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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2009

## Text

104 a

JUL 2 5 2008

OFFICE OF THE CLERK |

No. 07-1607

In The
Supreme Court of the Gnited States

e

SHELL OIL COMPANY,

Petitioner,
Vs.

UNITED STATES OF AMERICA, et al.,

Respondents.

°

On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Ninth Circuit

+

BRIEF OF INTERNATIONAL ASSOCIATION
OF DEFENSE COUNSEL AS AMICUS CURIAE
IN SUPPORT OF PETITIONER

+

HoRVITZ & LEVY LLP
MARY-CHRISTINE SUNGAILA
JEREMY B. ROSEN
BRADLEY S. PAULEY*
*Counsel of Record
15760 Ventura Boulevard, 18th Floor
Encino, California 91436-3000
(818) 995-0800

Attorneys for Amicus Curiae
International Association of Defense Counsel

——— EE EEE EEESEEEEESEEIoOoyaIIa™i|===—=x
COCKLE LAW BRIEF PRINTING CO (800) 225-6964
OR CALL COLLECT (402) 342-2831

i

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .................ccccccssseeseseeee il
INTEREST OF AMICUS CURIAE...............0.2.0006+ 1
SUMMARY OF ARGUMENT ..................:cceeeeeeeeeee 1
STATEMENT OF THE CASE..............:ccccceesseseesees 4
RT iiiihinctiniatitabidanlidpidteniaiccinnnmnviscinieriennncesn 4

I. ARRANGER LIABILITY UNDER CERCLA
REQUIRES INTENTIONAL CONDUCT
DiRECTED AT DISPOSAL ...............ccccceeeees 4

II. ARRANGER LIABILITY UNDER CERCLA
REQUIRES THE DISPOSAL OF [:AZ-
ARDOUS WASTE, NOT MERELY THE
SHIPMENT OF USEFUL PRODUCTS...... 12

III. THE PETITION SHOULD BE GRANTED
TO CLARIFY THAT OWNERSHIP OF
WASTE AT THE TIME OF DISPOSAL,
AND CONTROL OF THE DISPOSAL
PROCESS, ARE NECESSARY FOR AR-
B® 5 en ere 17

IV. WITHOUT REVIEW BY THIS COURT,
THE NINTH CIRCUIT'S DECISION WILL
HAVE SEVERE AND FAR-REACHING
ECONOMIC RAMIFICATIONS...................- 21

SITE cialattnidienbihesinedainsnbinieenesotecpaguoipeonein 23

al

ii

TABLE OF AUTHORITIES
Page
CASES

3550 Stevens Creek Associates v. Barclays Bank
of California, 915 F.2d 1355 (9th Cir. 1990)...passim

AM Int'l, Inc. v. Intl Forging Equip. Corp., 982
Me EN SAE: BGI) aiccccvsscevccsescersscesanssceseoress 7,15

Amcast Industrial Corp. v. Detrex Corp., 2 F.3d
POE ED BID sctivvccccececcectscescanenpeetstns 5, 11, 14, 21

Cadillac Fairview/Cal., Inc. v. United States,
41 F.3d 562 (9th Cir. 1994) ............................... 14, 19

Cal. Dept. of Toxic Substances Control v. Pay-
less Cleaners, 368 F. Supp. 2d 1069 (E.D. Cal.
ee icaedi cetacean tieiicahechinhiiiadeineadinicinh iedieghiliaibpaiideniideniatniwesiiaaren 15

Caminetti v. United States, 242 U.S. 470 (1917)......... 5
Carson Harbor Village, Ltd. v. Unocal Corp.,

ee ee ES GIO sc sctcnesesecsctntisseiccicenencsscess 5
Catellus Dev. Corp. v. United States, 34 F.3d

I cine iarsiecnteabsianinpiicheninaiiiniies 13
Chatham Steel Corp. v. Brown, 858 F. Supp.

BIBS GUD. Fim. 29D6)..........cc.ccocecsecescoregecercencorcoreves 11
Courtaulds Aerospace, Inc. v. Huffman, 826

F. Supp. 345 (E.D. Cal. 1993) ..................... 13, 15, 16

First United Methodist Church of Hyattsville v.
U.S. Gypsum Co., 882 F.2d 862 (4th Cir.
ST diitstetcsitdichepilaalecabteisnchaiibaedecipiiieibba didi stitilainvnndiciciiateainindl 22

