Petition for Writ of Certiorari — Neville Chemical Co. v. California ex rel. California Department of Toxic Substances Control
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No. 04 a 8 = JUN 2 y 2004
« IN THE
Supreme Court of the United States
NEVILLE CHEMICAL COMPANY,
Petitioner,
V.
STATE OF CALIFORNIA, on behalf of the California
Department of Toxic Substances Control,
Respondent.
On PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES CouRT OF APPEALS
FOR THE NINTH CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
THOMAS H. CLarKE, JR.
Counsel of Record
TERRY ANASTASSIOU
Ropers MAJESKI KOHN
& BENTLEY
333 Market Street
Suite 3150
San Francisco, CA 94105
(415) 543-4800
Counsel for Petitioner
187183 ce}
COUNSEL PRESS
(800) 274-3321 * (800) 359-6859
i
QUESTION PRESENTED
In the decision of which Petitioner Neville Chemical
seeks review, the Ninth Circuit Court of Appeals ruled that
the six-year statute of limitations for a CERCLA remedial
action runs from the date a government entity grants “final”
approval of a remediation plan. In doing so, the Court of
Appeals ignored the language of the statute and authority
from other circuits, and granted government entities
unfettered power to choose when, or whether, the statute
begins running by choosing when, or whether, to issue that
final approval. Petitioner Neville Chemical therefore requests
that this Court issue a writ of certiorari to address the
following question:
Whether the six-year statute of limitations for CERCLA
remedial actions appearing in 42 U.S.C. § 9613(g)(2) runs
from the date on which construction of remedial facilities
begins, or the date on which the responsible government
entity grants approval of a final remedial plan.
il
STATEMENT PURSUANT TO RULE 29.6
Neville Chemical Company was incorporated in the State
of Pennsylvania in 1925. The stock of Neville Chemical
Company is privately held and not offered for public sale.
Neville Chemical Company has two foreign affiliates,
Neville Chemical Europe B.V. of Uithoorn, Holland, and
ND Dispersions LLC, a joint venture with Les Derives
Resiniques et Terpeniques of Landes, France.
lil
TABLE OF CONTENTS
Page
SI UII vk cc ck kad wan veneessceasnss 1
Statement Pursuant to Rule 29.6 ............... ll
ee ee ee ill
Taple of Cited Authorities .............0..0005. \
er Vil
ee l
emtemment GF JUTISGICHION ... 1... cece l
I l
eee ree ere fee eee l
A. Neville Chemical Complies With DTSC
Instructions And Begins Remediation At The
santa Fe Springs Site ...............55. 2
B. The District Court’s Denial Of Neville
Chemicals’ Motion For Summary Judgment
And Entry Of Judgment In Favor Of The
eee i ak k eevee tea eK awe eee Ks 5
C. The Ninth Circuit Court Of Appeals’
PUUMNOG EPOCIGION: 2... eee e ees 7
iv
Contents
Reasons for Granting the Petition ..............
]. The
Court Of Appeals’ Decision Warrants
Review By Writ Of Certiorari............
A.
Conclusion
The Court Of Appeals’ Decision Cannot
be Reconciled With The Language Of
The Statute Or Decisions Of Other
ee ree rnd int See
1. On Its Face, The Statute Of
Limitations Bars The DTSC’s
ee er ee
2. Prior Decisional Authority Supports
Applying The Statute Of Limitations
To Bar The DTSC’'s Suit ........
The Ninth Circuit Decision Impermissibly
Gives The Government Control Over
When, Or Even Whether, The Statute Of
Limitations Will Run ...............
10
_
16
TABLE OF CITED AUTHORITIES
Page
Cases: ”
California v. Hyampom Lumber Co., 903 F. Supp.
ef AT ® A, reer rc. 12, 13, 14
Gherarty & Miller, Inc. v. Conoco, Inc., 234 F.3d
Wit Ce Ue OE kha nde irene eee 10
Louisiana v. Braselman Corp., 78 F. Supp. 2d 543
ee eee ae nr 10, 14
Nyhus v. Travel Management Corp., 466 F.2d 440
pA. Go Wee sas bie ee ee 15
Tahoe-Sierra Preservation Council, Inc. v. Tahoe
Regional Planning, 228 F.3d 998 (2000) ...... 15
United States v. Atlantic Richfield, 147 F. Supp. 2d
GEG CBO. DD. FOR, TOO) os cas ovine aeaeenees 10, 14
United States v. Cocoa Berkau, Inc., 990 F.2d 610
CPO: CE. ESS o's vals wietanae rece reee eee 15
United States v. Navistar Int’l Transp. Corp.,
152 F.3d 702 (7th Cir. 1998) oo nn cece wsces passim
United States v. Therm-All, Inc., 352 F.3d 924
CRC, BOO? 6s'6a ss et easakcse eee 15
United States v. Vanornum, 912 F.2d 1023 (8th Cir.
i, a ae eee eran errs So er mes 15
VI
Cited Authorities
Page
Statutes:
yy) SOR Some Bh” |) wero rrer ee. ye ts re l
42 U.S.C. § SGO12S). oii ccc nvscwssnanussees 13
QZ USL. 6 S607 oc cian ce esae ne eee 1,9
VQUSEC. CR... ee i, 1, 8, 10
42 U.S.C. § 9613(@K2MB) .......cecseeseceees 12
Vil
TABLE OFAPPENDICES
Page
Appendix A -—— Opinion Of The United States Court
Of Appeals For The Ninth Circuit In State Of
California v. Nelville Chemical Company
(Ninth Circuit Docket No. 02-56506 Filed
a S| Oe rer re re la
Appendix B — Revised Final Judgment Of The
United States District Court For The Central
District Of California Filed July 31,2002 ..... 27a
Appendix C — Order Granting Plaintiff’s Motion
For Judgment On The Pleadings Of The United
States District Court For The Central District Of
California, Western Division Dated July 10, 2002
ey earners 29a
Appendix D — Minute Order Of The United States
District Court For The Central District Of
California Issued June 19, 2002 .............. 36a
Appendix E — Order Granting Plaintiff’s Motion
For Summary Judgment Or In The Alternative,
Partial Summary Judgment Of The United States
District Court For The Central District Of
California, Western Division Filed May 10,
Pe reper ey ey eer nen Grae ep an 4la
Vill
Appendices
Appendix F — Order Granting In Part Plaintiff's
Motion For Summary Judgment Or In The
Alternative, Partial Summary Judgment Of The
United States District Court For The Central
District Of California, Western Division
oo 8 a: + ee re
Appendix G — Tentative Minute Order Of The
United States District Court For The Central
District Of California Issued March 11, 2002
CO. 8 SDE St Fe eseseese COR SF RDO 64D CEE TOSS SO 4 6 CO B'S
Appendix H — Minute Order Of The United States
District Court For The Central District Of
California Issued December 18, 2001 .........
Appendix I — Order Of The United States Court Of
Appeals For The Ninth Circuit Denying Petition
For Rehearing And Rehearing En Bant Filed
ND Bes Ne AA cK bee ke ede we os ees
Appendix J — Relevant Statute 42 USCS § 9601
SED hs thas coat Sah eee ee ee
ie ee ee
Appendix L — Relevant Statute 42 USCS § 9613
| pr rer oe rep rore ert ety ees
Page
56a
93a
123a
140a
]
Neville Chemical Company respectfully petitions for a
writ of certiorari to review the judgment of the United States
Court of Appeals for the Ninth Circuit in this case.
OPINIONS BELOW
The opinion of the Ninth Circuit Court of Appeals
(Appendix A, pp. la-26a) is reported at 358 F.3d 661.
The decisions of the District Court (Central District of
California) are unreported.
STATE MENT OF JURISDICTION
The Court of Appeals entered its judgment on February
10, 2004. The Court of Appeals denied Neville Chemical’s
petition for rehearing on March 31, 2004. (Appendix I,
pp. 136a-137a) The jurisdiction of this Court is invoked
under 28 U.S.C. § 1254(1).
STATUTES INVOLVED
Section 107 of the Comprehensive Environmental
Response, Compensation and Liability Act provides that suit
for costs incurred in a “remedial action” must be commenced
“within 6 years after initiation of physical on-site construction
of the remedial action... .” (42 U.S.C. § 9613(g)(2).)
