D]amages should be apportioned only if

the defendant can demonstrate that the harm is

divisible.”); cert. denied sub. nom, American Cyanamid

Co. v. O’Neil, 493 U.S. 1071 (1990). Congress intended

CERCLA apportionment to be governed by common

law tort principles and guided by the Restatement

(Second) of Torts § 443. See, e.g., In re Bell Petroleum

Servs., Inc., 3 F.3d 889, 895 (5th Cir. 1993).

The opinion in this case recognizes’ the

appropriateness of apportionment at the liability

phase of CERCLA litigation, but then devises a test

that, for all practical matters, obliterates that

possibility. Not surprisingly, the stringent test

devised by the opinion results in reversal of the district

court’s “reasonable basis” apportionment and saddles

Shell and the Railroads with complete responsibility

(joint and severally liability) for the total clean-up

costs.

Factors to be considered by courts in determining

whether apportionment is appropriate are explained in

comment d to the RESTATEMENT (SECOND) OF TOPTS

§ 433A(1), upon which other circuits apportivning

CERCLA liability have relied:

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

16

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.

Instead of cattle and crops, the district court

considered the percentage of land ownership by

various parties, the period in which the land was held

in ownership by each, and the period of contamination

to arrive at a “reasonable basis” for apportioning the

respective costs to be borne by Shell and the Railroads.

The district court’s approach to apportionment was in

keeping with the “whole point” of Restatement § 433A

that, as the dissent remarks, “no specific evidence is

required for apportionment so long as the evidence and

method used are ‘reasonable.” (Burlington Northern,

supra, 520 F.3d at 958.) Nonetheless, the Ninth

Circuit reversed the district court’s “apportionment”

because the parties did not produce “adequate records”

detailing “the amount of leakage attributable to

activities on the Railroad parcel, how the leakage

traveled to and contaminated the soil and groundwater

. ., and the cost of cleaning up the contamination.”

(Burlington Northern, supra, 520 F.3d at 957.)

Significantly, the opinion concedes that there would

be little “utility” to either the operator of the waste

facility or the owner of the land (not to mention the

seller of the useful product) to make such records, but

nonetheless faults the absence of such records as

grounds for reversing the district court’s

apportionment.

17

Under the opinion’s reasoning, it is difficult to

imagine any practical circumstances allowing for

apportionment of clean-up costs between and amongst

responsible parties. “Adequate records,” as the opinion

admits, are unlikely ever to be kept because there is no

“utility” for parties to keep the kind of documentation

the opinion says is now a prerequisite for CERCLA

“apportionment.”

The opinion in this case accepts the theory of

apportionment, but saddles it with an unreasonable

and burdensome requirement that effectively

extinguishes future CERCLA apportionment. This is

contrary to the law in numerous other circuits and

Congressional intent. The Court should seize the

opportunity to review this case for the purpose of

reconciling and harmonizing the conflicting views of

the circuits on what is required for CERCLA

apportionment.

18

CONCLUSION

For all the aforementioned reasons, the Court

should grant the petitions for certiorari filed by Shell

Oil Co. and the Railroads and consolidate both for

argument.

Respectfully submitted,

Fred J. Hiestand

Counsel of Record

1121 L Street, Suite 404

Sacramento, CA 95814

(916) 448-5100

Counsel for Amicus Curiae