ill

TABLE OF AUTHORITIES — Continued

Page
Fla. Power & Light Co. v. Allis Chalmers Corp.,
893 F.2d 13138 (ilth Cir. 1990).........................2.. 7,15
Freeman v. Glaxo Wellcome, Inc., 189 F.3d 160
a 12, 13, 14
General Electric Co. v. Aamco Transmissions,
Inc. , 962 F.2d 281 (2d Cir. 1992)....................... 18, 19
Jones-Hamilton Co. v. Beazer Materials &
Serv., Inc., 973 F.2d 688 (9th Cir. 1992)................... 8
Mathews v. Dow Chem. Co., 947 F. Supp. 1517
RCE Re we ae ACR Oe 11
Negonsott v. Samuels, 507 U.S. 99 (1993) ................... 5
Pakootas v. Teck Cominco Metals, Ltd., 452
Is a scesenensenven 4
Pneumo Abex Corp. v. High Point, Thomasville
& Denton R.R. Co., 142 F.3d 769 (4th Cir.
RE RE aE ELS AE RP Ie Races LS AOE Stk a 14
RSR Corp. v. Avanti Dev., Inc., 69 F. Supp. 2d
RETIREE eM Pe eS SO Ee 14
South Fla. Water Mgmt. Dist. v. Montalvo, 84
i aclidbatsemnnnbehs 7
United States v. Aceto Agric. Chem. Corp., 872
F.2d 1373 (Gth Cir. 1068) ...........0cccccccccccceseess 8, 11,18
United States v. CDMG Realty Co., 96 F.3d 706
TRESS SE ATR arene ee Oo a NR a a 5,8

United States v. Cello-Foil Products, Inc., 100
F.3d 1227 (6th Cir. 1996) ...................... 6, 7, 8, 15,19

iv

TABLE OF AUTHORITIES -— Continued

Page
United States v. Davis, 261 F.3d 1 (1st Cir
a etniil i)
United States v. Northeastern Pharmaceutical
& Chemical Co., 810 F.2d 726 (8th Cir.
AR ee ey ae ORCA ROP SRN Me eee ee 18, 20
United States v. Ron Pair Enter., Inc., 489 U. Ss.
a eed i)
United States v. Shell Oil Co., 294 F.3d 1045
SELES UNY ne 6s Roe ea OS ne
In re Voluntary Purchasing Groups, Inc., 2002
WL, 31166635 (N.D. Tlex. BOOB) .......cscrcccccccscoccesscese. 11
Zands v. Nelson, 779 F. Supp. 1254 (S.D. Cal.
SSS Sey aber SES IO ARR Ra eo EE 16, 17
STATUTES
i as saeedniniieieisainianell 10
I i aeenenesmndibennueiaiian 11
II Sevnccccscccnnccsssocceésnesnnsnes 12, 13,14
a ria teeaaescabebiinmicainmai 13
I ia iinnsucdndicsccineniedpaniiinenienensiinn passim
i cceniestibdbinnmmeemnenneelal 10
ee i I bs vcnicasccninscnicsnincansvincatonsiis passim
RULES
I UIT UII UTI shah sidadlliaisnelaindniteinnesbnmpelstepeadibinlaphaiian 1

Vv

TABLE OF AUTHORITIES — Continued

MISCELLANEOUS

Blake A. Watson, Liberal Construction of CERCLA
Under the Remedial Purpose Canon: Have
the Lower Courts Taken a Good Thing Too

Far?, 20 Harv. Envtl. L. Rev. 199 (1996)...........

Ian Erickson, Comment, Reconciling the CERCLA
Useful Product and Recycling Defenses, 80

BOs Ti: SA ID vevewnsncesesstietedeosiinnpeosepeees

David Brose, Ending the Arranger Debate: Inte-
grating Conflicting Interpretations in Search of
a Uniform Approach, 10 Mo. Envtl. L. &

2 | RISERS Es Bertone ae ona tone

Jason C. Kuhlman, Pneumo Abex Corp. v. High
Point, Thomasville & Denton R.R. Co., and
CERCLA “Arranger Liability,” 16 J. Nat.

Resources & Envtl. L. 151 (2002)............00........

1

INTEREST OF AMICUS CURIAE'

Amicus curiae International Association of De-
fense Counsel (IADC) is an association of corporate
and insurance attorneys whose practice is concen-
trated on the defense of civil lawsuits. The LADC is
dedicated to the just and efficient administration of
civil justice and continual improvement of the civil
justice system. The LADC supports a justice system in
which plaintiffs are fairly compensated for genuine
injuries, responsible defendants are held liable only
for appropriate damages, and non-responsible defen-
dants are exonerated without unreasonable cost.

°

SUMMARY OF ARGUMENT

As the petition demonstrates, the Ninth Circuit
has sanctioned an improper expansion of liability
under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), 42
U.S.C. sections 9601-9675, by broadly defining
those who have “arranged for disposal” of hazardous

* This brief was authored by amicus and its counsel listed
on the front cover, and was not authored in whole or in part by
counsel for a party. No one other than amicus or its counsel has
made any monetary contribution to the preparation or submis-
sion of this brief. Pursuant to rule 37 of the Rules of the Su-
preme Court of the United States, all parties have consented to
the filing of this brief. Letters indicating their consent are being
submitted with this brief. The parties were notified ten days
prior to the due date of this brief of the intention to file.

2

waste under 42 U.S.C. section 9607(a)(3) to include
a manufacturer like Shell who shipped a useful
product that later leaked after it left the manufac-
turer’s ownership and control. This potentially far-
reaching and ill-defined form of CERCLA liability is
contrary to CERCLA’s plain language and structure
and both deepens existing circuit splits and creates
new ones with regard to three different aspects of
“arranger” liability.