STATEMENT OF THE CASE
The California Department of Toxic Substances Control
(“The DTSC”) filed suit against Petitioner Neville Chemical
Company on September 21, 2000 in United States District
Court for the Central District of California. The DTSC sued
pursuant to 42 U.S.C. § 9607 to recover response costs for
. ae — ae
’
2
remediation of groundwater contamination at a site in Santa
Fee Springs, California. The District Court denied Neville
Chemical’s motion for summary judgment brought, in part,
based on the DTSC’s failure to file suit within six years of
Neville Chemical’s commencement of construction of
remedial facilities, granting the DTSC’s cross-motion for
summary judgment and entering judgment in the DTSC’s
favor. The Court of Appeals affirmed, ruling that, regardless
of when Neville Chemical began construction of remedial
facilities, the statute of limitations could not begin running
unless and until the DTSC formally approved the final
remedial plan.
A. Neville Chemical Complies With DTSC Instructions
And Begins Remediation At The Santa Fe Springs
Site
From 1952 to 1987, Neville Chemical manufactured
chemicals at a site in Santa Fe Springs, California. (App. 2a.)
On December 10, 1986, the DTSC issued a Remedial Action
Order under California’s Health & Safety Code. (App. 2a-3a.)
The order required Neville Chemical to perform a remedial
investigation and feasibility study and prepare a remedial action
proposal. (/d.) Once the DTSC approved Neville Chemical’s
proposed remedial action, Neville was required to execute the
plan until the clean-up goals were achieved. (/d.)
Neville Chemical submitted the results of its
investigation in August 1991 and, on October 25, 1991, the
DTSC ordered Neville Chemical to prepare its “Remedial
Action Plan” for clean-up of the Santa Fe Springs site:
In order te expedite planning for groundwater
remediation at [Neville Chemical], the Department
GB nee x Beton
ee ee aca a
is hereby directing [Neville Chemical] to prepare
and submit an RA proposal which includes, at a
minimum the following items:
The specific objectives of the extraction/
treatment system.
Proposed locations, dimensions, and
construction details for groundwater
extraction wells.
Technical description of selected
groundwater treatment technologies
including a general discussion of
selection criteria, an evaluation of cost
effectiveness and, if necessary, a
focused feasibility study...
The order specifically directed that Neville Chemical’s
proposal “be consistent with a final cleanup strategy for
groundwater as it may ultimately become the final remedy
presented in the Remedial Action Plan. The DTSC also
instructed Neville Chemical to begin remediation as soon as
possible:
The most recent schedule for cleanup of the
[Neville Chemical] site estimates that the draft
Remedial Action Plan (RAP) will not be
completed until January 1993. It is not
unreasonable to assume that an additional
six months to a year will pass before the final
[Remedial Action Plan] is approved and a
remedial design for groundwater is ready for
implementation. Proceeding immediately with
4
plans to extract and treat groundwater should
substantially expedite remediation of groundwater
contamination and thereby limit damage to
potential groundwater resources. This should
result in a more timely and cost effective cleanup.
Thus, as of October 1991, both the DTSC and Neville
Chemical were working on the assumption that investigation
was essentially complete, that the plan Neville Chemical
would submit in January 1993 would be for remedial action
rather than “removal” (as those terms are used in CERCLA),
and that extraction and treatment of the groundwater should
commence as soon as possible, regardless of when a final
remediation action plan would be approved.
Neville Chemical submitted its proposal for remediation
of groundwater contamination in a report dated September
1, 1992. (App. 4a.) The proposal was based on three
extraction wells by which groundwater would be brought to
the surface, treated for hazardous waste, and discharged into
the sanitary sewer system. (App. 126a.) As directed by the
DTSC, the proposal set forth the design and plan for
implementation of an extraction well network and water
treatment system that would serve as the final groundwater
remedy for the Santa Fe Springs site. (/d.)
The DTSC approved Neville’s September 1, 1991
proposal in January 1993. (App. 4a.) With the DTSC’s
approval, Neville Chemical’s contractors installed
groundwater extraction wells on April 20, 22 and 26, 1994.
(App. 4a-Sa.)
Following the DTSC’s approval of Neville Chemical’s
proposal to begin remediation at the Santa Fe Springs site
;
4
5
(by construction of the extraction wells), the DTSC
continued touching the regulatory and administrative bases
required before approval of a “final” remedial action plan.
(App. 4a-6a.) It elicited a feasibility study from Neville which
it received and approved in December 1994. (/d.) It reviewed
the alternatives which Neville examined in the feasibility
study, and elicited and examined yet another analysis of
possible remedies. (/d.) On March 16, 1995, the DTSC
approved Neville Chemical’s draft remedial action plan and
circulated it for public comment. App. 6a.) (/d.)
The draft remedial action plan was composed in principal
part of extraction and treatment of groundwater by the wells
and other facilities installed beginning in April 1994.
The DTSC finally approved the final remedial action plan
on May 8, 1995. By then, the extraction wells had been in
place for thirteen months.
The long regulatory and administrative process and the
final remedial action plan are remarkable for one consistent
fact: except for “do nothing” solutions such as use restrictions
or in situ treatment, every single alternative considered by
the DTSC and Neville was based on the extraction wells that
Neville Chemical installed in April 1994.
B. The District Court’s Denial Of Neville Chemicals’
Motion For Summary Judgment And Entry Of
Judgment In Favor Of The DTSC
On September 21, 2000, the DTSC filed the instant
lawsuit against Neville Chemical (State of California v.
Neville Chemical Company, U.S.D.C., C.D. Cal., Docket
No. 00-CV-10205 GHK), seeking reimbursement of costs the
DTSC claimed to have incurred in “supervising” the
6
contamination that it had directed Neville Chemical to
investigate and remediate, and which Neville Chemical had
in fact investigated and was in fact remediating. The DTSC
complaint named only Neville Chemical as a defendant, and
alleged two causes of action under CERCLA, one for
reimbursement and one for declaratory relief regarding
Neville’s purported duty of reimbursement. (/d.)
On October 22, 2001, Neville Chemical filed a motion
for summary judgment based on the DTSC’s failure to file
suit within six years of Neville Chemical’s initiation of on-
site construction of remedial facilities on the Santa Fe Springs
property. The District Court denied Neville Chemical’s
motion on December 18, 2001:
[P]laintiff has presented admissible evidence
that diverse solutions to the groundwater
contamination problem were still being discussed
in [Neville’s] draft [feasibility study] in December
1994, and that the parties were still considering
changes in the groundwater plan up until the
[remedial action plan] was finalized in May 1995.
Plaintiff has also offered evidence that the DTSC,
at least as late as its October 6, 1994 letter to
[Neville Chemical], was insisting that further
sampling and monitoring was necessary before the
wells proposed . . . could be considered the final
remedial soluticn for groundwater at the site.
Therefore, viewing the evidence in the light most
favorable to plaintiff, the nonmoving party, the
Court finds that the final remedial design was not
in place, and the statute of limitations had not yet
begun to accrue, on September 21, 1994
[i.e. six years before the complaint was filed].
(App. 134a-135a, footnote omitted.)
7
The District Court thereafter granted the DTSC’s motions
for partial summary judgment and judgment on the pleadings,
ultimately entering judgment for the DTSC on July 31, 2002.
C. The Ninth Circuit Court Of Appeals’ Published
Decision
Neville Chemical appealed the District Court’s decision
to the Ninth Circuit Court of Appeals. On February 10, 2004,
the Court of Appeals issued a published decision affirming
the District Court judgment, holding that Neville Chemical’s
construction of the remedial facilities in May 1994 did not
commence the statute of limitations running because the
DTSC had not yet issued a “final” approval of the remedial
plan. (App. 11la-14a.)
[W]e conclude that the ‘initiation of physical on-
site construction of the remedial action’ can only
occur after the final remedial action plan is
adopted, and that, in this case, the statute of
limitations, therefore, could not have begun to run
until the final remedial action was approved on
May 8, 1995. (App. 19a-20a.)
The Court of Appeals denied rehearing on March 31,
2004.
re
8
REASONS FOR GRANTING THE PETITION
I.
THE COURT OF APPEALS’ DECISION WARRANTS
REVIEW BY WRIT OF CERTIORARI
The Court should exercise its authority to review the
Court of Appeals’ published decision because the decision
conflicts both with the rulings of Courts in other Circuits
and with the plain language of the statute of limitations.
The rule embraced by the Court of Appeals also grants
government entities unlimited discretion as to when, or even
whether, the statute of limitations begins running, in
derogation both of a settled principle of law and the
legislative policy underlying the statute of limitations itself.
A. The Court Of Appeals’ Decision Cannot be
Reconciled With The Language Of The Statute Or
Decisions Of Other Courts
1. On Its Face, The Statute Of Limitations Bars The
DTSC’s Lawsuit
The Ninth Circuit’s decision cannot be reconciled with
the plain language of the statute because its focuses on an
event on which the statute is mute (“‘final” approval of the
remediation plan) and renders irrelevant the event on which
the statute speaks (construction of remedial facilities).