First, contrary to the Sixth and Seventh Circuits’
interpretation, the Ninth Circuit panel held that
arranger liability does not require an intent to dis-
pose of hazardous substances. Rather, because CER-
CLA’s definition of “disposal” includes “leaking” and
“spilling,” the panel concluded a defendant may be
liable as an arranger in the absence of “purposeful”
conduct. Pet. App. 44a. In so ruling, the panel failed
to acknowledge that the statute’s plain language — in
particular, its use of the phrase “arranged for dis-
posal” — requires intentional conduct directed at
carrying out disposal of hazardous material.

Second, parting ways with other circuits that
have considered the question, the Ninth Circuit panel
expanded arranger liability through its related, but
distinct, ruling that “disposal” under CERCLA can
encompass a manufacturer’s shipment of new, useful
products to its customers. Pet. App. 45a. In reaching
this result, the panel failed to take into account that
CERCLA’s definition of “disposal” is expressly limited
to waste, and that the term “disposal” itself connotes
the act of discarding useless matter. By so holding,

9
ry

the panel effectively eviscerated the “useful product”
doctrine in the Ninth Circuit, which until now has
ordinarily prevented shippers of useful products from
being held liable for the cost of cleaning up their
customers’ hazardous waste sites.

Finally, the panel concluded that whether Shell
owned the substance in question at the time of the
asserted disposal “is not an informative considera-
tion,” and that control of the disposal process “is
informative only in light of additional considera-
tions.” Pet. App. 49a. The panel thereby added to a
jumble of conflicting decisions by the Ninth Circuit
and other circuits concerning the relevance of owner-

ship and control to “arranger” liability.

If the Ninth Circuit’s opinion is left undisturbed,
its secondary and tertiary impacts will be widely felt
throughout our economy. The transfer of billions of
dollars in clean-up costs to those who do no more
than manufacture and ship new products in the chain
of commerce is certain to adversely impact prices, job
creation, and insurance premiums. While Congress
could have chosen to impose such liability, there is no
indication in the language of CERCLA that it did so.

Therefore, this Court should grant certiorari to
resolve the circuit splits created and perpetuated by
the Ninth Circuit’s decision. In so doing, it will pro-
vide critically needed guidance to the lower courts
and bring nationwide uniformity to this important
aspect of CERCLA liability.

+

4

STATEMENT OF THE CASE

Amicus hereby adopts and incorporates by refer-
ence the Statement of the Case set forth in Peti-
tioner’s Brief.

¢

ARGUMENT

I. ARRANGER LIABILITY UNDER CERCLA
REQUIRES INTENTIONAL CONDUCT
DIRECTED AT DISPOSAL.

CERCLA “was designed to deal with the problem
of inactive and abandoned hazardous waste disposal
sites.” 3550 Stevens Creek Assoc. v. Barclays Bank of
Cal., 915 F.2d 1355, 1363 (9th Cir. 1990). It “sets
forth a comprehensive scheme for the cleanup of
hazardous waste sites, and imposes liability for
cleanup costs on the parties responsible for the re-
lease or potential release of hazardous substances
into the environment.” Pakootas v. Teck Cominco

Metals, Lid., 452 F.3d 1066, 1972 (9th Cir. 2006).

One of four types of potentially responsible
parties (“PRPs”) liable for clean-up costs under CER-
CLA is an “arranger” — one who arranges for the
disposal of hazardous substances. An “arranger” is
defined as:

|AJny person who by contract, agreement, or
otherwise arranged for disposal or treat-
ment, or arranged with a transporter for
transport for disposal or treatment, of haz-
ardous substances owned or possessed by

5

such person, by anv other party or entity, at
any facility or incineration vessel owned or
operated by another party or entity and con-
taining such hazardous substances. .. .

42 U.S.C. § 9607(a)(3) (2006).

The circuit courts are deeply divided about what
the plain language’ of section 9607(a)(3) means. Two
circuits, the Sixth and Seventh, have concluded that
Congress’s decision to impose CERCLA liability on
those who “arrange[ ] for disposal or treatment .. . of
hazardous substances” implies a requirement of
intentional conduct directed toward such disposal or
treatment. For example, in Amcast Industrial Corp. v.

* “It is elementary that the meaning of a statute must, in
the first instance, be sought in the language in which the act is
framed, and if that is plain, . . . the sole function of the courts is
to enforce it according to its terms.” Caminetti v. United States,
242 U.S. 470, 485 (1917); accord Negonsott v. Samuels, 507 U.S.
99, 104-05 (1993). The plain language of CERCLA is particularly
critical to its interpretation because its legislative history is
widely considered to be of little value in determining Congress’s
intent. See Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d
863, 885 (9th Cir. 2001) (“Any inquiry into CERCLA’s legislative
history is somewhat of a snark hunt. Like other courts that have
examined the legislative history, we have found few truly
relevant documents.”); United States v. CDMG Realty Co., 96
F.3d 706, 713 n.2 (3d Cir. 1996) (finding CERCLA’s legislative
history “unhelpful ... sparse and often inconsistent”); David
Brose, Ending the Arranger Debate: Integrating Conflicting
Interpretations in Search of a Uniform Approach, 10 Mo. Envtl.
L. & Pol'y Rev. 76 (2003) (“[Als a consequence of the unusually
rapid passage of this legislation, there is little legislative history
to guide the courts in interpreting the statute.”).

6

Detrex Corp., 2 F.3d 746, 751 (7th Cir. 1993), a case
factually analogous to this one, the Seventh Circuit
held that, under the plain language of section
9607(a)\(3), a chemical manufacturer, Detrex, was not
liable as an arranger merely because its product
spilled onto its customer’s premises from a common
carrier’s trucks:

Detrex hired a transporter, all right, but it
did not hire it to spill TCE on [the cus-
tomer’s] premises. Although the statute de-
fines disposal to include spilling, the critical
words for present purposes are ‘arranged for.’
The words imply intentional action. The only
thing Detrex arranged for [the common car-
rier] to do was to deliver TCE to [the cus-
tomer’s} storage tanks. It did not arrange for
spilling the stuff on the ground. No one ar-
ranges for an accident. .. .

Similarly, in United States v. Cello-Foil Products,
Inc., 100 F.3d 1227, 1231 (6th Cir. 1996), the Sixth
Circuit held that the existence of an intent require-
ment is dictated by the application of the canons of
statutory construction to section 9607(a)(3):

We derive the intent element from the can-
ons of statutory construction. ‘Otherwise ar-
ranged’ is a general term following in a series
two specific terms and embraces the concepts
similar to those of ‘contract’ and ‘agreement.’
All of these terms indicate that the court
must inquire into what transpired between
the parties and what the parties had in mind
with regard to disposition of the hazardous

7

substance. Therefore, including an intent re-
quirement into the ‘otherwise arranged’ con-
cept logically follows the structure of the
arranger liability provision.

(Citations omitted); accord AM Int'l, Inc. v. Int’
Forging Equip. Corp., 982 F.2d 989, 999 (6th Cir.
1993) (“Liability only attaches to parties that have
‘taken an affirmative act to dispose of a hazardous
subsiance’”).°

As the Sixth Circuit explained in Cello-Foil,
interpreting section 9607(a)(3) to require a showing of
intent is consistent with CERCLA’s scheme of strict
liability for PRPs:

[E]xamining state of mind or ascertaining in-
tent at the contract, agreement, or other type
of arrangement stage does not undermine
the strict liability nature of CERCLA. The
intent inquiry is geared only towards deter-
mining whether the party in question is a

* The Eleventh Circuit has adopted a different approach.
Under its test, the court must examine all of the evidence
presented, keeping in mind the “broad remedial nature of
CERCLA” and that the transaction in question has to be some-
thing more than a “mere sale” to show that the “manufacturers
arranged for the disposal of hazardous waste by selling the
{product).” Fla. Power & Light Co. v. Allis Chalmers Corp., 893
F.2d 1313, 1318-19 (11th Cir. 1990); aecord South Fla. Water
Mgmt. Dist. v. Montalvo, 84 F.3d 402, 406 (11th Cir. 1996). In
contrast to the Sixth and Seventh Circuits, the Eleventh Circuit,
therefore, has “reject{ed] any attempt to establish a per se rule
in determining a manufacturer’s liability under CERCLA.” Fila.
Power, 893 F.2d at 1318.

8

potentially liable party. Once a party is de-
termined to have the requisite intent to be
an arranger, then strict liability takes effect.

Cello-Foil, 100 F.3d at 1232.

In stark contrast to the Sixth and Seventh Cir-
cuits, and in violation of CERCLA’s plain language,
the Ninth Circuit here adhered to the view that
arranger liability does not require intentional con-
duct. In reaching that conclusion, the panel ne-
glected the statute’s use of the term “arranged for”
and focused exclusively on CERCLA’s definition of
“disposal,” reasoning that because “‘d.sposal’ includes
such unintentional processes as ‘leaking’ . . . ‘disposal’
need not be purposeful.” Pet. App. 44a; accord Jones-
Hamilton Co. v. Beazer Materials & Serv., Inc., 973

* The same approach has been adopted by the Eighth
Circuit. United States v. Aceto Agric. Chem. Corp., 872 F.2d
1373, 1380 (8th Cir. 1989) (“Citing dictionary definitions of the
word ‘arrange,’ defendants argue they can be liable under
section 9607(a)(3) only if they intended to dispose of a waste... .
We reject defendants’ narrow reading of ... the statute.”)
(citation omitted).

* The Third Circuit, on the other hand, has observed that
the terms “leaking” and “spilling” are not mutually exclusive of
an intentional conduct requirement:

We think there is a strong argument ... that in the
context of this definition, “leaking” and “spilling”
should be read to require affirmative human action.
Both “leaking” and “spilling” also have meanings that
require some active human conduct... . In the context
of these words, then, Congress may have intended ac-
tive meanings of “leaking” and “spilling.”
CDMG Realty Co., 96 F.3d at 714.

9

F.2d 688, 695 (9th Cir. 1992) (holding company that
supplied chemicals to formulator under agreement
that “contemplated 2% spillage of materials” had
“arranged for disposal” of hazardous substances).

The Ninth Circuit panel reasoned that CERCLA’s
broad remedial purpose supported such a_ broad
definition of “arranger” liability because otherwise
government agencies and eventually the taxpayers
would be “left holding the bag for a great deal of
money” to clean up environmental sites. See Pet. App.
3a, 26a, 45a. The panel explained, “[wle have avoided
giving the term ‘arranger’ too narrow an interpreta-
tion to avoid frustrating CERCLA’s goal of requiring
that companies responsible for the introduction of
hazardous waste into the environment pay for the
remediation.” Pet. App. 42a.