The CERCLA statute of limitations for a remedial action
states that it begins running when construction begins on
remedial facilities. (42 U.S.C. § 9613(g)(2).) The Court of
Appeals published a decision that essentially states that the
date of construction is irrelevant. (App. 11la-14a.) Instead,
9
the Court of Appeals ruled, the relevant date is whenever the
government entity (in this case, the California DTSC) grants
“final approval” of the remedial plan.
As the Court of Appeals’ decision notes, the facts relevant
to apply the statute of limitations are not at issue. (App. 7a.)
The DTSC ordered Neville Chemical to prepare a remedial
plan for the Santa Fe Springs site “consistent with a final
cleanup strategy”; in September 1992, Neville Chemical
proposed a plan which consisted, in principal part, of three
extraction wells and a treatment facility; in January 1993,
the DTSC ordered Neville Chemical to begin construction
of the three wells and treatment facility proposed in Neville
Chemical’s draft remedial plan pending final approval;
Neville Chemical began this construction by installing the
wells in April 1994; the DTSC issued a “final” approval on
May 8, 1995 of a remedial plan that consisted, in principal
part, of the same three extraction wells and treatment facility
whose construction began in April 1994; and the DTSC filed
suit on September 21, 2000.
On its face, the statute of limitations would appear to
bar the DTSC’s action. The DTSC’s suit was an action for
recovery of remedial costs based entirely on 42 U.S.C.
§ 9607. CERCLA prescribes a six-year statute of limitations
for remedial actions, stating that the six-year period begins
to run when construction of remedial facilities begins:
Actions for recovery of costs
An initial action for the recovery of costs
referred to in section 9607 of the title must be
commenced...
10
(B) for a remedial action, within 6 years after
initiation of physical on-site construction of the
remedial action, except that, if the remedial action
is initiated within 3 years after the completion of
the removal action, costs incurred in the removal
action may be recovered in the cost recovery
action brought under this subparagraph ...
(42 U.S.C. § 9613(g)(2).)
Neville Chemical performed the first construction of the
remedial facilities in April 1994, when it installed the three
extraction wells. The DTSC did not file suit until September
2000. Application of the six-year statute of limitations should
have been clear.
2. Prior Decisional Authority Supports Applying The
Statute Of Limitations To Bar The DTSC’s Suit
In addition to the plain language of the statute, the
Ninth Circuit’s decision is inconsistent with rulings from
courts in other circuits. Indeed, prior decisional authority has
not hesitated to follow the plain language of the statute and
reject “bright line” rules dating the statute from “final”
approval. (United States v. Navistar Int'l Transp. Corp.,
152 F.3d 702, 712 (7th Cir. 1998); see also United States v.
Atlantic Richfield, 147 F. Supp. 2d 614, 620 (So. D. Tex.
2001); Louisiana v. Braselman Corp., 78 F. Supp. 2d 543,
548 (E.D. La. 1996); cf’ Gherarty & Miller, Inc. v. Conoco,
Inc., 234 F.3d 917, 926 (Sth Cir. 2000).)
In Navistar, the United States sued a property owner to
recover the costs of responding to the presence of hazardous
waste in a landfill on its property. (Navistar, supra, 152 F.3d
at 704.) The remedial plan called, in part, for the placement
11
of a clay “cap” over much of the landfill. (Jd. at 705.)
The U.S. filed its costs recovery suit six years Jess one day
after the remedial plan was approved in writing, but six years
plus one day after the property owner began placing clay on
the property. (/d.)
The District Court denied the defendant’s motion for
summary judgment, but the Seventh Circuit reversed. It noted
that the United States Supreme Court has instructed lower
courts not to enforce statutes of limitations “in a grudging,
hostile fashion .. .” (/d. at 707.) The Seventh Circuit went
on to acknowledge the settled principle that statutes of
limitations are enacted for a reason, and concluded by
reversing the denial of summary judgment, ruling as a matter
of law that the commencement of the remedial activity one
day more than six years before suit was filed barred the
government’s recovery. (/d. at 711, et seq.)
The Ninth Circuit’s decision cannot be reconciled with
Navistar. In Navistar, the Seventh Circuit rejected use of the
“final” approval date to start the statute of limitations
running. In this action, the Ninth Circuit’s published decision
embraces using the “final” approval, essentially rendering
the statute’s reference to construction meaningless.
If anything, the facts of this case are more compelling than
in Navistar, where it turned out that the remedy on which
the property owner embarked required substantial revision
and reconstruction. (/d. at 705-706.) By contrast, in this case,
the three extraction wells that Neville Chemical installed in
April 1994 formed the heart of the remedial plan ultimately
approved by the DTSC.
12
Ironically, the Seventh Circuit’s decision in Navistar
decision followed a 1995 ruling from a California District
Court which rejected a “bright-line” rule that the date on
which “final” approval of a remedial plan issued was the
date on which the statute of limitations begins to run.
(California v. Hyvampom Lumber Co., 903 F. Supp. 1389,
1392-1393 (E.D. Cal. 1995.) In Hyampom Lumber, the DTSC
filed suit to recover costs from property owners which the
DTSC claimed to have incurred in responding to
contamination on the owner’s property. (/d. at 1390.) The
DTSC issued a draft remedial action plan in June 1988 that
required the property owners to excavate and remove
contaminated soil. (/d.) Beginning on September 15, 1988,
a subcontractor installed a lumber pole and necessary
hardware to run power and water onto the site. (/d. at 1391.)
When the DTSC filed suit to recover its response costs,
the defendants moved for summary judgment, arguing that
construction of facilities necessary for the remedial action
(a power pole and some wire and pipes) had begun the six-
year statute of limitations running. (/d. at 1391.) Although
the power lines and water pipes had been installed in
September 1988, the DTSC approved the remedial action
plan in October 1988, with on-site excavation beginning on
October 24, 1988. The DTSC did not file suit to recover its
costs in the remedial action until September 30, 1994. (/d.)
The District Court began its analysis by quoting the
statute of limitations, which states that it begins running with
“initiation of physical on-site construction of the remedial
action...” (42 U.S.C. § 9613(g)(2)(B).) The Court noted
that this language actually contained four elements:
1) the construction at issue must be “physical”; 2) it must
13
have occurred “on-site”; 3) it must be part of the
“construction of remedial action”; and 4) it must constitute
the “initiation” of the remedial action. (Hyampom Lumber,
supra, 903 F. Supp. 1389.) The Court found that the first
two elements had surely been satisfied. Installation of the
pole and some wires and pipes had surely been “physical”
and “on-site.” (/d.)
The Court stated that whether this was “construction of
the remedial action,” was a more difficult question. The Court
stated that this third element actually had two of its own
sub-elements: the activity must be “remedial” and part of
the “construction of the remedial action.” The Court
concluded that the activity in question — installing the pole,
some wire and pipes — satisfied this element because it was
“consistent with the permanent remedy.” (/d.)
Significantly, in analyzing whether the construction at
issue started the statute of limitations running, the Court in
Hyampom rejected the notion that the absence of a final
remediation plan meant that the construction could not be
“initiation” of that plan . (/d. at 1392-1393.) To the contrary,
the Court stated, any such rule “would make the lengthy
definition of “remedy” and “remedial action” appearing in
[42 U.S.C.] § 9601(24) meaningless — the terms would simply
be defined as all response activities which occur after final
approval of the permanent plan.” (/d., see App. 138a-139a.)
The Court concluded that the statute of limitations began
running when the pole and some wire and pipes were installed
beginning on September 15, 1988. (/d. at 1394.) Thus, the
State’s filing of its contribution suit on September 30, 1994
was two weeks late. (/d.)
14
As with Navistar, this case presents an even more
compelling case for enforcing the statute of limitations than
Hyampom Lumber. In Hyampom, the initial construction was
hardly unique to remedial action; it essentially consisted of
running power to the job site. (/d. at 1391.) By contrast, the
three extraction wells installed by Neville Chemical are
unique to remediation of groundwater treatment.
In addition to the Seventh Circuit (the Navistar decision),
District Courts in the Fifth Circuit also followed the
Hyampom Lumber decision and rejected use of the “final”
approval to begin the statute of limitations running.
(See United States v. Atlantic Richfield, supra, 147 F. Supp.
2d 614, 620 (So. D. Tex. 2001); Louisiana v. Braselman
Corp., supra, 78 F. Supp. 2d 543, 548 (E.D. La. 1996).)
The Ninth Circuit’s decision dates the statute of
limitations from an event — final approval of the remedial
plan — which the statute of limitations never mentions. In
- doing so, the decision ignores CERCLA’s statutory focus on
initiation of construction and conflicts with decisions of other
courts. Neville Chemical respectfully submits that these
conflicts merit this Court’s intervention through the
extraordinary writ of certiorari.