But it is not the role of the courts to second-guess
the framework Congress has established for funding
cleanups, or to expand the scope of CERCLA beyond
the statute’s plain language and structure. United
States v. Ron Pair Enter. Inc., 489 U.S. 235, 242
(1989) (The task of statutory interpretation “begins
where all such inquiries must begin: with the lan-
guage of the statute itself. In this case it is also where
the inquiry should end, for where, as here, the stat-
ute’s language is plain, ‘the sole function of the courts
is to enforce it according to its terms.’”) (citation
omitted); United States v. Davis, 261 F.3d 1, 53 (lst
Cir. 2001) (CERCLA’s “‘broad remedial purpose’”
cannot be construed inconsistently with the statute’s
plain language); see also Stevens Creek, 915 F.2d
at 1363 (notwithstanding the remedial purpose of

10

CERCLA, “we must reject a construction that the
statute on its face does not permit, and the legislative
history does not support.”).

As one commentator on CERCLA statutory
construction has observed:

It is well-accepted that the remedial purpose
canon has little utility when an expansive in-
terpretation would contradict the plain
meaning of the statute. Even those who dis-
agree with a textualist approach to statutory
construction acknowledge that there is a hi-
erarchy among interpretive principles, and
that the prevailing view is ‘that the statutory
text is the most authoritative interpretive
criterion.” Thus, when deciding whether to
apply the remedial purpose canon, the courts
have made it clear that a judge charged with
interpreting a statute must respect the pri-
macy of the text.

Blake A. Watson, Liberal Construction of CERCLA
Under the Remedial Purpose Canon: Have the Lower
Courts Taken a Good Thing Too Far?, 20 Harv. Envitl.
L. Rev. 199, 243-44 (1996) (footnotes omitted).

Moreover, the Ninth Circuit’s concern that ordi-
nary taxpayers will unfairly bear the burden of clean-
up costs is misplaced. See Pet. App. 26a. It is not
the taxpayers per se who fund clean-ups when
solvent PRPs cannot be located. Rather, Congress’s
1986 amendments to CERCLA create a Superfund
that funds clean-up activities. See 26 U.S.C. § 9507
(2006); 42 U.S.C. §§ 9604-05 (2006). The Superfund

11

is financed by a combination of appropriations, indus-
try taxes and judgments obtained in legal actions to
recover response costs. See 26 U.S.C. § 9507(b) (2006).
Accordingly, rather than doing violence to the statu-
tory text by stretching the limits of arranger liability
beyond their appropriate bounds, the proper ap-
proach is to presume that if a party is not a PRP
under CERCLA’s plain language, Congress intended
for the Superfund — including industry taxes — to
fund the clean-up.

As district courts around the country have previ-
ously observed, there is an irreconcilable and widening
circuit split concerning whether intentional conduct is
required for arranger liability under CERCLA. See Jn
re Voluntary Purchasing Groups, Inc., 2002 WL
31156535 at *6 (N.D. Tex. 2002) (unreported) (“The
Eighth Circuit in Aceto differs from the Seventh [in
Amcast] in holding that an arranger need not have an
intent to dispose of hazardous materials”); Mathews
v. Dow Chem. Co., 947 F. Supp. 1517, 1523 (D. Colo.
1996) (“As to the term ‘arranged for,’ ... several
courts in other circuits have grappled with this
important issue. Three leading cases regarding this
issue have each taken different approaches in inter-
preting ‘arranged for.’”) (citations omitted); Chatham
Steel Corp. v. Brown, 858 F.Supp. 1130, 1138-39
(N.D. Fla. 1994) (noting conflict between intent
requirement of the Seventh Circuit and the looser
Eleventh Circuit approach); see also Brose, supra, at
77 (“Modern courts have adopted three approaches
in applying arranger liability: (1) a strict liability

12

approach; (2) a specific intent approach; and (3) a
‘totality of the circumstances,’ case-by-case ap-
proach.”). The Ninth Circuit has only added to this
divergence of authority, placing it squarely at odds
with the Sixth and Seventh Circuits on this impor-
tant issue. This Court should grant the petition and
provide needed guidance to the lower courts by re-
solving this conflict.

II. ARRANGER LIABILITY UNDER CERCLA
REQUIRES THE DISPOSAL OF HAZ-
ARDOUS WASTE, NOT MERELY THE
SHIPMENT OF USEFUL PRODUCTS.

Before the Ninth Circuit’s holding below (Pet.
App. 45a-46a), no federal appeals court had ever held
that the mere shipment of a useful product to a
customer can give rise to arranger liability for the
shipper when that product leaks on the customer’s
property after delivery. By so holding, the Ninth
Circuit has contravened CERCLA’s definition of
“disposal,” and placed itself in conflict with several
other circuits that have held arranger liability does
not attach to the sale of a useful product.

CERCLA borrows its definition of disposal from
the Solid Waste Disposal Act (SWDA), 42 U.S.C.
§ 6901, et seq. (2006).° Freeman v. Glaxo Wellcome,

* The Resource Conservation and Recovery Act of 1976 (RCRA),

42 U.S.C. § 6901 et seq. (2006), amended the SWDA in 1976 and

the terms RCRA and SWDA may be used interchangeably.
(Continued on following page)

13

Inc., 189 F.3d 160, 164 (2d Cir. 1999) (“Congress
expressly incorporated into CERCLA the definition of
‘disposal’ from the Solid Waste Disposal Act.”). The
SWDA defines “disposal” exclusively in terms of the
disposal of waste. 42 U.S.C. § 6903(3) (defining “dis-
posal” as “the discharge, deposit, injection, dumping,
spilling, leaking, or placing of any solid waste or
hazardous waste into or on any land ... so that [it]
may enter the environment or be emitted into the air
or discharged into any waters, including ground
waters.”) (emphases added); Ian Erickson, Comment,
Reconciling the CERCLA Useful Product and Recy-
cling Defenses, 80 N.C. L. Rev. 605, 612 (2002) (“The
RCRA definition requires the disposal of a ‘waste,’ not
a ‘substance.’”).

As a result, numerous courts, including the Ninth
Circuit in the past, have held that CERCLA applies
only to the disposal of material that may be charac-
terized as “waste.” Freeman, 189 F.3d at 164 (“Be-
cause the definition of ‘disposal’ refers to ‘waste,’ only
transactions that involve ‘waste’ constitute arrange-
ments for disposal within the meaning of CERCLA.”);
Catellus Dev. Corp. v. United States, 34 F.3d 748, 750
(9th Cir. 1994) (“In Stevens Creek, we agreed with
other circuits that ‘disposal’ refers ‘only to an affirma-
tive act of discarding a substance as waste, and not to
the productive use of the substance.’”) (quoting

Courtaulds Aerospace, Inc. v. Huffman, 826 F. Supp. 345, 349 &
n.4 (E.D. Cal. 1993).

14

Stevens Creek, 915 F.2d at 1362); accord Cadillac
Fairview/Cal., Inc. v. United States, 41 F.3d 562, 565
(9th Cir. 1994).

Courts have also found the scope of arranger
liability is limited to the disposal of waste because the
words “disposal” and “treatment,” as used in the
SWDA, connote the act of discarding a substance.
Pneumo Abex Corp. v. High Point, Thomasville &
Denton R.R. Co., 142 F.3d 769, 774 (4th Cir. 1998)
(the SWDA’s “definition of ‘treatment’ presupposes
discard.... Therefore, ‘treatment ... of hazardous
substances’ as used in CERCLA refers to a party
arranging for the processing of discarded hazardous
substance or processing resulting in the discard of
hazardous substances.”) (emphasis added); Amcast, 2
F.3d at 751 (“The words ‘arranged with a transporter
for disposal or treatment’ appear to contemplate a
case in which a person or institution that wants to get
rid of its hazardous wastes hires a transportation
company to carry them to a disposal site.”) (emphasis
added); accord RSR Corp. v. Avanti Dev., Inc., 69
F. Supp. 2d 1119, 1126 (S.D. Ind. 1999).

Conversely, federal appeals courts have until now
consistently held that one who merely sells a useful
product does not arrange to discard waste and cannot
be liable as an arranger for “disposal” under section
9607(aX3). Freeman, 189 F.3d at 164 (“‘ilf 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 [will] not be imposed.’”) (quoting

15

Fla. Power, 893 F.2d at 1317); Cello-Foil, 100 F.3d at
1232 (“‘Liability only attaches to parties that have
“taken an affirmative act to dispose of a hazardous
substance... as opposed to convey a useful substance
for a useful purpose”’”), quoting AM Int'l, 982 F.2d at
999; Jason C. Kuhlman, Pneumo Abex Corp. v. High
Point, Thomasville & Denton R.R. Co., and CERCLA
“Arranger Liability,” 16 J. Nat. Resources & Envtl. L.
151, 159 (2002) (“the distinction between a sale of
valuable property and an arrangement for treatment
or disposal takes on great significance; a sale of a
valuable commodity by definition cannot be a discard-
ing of material.”).

Indeed, the Ninth Circuit has previously recog-
nized and applied this “useful product doctrine.”
Stevens Creek, 915 F.2d at 1362 (“[C]Jourts in other
circuits have construed ‘disposal’ for purposes of
section 107(a)(3) as referring only to an affirmative
act of discarding a substance as waste, and not to the
productive use of the substance. [W]e see no reason to
adopt a different definition in this case.”) (citations
omitted); see also Cal. Dept. of Toxic Substances
Control v. Payless Cleaners, 368 F.Supp. 2d 1069,
1077 (E.D. Cal. 2005) (a manufacturer cannot “be
held liable as a CERCLA arranger where it has done
nothing more than sell a useful chemical”) (citations
omitted); Courtaulds Aerospace, 826 F. Supp. at 354
(“the ‘sale of a useful product’ defense applies when
the sale is of a new product, manufactured specifi-
cally for the purpose of sale, or of a product that

16

remains useful for its normal purpose in its existing
state.”).