B. The Ninth Circuit Decision Impermissibly Gives The
Government Control Over When, Or Even Whether,
The Statute Of Limitations Will Run
In addition to the conflict with other courts, the
Ninth Circuit decision merits this Court’s review because it
gives government entities unfettered discretion over when,
or even whether, the CERCLA statute of limitations begins
to run. The Ninth Circuit decision states that, unless and until
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a “final” approval of the remedial plan issues, the statute of
limitations does not begin running. It follows that a government
entity such as California’s DTSC can delay or even prevent
commencement of the statute of limitations by the simple
expedient of declining to issue final approval of a remedial plan,
notwithstanding that the remedial activities have long been under
way.
Federal Courts do not approve endowing any parties, much
less state agencies, with unlimited discretion regarding when
or whether a statute of limitations operates. (United States v.
Cocoa Berkau, Inc., 990 F.2d 610, 614 (Fed. Cir. 1993) [court
cannot interpret the accrual of a right of action such that it
“permits a single party to postpone unilaterally and indefinitely
the running of the statute of limitations.”]; see also United States
v. Therm-All, Inc., 352 F.3d 924 (Sth Cir. 2003); Tahoe-Sierra
Preservation Council, Inc. v. Tahoe Regional Planning, 228 F.3d
998, 1001 and n.2 (Kosinski, J., dissenting).} To the contrary,
Federal Courts have implicitly recognized the impropriety of
permitting a government entity to delay the running of a statute
of limitations indefinitely. (United States v. Vanornum, 912
F.2d 1023, 1027 n.5 (8th Cir. 1990), citing Nyhus v. Travel
Management Corp., 466 F.2d 440, 453 (D.C. Cir. 1972).)
The principle that the government is not entitled to delay
statutes of limitations forever also accords with the legislative
purpose underlying the CERCLA statute of limitations itself:
By implementing the [CERCLA] statute of
limitations, [Congress] expressed a determination
that, in order to achieve timely clean-up of affected
sites and to ensure replenishment of the [Superfund],
cost recovery actions must commence in a timely
fashion. Therefore, although we shall construe
16
ambiguities in the statute in favor of the government
in an effort to avoid frustrating the beneficial
purposes of CERCLA, we must recognize that
Congress has determined that that those beneficial
purposes are serviced by the timely filing of recovery
actions.” (Navistar, supra, 152 F.3d at 707-708,
emphasis added, footnotes omitted.)
The Ninth Circuit decision’s embrace of a “bright line” rule
running the statute of limitations from issuance of a “final”
approval permits a government entity to determine when,
or whether, the statute runs by choosing when, or wither, to
issue final approval of the remediation plan. The decision is
therefore in derogation, not merely of a settled principle of
Federal law, but of the legislative purpose underlying the statute
the decision applied. Review of the decision is an appropriate
use of this Court’s powers.
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted,
THomas H. CLarKE, JR.
Counsel of Record
TERRY ANASTASSIOU
Ropers MAJESKI KOHN
& BENTLEY
333 Market Street
Suite 3150
San Francisco, CA 94105
(415) 543-4800
Counsel for Petitioner
ae SSS
;
eS
a.
APPENDIX
la
APPENDIX A — OPINION OF THE UNITED STATES
COURT OF APPEALS FOR THE NINTH CIRCUIT IN
: STATE OF CALIFORNIA vy. NELVILLE CHEMICAL
: COMPANY (NINTH CIRCUIT DOCKET NO. 02-56506
a FILED FEBRUARY 10, 2004)
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 02-56506
D.C. No.
CV-00-10205-CAS
habia
STATE OF CALIFORNIA, On behalf of the California
Department of Toxic Substances Control,
Plaintiff-Appellee,
V.
NEVILLE CHEMICAL COMPANY, a Corporation,
Defendant-Appellant.
Chae AT AION an AL OPM A NRE ay Se Ni ca
Appeal from the United States District Court for the
Central District of California
Christina A. Snyder, District Judge, Presiding
Argued and Submitted
November 3, 2003—Pasadena, California
Filed February 10, 2004
Before: Harry Pregerson, Ferdinand F. Fernandez, and
Marsha S. Berzon, Circuit Judges.
Before Harry Pregerson, Ferdinand F. Fernandez, and
Marsha S. Berzon, Circuit Judges.
2a
Appendix A
OPINION
BERZON, Circuit Judge:
The issue before us presents a question of statutory
interpretation: Under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), when
does the limitations period for suing to collect remedial action
costs from a party responsible for hazardous substances
begin? One would expect a fairly straightforward answer to
that question in the statute. Potential plaintiffs need to know
when to file suit, and potential defendants would surely prefer
clear notice as to when their legal liability, if any, lapses.
True, in the “maze”-like structure and “baffling language”
of CERCLA, clarity is rare. Carson Harbor Vill. Ltd. v.
Unocal Corp., 270 F.3d 863, 880, 883 (9th Cir.2001)
(en banc). The provision we grapple with today appears at
first blush to be no exception. But as one works one’s way
through the statute as a whole, a fairly definite answer
emerges. As will appear, we conclude that the limitations
period for bringing an initial suit for recovery of remedial
action costs under CERCLA cannot accrue until after the final
adoption of the remedial action plan required by the statute.
FACTUAL BACKGROUND
For 35 years, Neville Chemical Company (Neville)
manufactured at its industrial facility in Santa Fe Springs,
California, various chemical compounds for use in
insecticides, solvents, metal working lubricants, and flame
retardants. These activities contaminated the groundwater and
soil at the facility. In 1986, the California Department of
3a
Appendix A
Toxic Substances Control’ (the Department) issued a
Remedial Action Order, directing Neville to (1) begin the
process of cleaning the site; (2) conduct a remedial
investigation and feasibility study; (3) submit a draft remedial
action plan (RAP); and, once the draft RAP was finalized,
(4) implement the plan.
The Department sent Neville a letter on September 29,
1989, informing Neville of its obligation to pay an “activity
fee” to the Department. The letter explained that the activity
fee—$46,636.38—was “to partially cover the Department’s
cost of overseeing [Neville’s] actions to characterize and
satisfactorily remediate this site.” At that time, the
Department had a formal policy of “only collect[ing] direct
program expenditures (generally laboratory or contract
expenditures) beyond activity fees in cases where the
responsible parties are being cooperative.” In 1992, the
Department rescinded this policy in favor of pursuing the
full cost recovery of overseeing a clean-up, regardless of
whether the responsible party was recalcitrant or cooperative.
In August 1991, Neville presented the Department with
preliminary findings from the Remedial Investigation.
In October 1991, the Department directed Neville to prepare
a Groundwater Removal Action Proposal (the Proposal),
in which Neville was to propose an expedited response to
the contamination. The Department stated that the Proposal
“should be consistent with a final cleanup strategy for
1. The Department of Toxic Substances Control was a division
of the California Department of Health Services until it became a
separate department in 1991. We will refer to this entity simply as
“the Department” throughout this opinion.
4a
Appendix A
groundwater as it may ultimately become the final remedy
presented in the Remedial Action Plan.” Neville submitted
its Proposal on September 1, 1992. It included “three major
components: an extraction system, a temporary on-site
treatment system, and an effluent disposal system.”
The Department reviewed the Proposal and, in January
1993, directed Neville to implement the extraction and
treatment system. In a letter to Neville, the Department stated:
“The proposed system will potentially become part of the
final remedial alternative for the site,” and “[t]he ground
water extraction and treatment system is envisioned as part
of the final remedial alternative.... [H]owever, the
Department may order the discontinuation of its use in the
event it is not effective or if it enhances the migration of
contaminants from the Site.”
Neville submitted a Feasibility Study Technical
Memorandum in August 1993, listing alternative possible
remedies. In response to this memorandum, the Department
stated that it:
has not gathered sufficient information and public
comment to require any of the alternatives to be
implemented as of yet. Part of this remediation
process requires that all feasible alternatives be
scrutinized carefully and thoroughly prior to
actual selection of the remedial alternative.
The Feasibility Study is the tool that allows the
Department to weigh the technical and substantial
issues for all possible alternatives in order to make
a sound and fair decision in protecting the public
health and the environment.
Sa
Appendix A
Additionally, the letter stated:
The department reviewed and approved of the
[Groundwater] Removal Action as an
interim measure to prevent further migration and
to protect the public health and the environment. -
The [Groundwater] Removal Action is not a
Department-approved final Remedial Action,
and cannot be construed to be such. The
- [Groundwater] Removal Action, may be included
as part of the final Remedial Action depending
on the results and conclusions of the Health Risk
Assessment and the Remedial Action itself, which
has yet to be prepared. Therefore, whether the
[Groundwater] Removal Action constitutes the
groundwater portion of the final Remedial Action
cannot be determined at this point.