By its present holding, however, the Ninth Cir-
cuit has effectively broken with its own precedent and
with the holdings of the Second, Fourth, Sixth, and
Eleventh Circuits cited above. The Ninth Circuit
panel here held that the useful product doctrine only
applies when a substance is first used as intended.
Pet. App. 45a. Based on this assumption, the panel
concluded that the “useful product” doctrine has no
application where “the sale of a useful product neces-
sarily and immediately results in the leakage of
hazardous substances.” Jd.

The Ninth Circuit’s exceedingly narrow interpre-
tation of the useful product doctrine turns CERCLA
on its head. By imposing arranger liability on one
who merely manufactures and ships new, useful
products, the panel opinion exceeds CERCLA’s ex-
press limitation of liability under section 9607(a)(3) to
those who arrange to dispose of — i.e., to discard —
waste. To be sure, a product is not useful after a leak
has occurred but if, by such faulty logic, a useful
product can be so readily transformed into “waste,”
there are no useful products for CERCLA’s purposes
and the doctrine has no meaning.’ Arranger liability

’ The panel acknowledged as much by citing Zands uv.
Nelson, 779 F. Supp. 1254, 1262 (S.D. Cal. 1991) as support for
its interpretation. Pet. App. 45a-46a. The district court in Zands
addressed whether the leakage of gasoline from underground
storage tanks constituted the disposal of waste. The court found

(Continued on following page)

17

only arises after substances have been released,
thereby terminating their usefulness.

The Ninth Circuit’s narrow reading of section
9607(aX(3) vitiates the useful product doctrine and
imposes a sweeping expansion of CERCLA liability
that cannot be squared with the statute’s language
and structure. Therefore, this Court should grant the
petition to resolve the circuit split created by the
Ninth Circuit and to provide needed guidance con-
cerning the applicability of arranger liability under
CERCLA to shippers of useful products.

lil. THE PETITION SHOULD BE GRANTED
TO CLARIFY THAT OWNERSHIP OF
WASTE AT THE TIME OF DISPOSAL, AND
CONTROL OF THE DISPOSAL PROCESS,
ARE NECESSARY FOR ARRANGER LI-
ABILITY.

The Court should also grant the petition to
resolve inter- and intra-circuit conflicts concerning
the relevance of ownership and control to arranger
liability under section 9607(a)(3). As deeply divided
as the circuits are concerning all questions pertinent
to arranger status, nowhere is there more confusion
and less uniformity than on the issue of whether an
alleged arranger must own the hazardous substance

that it did, reasoning in circular fashion that “‘gasoline is no
longer a useful product after it leaks into, and contaminates, the
soil.’” Id.

18

at the time of disposal, and whether it must control
the disposal process.

Outside of the Ninth Circuit, the federal courts
are divided on this issue. In Aceto, the Eighth Circuit
held the defendant chemical manufacturers who
contracted with a pesticide formulator could be liable
as arrangers for the costs of cleaning up the formula-
tor’s property in part because the manufacturers
“actually owned the hazardous substances, as well as
the work in process.” (Aceto, 872 F.2d at 1382.) In so
holding, the Eighth Circuit cited its earlier holding in
United States v. Northeastern Pharmaceutical &
Chemical Co., 810 F.2d 726, 743-44 (8th Cir. 1986)
(NEPACCO), that liability may be imposed “on those
who had the authority to control the disposal, even
without ownership or possession.” Aceto, 872 F.2d at
1382.

By contrast, the Second Circuit in General Elec-
tric Co. v. Aamco Transmissions, Inc., 962 F.2d 281,
286 (2d Cir. 1992), rejected the notion that authority
to control the disposal process is sufficient, holding
“that it is the obligation to exercise control over
hazardous waste disposal, and not the mere ability or
opportunity to control the disposal of hazardous
substances that makes an entity an arranger under
CERCLA’s liability provision.” (Second emphasis
added.) There, the court held that oil companies had
not arranged for disposal of their service station
tenants’ waste motor oil because any control they
exercised over their tenants’ businesses was not

19

“directed toward either the generation of or the
disposal of waste oil.” Id. at 287-88.

The Sixth Circuit has taken yet another ap-
proach to the issue, rejecting control over the disposal
process as a relevant consideration in deciding who is
an arranger under CERCLA. In Cello-Foil, it ob-
served that “a party can be responsible for ‘arranging
for’ disposal, even when it has no control over the
process leading to the release of substances.” Cello-
Foil, 100 F.3d at 1232. Instead, as discussed above,
the Sixth Circuit found the key inquiry to be whether
“a party possessed the requisite intent to be an ar-
ranger.” Id. Thus, the federal appeals courts have
taken divergent approaches to the relevance of waste
ownership and control of the disposal process to
arranger liability under section 9607(a)(3).

The same lack of consistency prevails within the
Ninth Circuit. In Cadillac Fairview, the Ninth Circuit
held that rubber companies who returned contami-
nated styrene to the producer for redistillation coula
be liable as arrangers notwithstanding the fact they
did not own the styrene or control the redistillation
process. Cadillac Fairview, 41 F.3d at 565 (“[WJe have
extended liability under section 107(a\(3) to persons
who have sold and therefore no longer own the haz-
ardous substances, and to persons who have no
control over the process leading to release of the
substances.”) (citations omitted).