Neville began to excavate three extraction wells at the
site in April 1994. A month later, Neville submitted a Draft
Feasibility Study, again proposing several aiternative
remedies. The Department responded with comments to this
draft in June of 1994, including the following:
“The Department has never stated that the Ground Water
Removal Activity ... is the final ground water remedy, but
has to be tested to determine the efficiency of the system.”
In October of the same year, the Department sent Neville a
letter expressing concern because Neville had not started
construction of the Groundwater Removal System. The
Department also noted, “Neville will need to compare several
sample results to determine the effectiveness of the System.
Neville will use the information to determine whether this
|
6a
Appendix A
or a modified System will be incorporated into the draft
Remedial Action Plan.”
Neville submitted a final Feasibility Study, discussing
seven alternative groundwater remedial options, in December
of 1994. Later that month the Department approved it.
Neville then submitted a draft remedial action plan. On May
8, 1995, after having circulated the draft for public review
and comment and holding a public meeting to discuss the
plan, the Department approved the final remedial action plan.
The groundwater containment and treatment system
originally designed as an interim removal action remained
part of the final RAP.
ANALYSIS
I. Accrual of Cause of Action
Neville first argues that the district court erred in denying
Neville’s summary judgment motion because the statute of
limitations for bringing a cost recovery action under
CERCLA barred California’s suit. A party may appeal a denial
of summary judgment once a final judgment has been entered
in the suit. Comsource Indep. Foodservice Cos. v. Union Pac.
R.R. Co., 102 F.3d 438, 442 (9th Cir.1996). We review a
denial of summary judgment de novo. 7d. (citing Warren v.
City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995), and
Pomerantz v. County of Los Angeles, 674 F.2d 1288, 1290
(9th Cir.1982)).
California brought suit on behalf of the Department under
§ 107 of CERCLA, 42 U.S.C. § 9607. This statute provides
|
7a
Appendix A
that the owner and operator of a facility “shall be held liable
for—(A) all costs of removal or remedial action incurred by
...aState... not inconsistent with the national contingency
plan... .” An “initial action’” for recovery of costs “must be
commenced ... for a remedial action, within 6 years after
initiation of physical on-site construction of the remedial
action.” 42 U.S.C. § 9613(g)(2). The present suit was brought
on September 21, 2000. Therefore, the suit is time-barred if
and only if the “initiation of physical on-site construction of
the remedial action” occurred on or before September 21,
1994.
The facts of the case are not in dispute. The only question
is which of the enumerated events constitutes the “initiation
of physical on-site construction of the remedial action,”
thereby triggering the limitafions-period. Neville maintains
that the statute of limitations began to run in April 1994,
when it started excavating the extraction wells. California
argues that no remedial action could have occurred until the
final remedial action plan was approved by the Department
on May 8, 1995. This Court has yet to decide when an
action is remedial for the purpose of triggering the statute
of limitations in cost recovery suits under 42 U.S.C.
§ 9613(g)(2).
A. Statutory Interpretation
The purpose of a limitations period is to “clearly
define the time period in which suit must be commenced.”
2. The statute divides actions for recovery of costs into initial
and subsequent. The parties do not dispute that this is an “initial
action.”
a
8a
Appendix A
United States v. Colvin, 204.F.3d 1221, 1226 (9th Cir.2000).
Here, the statute of limitations is invoked to bar the
government from collecting the costs it expended in cleaning
up a hazardous waste site, a situation in which we have been
specially instructed by the Supreme Court to construe
limitations periods in favor of the government. See
Badaracco v. Comm'’r, 464 U.S. 386, 391-92 (1984)
(“Statutes of limitation sought to be applied to bar rights of
the Government, must receive a strict construction in favor
of the Government.”’) (citing E.J. Dupont De Nemours & Co.
v. Davis, 264 U.S. 456, 462 (1924)). Additionally, if at all
possible, the statute should be interpreted to provide a clear
accrual date, so that each party—but especially the State
as plaintiff—knows when the time to bring suit runs out.
The text of the statute, read as a whole rather than in pieces,
specifies that ascertainable date.
Title 42 U.S.C. § 9613(g)(2) provides that the “initiation
of physical on-site construction of the remedial action”
triggers the statute of limitations. CERCLA defines “remedial
action” in section 9601(24):
The terms “remedy” or “remedial action” means
[sic] those actions consistent with permanent
remedy taken instead of or in addition to removal
actions in the event of a release or threatened
release of a hazardous substance into the
environment, to prevent or minimize the release
of hazardous substances so that they do not
migrate to cause substantial danger to present or
future public health or welfare or the environment.
The term includes, but is not limited to, such
9a
Appendix A
actions at the location of the release as storage,
confinement, perimeter protection using dikes,
trenches, or ditches, clay cover, neutralization,
cleanup of released hazardous substances and
associated contaminated materials, recycling or
reuse, diversion, destruction, segregation of
reactive wastes, dredging or excavations, repair
or replacement of leaking containers, collection
of leachate and runoff, onsite treatment or
incineration, provision of alternative water
supplies, and any monitoring reasonably required
to assure that such actions protect the public health
and welfare and the environment.
42 U.S.C. § 9601(24) (emphasis added). “Removal,” in turn,
is defined thus:
The terms “remove” or “removal” means{[sic] the
cleanup or removal of released hazardous
substances from the environment, such actions as
may be necessary [sic] taken in the event of the
threat of release of hazardous substances into the
environment, such actions as may be necessary to
monitor, assess, and evaluate the release or threat
of release of hazardous substances, the disposal
of removed material, or the taking of such other
actions as may be necessary to prevent, minimize,
or mitigate damage to the public health or welfare
or to the environment, which may otherwise result
from a release or threat of release. The term
includes, in addition, without being limited to,
security fencing or other measures to limit access,
10a
Appendix A
provision of alternative water supplies, [and]
temporary evacuation and housing of threatened
individuals not otherwise provided for....
42 U.S.C. § 9601(23). The plain meaning of the
definition of “remedial,” read together with the
statute of limitations in § 9613(g)(2) and the use
of that same term in the rest of the statute, supports
the conclusion that “the initiation of physical on-
site construction of the remedial action” can only
occur after the final remedial action plan is
adopted.
The first half of the definition of “remedial action”
provides a general description of how such an action fits into
the entire scheme of the clean-up required by the statute.
Remedial actions, the statute provides, must be “consistent
with permanent remedy taken instead of or in addition to
removal actions.” The second half of the definition lists some
activities that could constitute remedial actions. These
examples, however, must be read in light of the more general
description of the first half.
For example, the “provision of alternative water
supplies” is listed as both a type of “remedial action” and as
a type of “removal.” The provision of alternative water
supplies will only be “remedial,” therefore, if it is done
“consistent[ly] with permanent remedy. .. .” On the other
hand, if alternative water supplies are provided on a more
temporary basis, the very same activity would be a “removal”
action. That is, “removal actions generally are immediate or
interim responses, and remedial actions generally are
permanent responses.” Geraghty & Miller, Inc. v. Conoco
; af ee —“‘—C~C
Wiiecsitsenans..:-.
lla
Appendix A
Inc., 234 F.3d 917, 926 (Sth Cir.2000). In this case, therefore,
even if the completed extraction wells do fall under one of
the types of activities listed in the second half of the definition
of “remedial action” (e.g., “onsite treatment’), the excavation
of those wells must still be “consistent with permanent
remedy” to have triggered the statute of limitations.
For an action to be “consistent with permanent remedy,”
a permanent remedy must already have been adopted. Neither
party can know for sure whether a given action is consistent
with permanent remedy until that permanent remedy is
determined. The first point at which both parties can be
certain that any construction is consistent with a permanent
remedy is when the permanent remedy is actually selected.
In this case, as in most cases,’ the permanent remedy was
selected when the final RAP was approved.
Until after the adoption of the RAP, then, California
could not have brought suit to recover remedial costs.
“The standard rule [is] that the limitations period commences
when the plaintiff has a complete and present cause of
action.” Bay Area Laundry & Dry Cleaning Pension Trust
Fund v. Ferbar Corp. of Cal., Inc., 522 U.S. 192, 201 (1997)
(quoting Rawlings v. Ray, 312 U.S. 96, 98 (1941)) (internal
quotation marks omitted). “[U]ntil the plaintiff can file suit
3. In cases where private, non-governmental parties conduct
the clean-up of a site without governmental or agency oversight and
then pursue response costs under CERCLA, there will most likely
still be a remedial action plan in place. See 40 CFR § 300.700
(providing that private parties should follow the public notice and
comment procedures required of government actors). As no non-
governmental response cost suit is before us, however, we do not
address the limitation period applicable to such suits.
12a
Appendix A
and obtain relief,” a limitations period ordinarily does not
commence. Bay Area Laundry, 522 U.S. at 201; see also
Reiter v. Cooper, 507 U.S. 258, 267 (1993) (“While it is
theoretically possible for a statute to create a cause of action
that accrues at one time for the purpose of calculating when
the statute of limitations begins to run, but at another time
for the purpose of bringing suit, we will not infer such an
odd result in the absence of any such indication in the
statute.”’).
The Department could not have brought suit for costs of
remedial action at the time Neville began excavating the
extraction wells.* At that time, neither party could have
known if the wells would eventually be “consistent with
permanent remedy,” because no final remedial action plan
had been decided upon at that point. As we must assume that
the limitations period did not begin to run until at least the
4. This is not to say that the Department was unable to bring
any suit to recover any costs at the time Neville began excavating
the extraction wells. Under 42 U.S.C. § 9613(g)(2), “an action may
be commenced under section 9607 of this title for recovery of costs
at any time after such costs have been incurred.” As soon as the
Department expended its first dollar, it could have sued Neville for
this dollar and sought a declaratory judgment of Neville’s liability
for future response costs. However, the availability of the option to
bring suit earlier, and thereby obtain a declaratory judgment as to
liability, should not confound Congress’s clear intention that an initial
action to recover remedial costs may be brought “within 6 years after
initiation of physical on-site construction of the remedial action.”
A suit to recover the costs of particular remedial actions, as opposed
to a suit to recover removal costs and obtain a declaratory judgment
on liability, can only be brought once those remedial actions have
been completed.
a ee” eee ee
l3a
Appendix A
time California could have brought suit to recover remedial
costs, that period could not have been triggered by the
excavation of the wells. To rule otherwise would be to hold,
as a practical matter, that California was required to bring
suit before April 19, 2000, less than five years after its action
for recovery of remedial costs first accrued, even though the
statute specifies a six-year limitations period.°
In the case at hand, neither party could have known
before the final RAP was approved whether any particular
construction projects would be “consistent with the final
remedy”: Before the final remedial action plan was approved,
the letters from the Department emphasized and
re-emphasized that it did not know whether any of the
measures already taken by Neville would or would not be
5. The legislative history of the Superfund Amendments and
Reauthorization Act of 1986 (SARA), which added the statute of
limitations provision to CERCLA, is consistent with our interpretation
of § 9613(g)(2). When we can interpret a statute by its plain meaning,
we only look to the congressional history to “ensure that there is no
clearly contrary legislative intent.” Carson Harbor Village, Ltd., 270
F.3d at 884. There is none here. The House Report from the Judiciary
Committee states: “The statute of limitations provided by this
amendment for the initial cost recovery action for a remedial action
is three years from the commencement of physical on-site
construction of the remedial action, that is, after the [Remedial
Investigation/Feasibility Study] and after design of the remedy.”
H.R. Rep. 99-253(IID), reprinted in 1986 U.S.C.C.A.N. 3038, 3044
(emphasis added) (referring to one version of the predecessor bill,
H.R. 2817, which provided a three-year statute of limitation but was
otherwise identical to the final Act with regard to the pertinent
limitations provision). The design of the remedy can only occur after
the final remedy has been selected in the final remedial action plan.
l4a
Appendix A
consistent with the final remedial plan. See Letter from the
Department to Neville, January 1993 (stating that the
Department may discontinue the use of the groundwater
extraction and treatment System “in the event it is not
effective or if it enhances the migration of contaminants from
the Site”); Letter from the Department to Neville, August
1993 (stating that the Department “has not gathered sufficient
information and public comment to require any of the
alternatives to be implemented as of yet’); id. (stating that
the Department “reviewed and approved of the
[Groundwater] Removal Action as an interim measure” but
that the Groundwater Removal Action “is not a Department-
approved final Remedial Action, and cannot be construed as
such.... Therefore, whether the [Groundwater] Removal
Action constitutes the groundwater portion of the final
Remedial Action cannot be determined at this point.”’).
Section 9617 of CERCLA, which provides for public
participation in selection by the President or a State of a
remedial action plan, reinforces our interpretation of
“remedial action” as action taken after the final remedial
action plan has been approved. After mandating a public
notice and comment period and a public meeting regarding
the proposed remedial action plan, 42 U.S.C. § 9617(a)(1)
& (2), the statute provides: “Notice of the final remedial
action plan adopted shall be published and the plan shall be
made available to the public before commencement of any
remedial action.” 42 U.S.C. § 9617(b) (emphasis added).
So, under the statute, remedial action may not commence—
and therefore, the “initiation of physical on-site construction
of the remedial action” cannot begin—until after a final
remedial action plan is adopted.
I5a
Appendix A
The statutory provision limiting the time in which a
party may commence a suit for natural resource damages
also supports this interpretation of “remedial action.”
Title 42 U.S.C. § 9613(g)(1) states, “In no event may an
action for damages under this chapter with respect to
{a facility at which a remedial action is scheduled] be
commenced ... before selection of the remedial action if
the President is diligently proceeding with a remedial
investigation and feasibility study. .. .” The reason for this
limitation was illuminated in the House Report issued by
the Committee on the Judiciary: Congress sought to integrate
cost recovery and damages actions. H.R. Rep. 99-253(III),
reprinted in 1986 U.S.C.C.A.N. 3038, 3044. The premise
behind the Report’s reasoning is clear: natural resource
damages actions and cost recovery actions could not be
integrated if damages actions were brought before a remedy
was selected, because cost recovery suits could not be brought
before that point.
Some courts have raised the concern that if one reads
the statute, as we do, to provide that “initiation of physical
on-site construction of the remedial action” can only take
place after the final remedial action plan is approved, much
of the definition of “remedial action” would become
superfluous. See, e.g., United States v. Navistar Int'l Transp.
Corp., 152 F.3d 702, 712 (7th Cir.1998); California vy.
Hyampom Lumber Co., 903 F.Supp. 1389, 1392-93
(E.D.Cal.1995); Advanced Micro Devices, Inc. v. Nat'l
Semiconductor Corp., 38 F.Supp.2d 802, 811 (N.D.Cal.1999)
(citing Hyampom, 903 F.Supp. at 1393). This concern is
unwarranted. First, the definition of “remedial action” has
roles in the statute other than defining the onset of one
l6a
Appendix A
limitations period. The functional aspects of the definition
are critical, for example, in apportioning the percentage of
the costs of any clean-up between States and the Fund.
See 42 U.S.C. § 9604; see also 42 U.S.C. § 9621 (requiring
that certain standards be met when implementing remedial
actions).
Second, even though an action can only be remedial if it
is taken after the final remedial action plan 1s approved, that
does not mean that a// actions taken after the final remedial
action plan is approved are remedial.° In Colorado v. Sunoco,
Inc., 337 F.3d 1233 (10th Cir.2003), for example, the
Tenth Circuit was faced with the task of classifying certain
actions, all of which took place after the EPA chose its
permanent remedy, as either “remedial” or “removal” actions.
After discussing the character of the various actions in light
of the definitions of “remedial” and “removal,” the court
determined that two of the actions were, in fact, removal
6. Because of the temporal aspect of our interpretation of
“remedial action,” we do note that the government can only recover
costs as “remedial” if those costs were incurred after the cause of
action for such costs accrues. Any costs incurred before the remedial
action plan was finally designated (such as the construction of the
extraction wells in this case) may be recovered, however, as
“removal” costs, and are subject to the statute of limitations for
removal actions. See 42 U.S.C. § 9613(g)(2)(A) (“An initial action
for recovery of the costs referred to in section 9607 of this title must
be commenced ... [,] for a removal action, within 3 years after
completion of the removal action. . . .”); 42 U.S.C. § 9613(g)(2)(B)
(“{I]f the remedial action is initiated within 3 years after the
completion of the removal action, costs incurred in the removal action
may be recovered in the cost recovery action brought under this
subparagraph.”).
17a
Appendix A
acuons, both because they were interim rather than permanent
measures, taken in response to the threat of release of
contaminated water, and because similar activities had been
denominated “removal action” by the EPA in previous clean-
ups. /d. at 1244-45. Thus, as Sunoco illustrates, our
interpretation of the statute of limitations does not render
any part of the definition of “remedial” superfluous.