Eight years later, the Ninth Circuit executed an
apparent about-face in United States v. Shell Oil Co.,

20

294 F.3d 1045 (9th Cir. 2002). There, in the course of
ruling on counter-claims by oil companies that the
United States was partly liable as an arranger for the
costs of cleaning up the sites of World War II-era
aviation fuel refineries, the court stated: “We agree

. that control is a crucial element of the determina-
tion of whether a party is an arranger under
§ 9607(a\(3).” Id. at 1055 (emphasis added). Citing
the Eighth Circuit’s decision in NEPACCO, the Ninth
Circuit then concluded the United States lacked the
ownership and control necessary for imposing ar-
ranger liability. Jd. at 1057 (“In this case, the United
States neither exercised actual control, nor had the
direct ability to control, in the sense intended in
NEPACCO. In this case, the waste never belonged to
the United States... .”).

Notwithstanding its holding in Shell, the Ninth
Cireuit again reversed course in its panel decision
below. Responding to Shell’s argument that it neither
owned the product at the time of transfer to the
buyer’s storage tanks nor controlled the transfer
process that resulted in spills, the panel determined
that “ownership at the time of disposal is not an
informative consideration, and control is informative
only in light of additional considerations.” Pet. App.
49a.

Accordingly, the relevance of ownership and
control to the question of arranger liability is unset-
tled. The different federal circuits disagree and the
Ninth Circuit’s decisions are themselves difficult, if
not impossible, to reeoncile. Therefore, this Court

21

should grant the petition to decide whether owner-
ship of the substance and control of the disposal
process are necessary to the imposition of arranger
liability under CERCLA.

IV. WITHOUT REVIEW BY THIS COURT, THE
NINTH CIRCUIT’S DECISION WILL HAVE
SEVERE AND FAR-REACHING ECONOMIC
RAMIFICATIONS.

The negative economic consequences of the Ninth
Circuit’s holding are far-reaching. If everyone who
ships a useful, potentially hazardous substance can
be deemed a responsible party under CERCLA when
that substance later spills or leaks, the reach of
CERCLA liability will be nearly infinite. Suddenly,
every shipper will be rendered the de jure insurer of
the environmental purity of all of its customers’ far-
flang properties. The impact of such broad-based
liability will reverberate through our economy, in-
creasing the cost of doing business and directly or
indirectly affecting consumers, workers, manufactur-
ers, shippers and insurers alike.*

* As explained above, CERCLA’s language does not require
such an ill-advised result. See, eg., Ameast, 2 F.3d at 751 (“It
would be an extraordinary thing to make shuppers strictly liable
wnder the Superfund statute for the consequences of accidents to
common carners or other reputabie transportateon companies
that the shippers had hired in good faith to ship their prod-
ucts.”).

22

The Ninth Circuit, in rejecting the notion that
CERCLA creates a cause of action for the voluntary
removal of asbestos from commercial buildings, has
itself acknowledged such far-reaching adverse effects
from expanding CERCLA liability. Stevens Creek, 915
F.2d at 1365. In recognizing the “substantial and far-
reaching legal, financial and practical consequences”
of expanding the reach of CERCLA, the court favora-
bly cited the Fourth Circuit’s decision in First United
Methodist Church of Hyattsville v. U.S. Gypsum Co.,
882 F.2d 862, 869 (4th Cir. 1989), in which that court
observed of the same question:

To extend CERCLA’s strict liability scheme
to all past and present owners of buildings
containing asbestos as well as to all persons
who manufactured, transported, and in-
stalled asbestos products into buildings,
would be to shift literally billions of dollars of
removal cost liability based on nothing more
than an improvident interpretation of a stat-
ute that Congress never intended to apply in
this context. Certainly, if Congress had in-
tended for CERCLA to address the monu-
mental asbestos problem, it would have said
so more directly when it passed [the 1986
“Superfund” amendments to CERCLA|.

The same reasoning applies equally to the Ninth
Circuit’s ill-advised holding that shippers of useful
products can now be liable as “arrangers” for paying
the vast sums needed to clean up others’ hazardous
waste sites. The decision to shift potentially billions
of dollars in clean-up liability in this fashion rests on

23

nothing more than an “improvident interpretation” of
section 9607(a)(3).

If Congress had wished to extend CERCLA
“arranger” liability to the shipment of useful prod-
ucts, it certainly could have selected the appropriate
language to effectuate that result. It is not the func-
tion of the Ninth Circuit to make that policy determi-
nation. Therefore, this Court should uphold the
primacy of CERCLA’s text and forestall the negative
ramifications of the Ninth Circuit’s decision by de-
termining the appropriate scope of arranger liability
under CERCLA.

+

CONCLUSION

For the foregoing reasons, the petition for certio-
rari should be granted.

Respectfully submitted,

Horvitz & LEVY LLP
MAry-CHRISTINE SUNGAILA
JEREMY B. ROSEN
BRADLEY S. PAULEY*

*Counsel of Record

15760 Ventura Boulevard,
18th Floor

Encino, California 91436-3000

(818) 995-0800

July 25, 2008 Attorneys for Amicus Curiae
International Association
of Defense Counsel

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385015_0098%3A08. Public record. Not legal advice.