B. Decisions of Other Circuits
Our conclusion that no action can be “remedial” until a
final remedial action plan is in place is consistent with the
results reached by every court of appeals that has considered
the onset of the limitations period for recovery of remedial
action costs under CERCLA, if not with all the reasoning of
those cases.
In Geraghty, the Fifth Circuit held that the installation
of monitoring wells could not have triggered the statute of
limitations because it occurred before the government agency
overseeing the clean-up had issued its final approval of the
remedial plan. See Geraghty, 234 F.3d at 927. The Seventh
Circuit also reached the same result as we do, although some
of its reasoning differed from ours. See Navistar, 152 F.3d at
711-12. In Navistar, although the final remedial design was
not approved until 1990, the final remedial action plan,’
7. Aremedial design is a term of art in CERCLA, and differs
both substantively and temporally from a final remedial action plan.
While there is no explicit definition of “remedial action plan” in
either the statute or the regulations implementing it, the regulations
do provide a detailed description of the process whereby a final
(Cont'd)
18a
Appendix A
selecting a permanent clay cap as part of the permanent
remedy, was apparently approved before that. /d. at 704
(“At the conclusion of this process[, which ended before
February 1989], the EPA determined that, among other things,
the landfill needed to be covered with a permanent clay cap
to isolate the hazardous materials from the rest of the
environment.”’). Thus, although the Seventh Circuit rejected
(Cont'd)
remedy is selected by the agency. In this process, the lead agency
must present a proposed plan, which fits the description of the
“remedial action plan” of CERCLA’s Section 9617, to the public.
40 CFR § 300.430(f)(2). The “proposed plan” must “briefly describe[]
the remedial alternatives analyzed by the lead agency, propose[ ] a
preferred remedial action alternative, and summarize[] the
information relied upon to select the preferred alternative.” /d. The
regulation continues, “The purposes of the proposed plan is to
supplement the RI/FS and provide the public with a reasonable
opportunity to comment on the preferred alternative for remedial
action, as well as alternative plans under consideration, and to
participate in the selection of remedial action at a site.” /d.
The remedy chosen in the remedial action plan is only generally
described in that document, leaving for a subsequent date the actual
design of the plan’s physical implementation. See 40 CFR
§ 300.430(f)(1)- (6) (describing the process by which the lead agency
chooses a final remedy and documents its selection in a record of
decision); see also 42 U.S.C. § 9617 (providing publication
requirements in the event that the remedial action differs from the
adopted final remedial action plan).
The final remedial design, on the other hand, while based on
the remedy adopted in the RAP, is distinct: it is “the technical analysis
and procedures which follow the selection of remedy for a site and
result in a detailed set of plans and specifications for implementation
of the remedial action.” 40 CFR § 300.5.
a ee en
19a
Appendix A
a bright-line rule in which the final remedial design had to
be formally approved before an action could be considered
remedial, the action that it found to be remedial— installing
the clay cap—occurred after the final remedial action plan
was chosen. Because our holding finds the pivotal event for
defining the initiation of remedial action is the adoption of a
remedial action plan—not a final remedial design—the facts
in Navistar would have led us to find the suit barred by the
limitations period as well.
Finally, the Tenth Circuit, while not expressly rejecting
a bright-line rule, has distinguished “remedial actions” from
“removal actions” based solely on the more “descriptive”
parts of their definitions. See Sunoco, Inc., 337 F.3d at
1244-45; see also Pub. Serv. Co. of Colo. v. Gates Rubber
Co., 175 F.3d 1177, 1182 (10th Cir.1999) (distinguishing
“remedial actions” from “removal actions” in a context other
than the triggering of the statute of limitations). In both the
Tenth Circuit cases, however, it appears that the actions in
question took place after a remedial action plan was in place.
See Sunoco, 337 F.3d at 1237, 1244-45; Pub. Serv. Co., 175
F.3d at 1179, 1182-84. Were we faced with the same facts,
we, too, would have to turn to the descriptive aspects of the
definitions to determine whether the actions at issue in
Sunoco Inc. and Public Service Co. were remedial or removal.
For the same reasons the result in Navistar is not in conflict
with our holding, then, these Tenth Circuit cases do not
conflict, either.
In sum, we conclude that the “initiation of physical on-
site construction of the remedial action” can only occur after
the final remedial action plan is adopted, and that, in this
20a -
Appendix A
case, the statute of limitations, therefore, could not have
begun to run until the final remedial action was approved on
May 8, 1995. The Department’s suit was brought within six
years of the approval of the remedial action plan and is not,
thus, barred by the statute of limitations. :
II. Neville s Defenses on the Merits
Neville raised an affirmative defense—waiver and
estoppel—in the district court. The argument was that Neville
cannot be liable under CERCLA for the costs of overseeing
the clean-up incurred by the Department because the
Department had promised that it would not sue Neville for
full recovery costs if Neville conducted the research,
planning, and clean-up of the site. The district court ruled
that Neville could not assert equitable defenses toa CERCLA
recovery action. We review the grant of summary judgment
de novo. United States v. Chapman, 146 F.3d 1166, 1169
(9th Cir.1998).
CERCLA section 107(a) and (b), 42 U.S.C. § 9607(a)
and (b), allow for only three defenses to CERCLA liability.
A covered person is liable under the statute “subject only to
the defenses set forth in subsection (b) of this section.”
42 U.S.C. § 9607(a). Subsection (b) lists three defenses
“(1) an act of God; (2) an act of war; [and] (3) an act or
omission of a third party... .” 42 U.S.C. § 9607(b)(1)-(3).
In Levin Metals Corp. v. Parr- Richmond Terminal Co.,
799 F.2d 1312, 1316-17 (9th Cir.1986), we suggested that
these defenses were exclusive.
Congress imposed strict, but not absolute, liability
under CERCLA. It provided defenses to liability
4
FS
4
i
:
i
21a
Appendix A
for causation solely by an act of God, an act of
war, or acts or omissions of a third party....
Consequently, in order to state a claim for
declaration of nonliability, the declaratory
judgment plaintiff must base its claim of
nonliability on one or more of the statutory
affirmative defenses.
Jd. (emphasis added) (internal quotation marks and citations
omitted).
Every court of appeals that has considered the precise
question whether § 9607 permits equitable defenses has
concluded that it does not, as the statutory defenses are
exclusive. See Gen. Elec. Co. v. Litton Indus. Automation
Sys., Inc., 920 F.2d 1415, 1418 (8th Cir.1990) (holding that
CERCLA does not provide an “unclean hands” defense)
(questioned on other grounds in Key Tronic Corp. v. United
States, 511 U.S. 809 (1994)); see also Blasland, Bouck &
Lee, Inc. v. City of North Miami, 283 F.3d 1286, 1304
(11th Cir.2002) (holding that CERCLA bars equitable
defenses); Velsicol Chem. Corp. v. Enenco, Inc., 9 F.3d 524,
530 (6th Cir.1993) (same); Zown of Munster v. Sherwin-
Williams Co., 27 F.3d 1268,-1270 (7th Cir.1994) (same).
Following the implication of Levin Metals and the express
holdings of these cases from other circuits, we conclude that
the three statutory defenses are the only ones available, and
that traditional equitable defenses are not. The district court
was correct, therefore, in holding that Neville could not raise
equitable defenses to liability under CERCLA.
22a
Appendix A
Neville argues separately that equitable defenses are at
least relevant to the amount of recovery that the Department
receives. Even if it is liable for some of the oversight costs,
Neville asserts, that amount is limited by equitable
consideration that the Department’s implied promise to
pursue recovery of only a limited “activity fee,” rather than
the Department’s actual recovery- oversight costs. Neville
cites as support for this argument numerous cases in which
courts considered equitable factors in allocating costs in suits
for contribution. See, e.g., Alcan-Toyo Am., Inc., v. N. Ill.
Gas Co., 881 F.Supp. 342, 346-47 (N.D.II1.1995);
Akzo Coatings, Inc. v. Aigner Corp., 909 F.Supp. 1154, 1161-
62 (N.D.Ind.1995); New York v. Almy Bros., 971 F.Supp. 69,
73 (N.D.N.Y.1997).
Suits for contribution, however, are entirely distinct
under the statute from suits for recovery of costs. The former
is governed by 42 U.S.C. § 9613(f)(1), which explicitly states,
“In resolving contribution claims, the court may allocate
response costs among liable parties using such equitable
factors as the court determines are appropriate.”
The provisions of CERCLA governing suits for recovery of
costs, 42 U.S.C. §§ 9607(a) and 9613(g)(2), make no such
reference to equitable factors. Also, “the critical distinction
between [suits for contributions and suits for cos* recovery]
is that under § 107 [42 U.S.C. § 9607(a)], the court merely
determines whether the party is jointly and severally liable,
without regard to the amount of fault; but under § 113
[42 U.S.C. § 9613(f(1)], the court also divides the fault of
the parties, using equitable factors.” Catellus Dev. Corp. v.
L.D. McFarland Co., 910 F.Supp. 1509, 1514 (D.Or.1995).
(
7
23a
Appendix A
California is not bringing suit here for contribution, so the
specific language allowing the court to consider equitable
factors when apportioning contribution is inapplicable.
Neville makes one last defensive argument:
The Department may not sue for its recovery costs, Neville
contends, because those costs were not consistent with the
national contingency plan. Whether a party can recover
certain costs under § 9607 depends on whether or not those
costs were incurred consistently with the “national
contingency plan.” 42 U.S.C. § 9607(a)(4)(A){providing that
a covered person who violates CERCLA “shall be liable for
... all costs of removal or remedial action incurred by the
... State... not inconsistent with the national contingency
plan”) (emphasis added). The national contingency plan is
promulgated by the EPA and “provide [s] the organizational
structure and procedures for preparing and responding to...
releases of hazardous substances.” 40 C.F.R. § 300.1.
See also Wash. St. Dept of Transp. v. Wash. Natural Gas
Co., 59 F.3d 793, 799 (9th Cir.1995) (“WSDOT”). To show
that the Department’s actions were inconsistent with the
national contingency plan, the burden is on Neville to show
that the Department acted im an arbitrary and capricious
manner in choosing a particular response action. See id.
at 802 (citing United States v. Hardage, 982 F.2d 1436, 1442
(10th Cir.1992)). When a state is seeking recovery of response
costs, consistency with the national contingency plan is
presumed. /d. at 799-800.
Neville has provided no evidence that the Department
acted “arbitrarily and capriciously in choosing a particular
response action to respond to a hazardous waste site.”
24a
Appendix A
Hardage, 982 F.2d at 1442 (emphasis added). Accord
WSDOT, 59 F.3d at 802 (“To prove that a response action of
the EPA was inconsistent with the NCP, a defendant must
prove that the EPA’s response action was arbitrary and
capricious.”) (emphasis added). In fact, Neville does not
challenge any response action taken by the Department.
Neville challenges instead the Department’s attempt to
recover the full oversight costs after suggesting that, should
Neville cooperate and conduct the clean-up itself, the
Department would only require Neville to pay an “activity
fee.” This change in policy and pursuit of the full costs of
oversight cannot be “inconsistent with” the national
contingency plan, as the national contingency plan does not
direct the state to limit its recovery of response costs in any
way. See 40 C.F.R. §§ 300.1 et seq. The district court,
therefore, did not err by finding that Neville was responsible
for all the Department’s response costs.
Ill. Motion for Leave to Amend
Finally, Neville appeals the district court’s denial of its
motion for leave to amend its counterclaim. We review the
district court’s denial of Neville’s motion for leave to amend
for an abuse of discretion. See Griggs v. Pace Am. Group,
Inc., 170 F.3d 877, 879 (9th Cir.1999).
Generally, leave to amend pleadings “shall be freely
given when justice so requires.” Fed.R.Civ.P. 15(a). “[T]he
grant or denial of an opportunity to amend is within the
discretion of the District Court,” and denial of leave to amend
is appropriate if the amendment would be futile. Foman vy.
Davis, 371 U.S. 178, 182 (1962). “[F]utility includes the
ates fF on
Delt le Ahk
eh ih oe eSontatin = °
25a
Appendix A
inevitability of a claim’s defeat on summary judgment.”
Johnson v. Am. Airlines, Inc., 834 F.2d 721, 724 (9th
‘Cir.1987).
Neville moved to amend its complaint to allege a
violation of due process and equal protection under the
California Constitution. The district court denied Neville’s
motion for leave to amend because the court determined that
amendment would be futile. The district court held that, even
if Neville were to amend its complaint and allege a violation
of equal protection, Neville could not point to a triable issue
of material fact to support such an allegation. On appeal,
Neville argues only that the district court erred by (1) holding
that the California Constitution requires a showing of
“invidious discrimination” to prove selective prosecution,
and (2) refusing to compel discovery on the issue of selective
prosecution.
The district court did not abuse its discretion. First, the
court was correct in its interpretation of California
constitutional law in holding that Neville had to allege
discrimination based on an “invidious” criterion. Baluyut v.
Superior Court, 911 P.2d 1, 5 (1996), on which Neville
exclusively relies, holds that a defendant must show that “he
has been deliberately singled out for prosecution on the basis
of some invidious criterion” in order to prove discriminatory
prosecution. /d. (citation and internal quotation marks
omitted). That case goes on to define “invidious”
as “unrelated to legitimate law enforcement objectives.”
Id. at 6. Additionally, Baluyut states that “[u]nequal treatment
which results simply from laxity of enforcement or which
reflects a nonarbitrary basis for selective enforcement of a
26a
Appendix A
statute does not deny equal protection and is not
constitutionally prohibited discriminatory enforcement.”
Id. at 5. |
Neville fails to allege, first, that other similarly situated
parties were excused from paying the full oversight costs
and thus that it was “deliberately singled out for prosecution.”
Even if Neville could show this, it would have to allege also
that the reason for this discrepancy was not simply laxity of
enforcement, but was in fact a result of invidious
discrimination, i.e., unrelated to law enforcement purposes.
As the record now stands, Neville has shown that the
Department changed its policy about collecting oversight
costs. However, this change was explained by the
Department: the agency determined that the non-enforcement
policy was inconsistent with state statutes. Thus, the
Department has provided a non-arbitrary, law enforcement
rationale for the change in policy. On the basis of this record,
the district court did not abuse its discretion by denying leave
to amend, or by denying discovery when no actionable injury
was alleged.
AFFIRMED.
27a
APPENDIX B — REVISED FINAL JUDGMENT OF
THE UNITED STATES DISTRICT COURT FOR THE
CENTRAL DISTRICT OF CALIFORNIA
FILED JULY 31, 2002
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
CASE NO.: 00-10205 CAS (Ex)
STATE OF CALIFORNIA, on behalf of the California
Department of Toxic Substances Control,
Plaintiff,
V.
NEVILLE CHEMICAL COMPANY, a corporation;
and DOES 1-10,
Defendants.
REVISED FINAL JUDGMENT
In orders dated March 26, 2002, and May 10, 2002, the
Court granted Plaintiff's Motion for Summary Judgment,
Or In The Alternative, Partial Summary Judgment. On July
11, 2002, the Court granted Plaintiff’s Motion for Judgment
| on the Pleadings. On the basis of these rulings, and having
: reviewed and considered the papers submitted in support of
! said motions and in support of Plaintiff’s costs, including
attorneys’ fees, and oral argument of counsel, IT IS
ORDERED AND ADJUDGED that:
28a
Appendix B
Defendant Neville Chemical Company is liable under
the Comprehensive Environmental Response, Compensation
and Liability Act (“CERCLA”) section 107(a), 42 U.S.C.
§ 9607(a) for Plaintiff’s response costs, including interest
and reasonable attorneys’ fees, in the amount of
$1,097,402.60, which the Plaintiff has incurred responding
to the release or threatened release of hazardous substances
from the Neville Chemical Company facility, located in
12800 East Imperial Highway, Santa Fe Springs, California
(“Neville facility”).
Furthermore, pursuant to CERCLA section 113(g)(2),
42 U.S.C. § 9613(g)(2), Defendant Neville Chemical
Company is liable for all future response costs incurred by
the Plaintiff in responding to the release or threatened release
of hazardous substances from the Neville facility.
Dated: July 30, 2002
By: s/ Christina A. Snyder
CHRISTINA A. SNYDER
United States District Judge
29a
APPENDIX C — ORDER GRANTING PLAINTIFF’S
MOTION FOR JUDGMENT ON THE PLEADINGS OF
THE UNITED STATES DISTRICT COURT FOR THE
CENTRAL DISTRICT OF CALIFORNIA, WESTERN
DIVISION DATED JULY 10, 2002
AND FILED JULY 11, 2002
UNITED STATES DISTRICT COURT |
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
Case No. CV 00-10205 CAS (Ex)
STATE OF CALIFORNIA,
Plaintiff,
V.
NEVILLE CHEMICAL CO.,
Defendant.
ORDER GRANTING PLAINTIFF’S MOTION
FOR JUDGMENT ON THE PLEADINGS
The Court finds plaintiff’s motion appropriate for
decision without oral argument. Fed. R. Civ. P. 78; Local
Rule 7-15.
I. INTRODUCTION
This case is a cost-recovery action brought by
plaintiff State of California on behalf of the Department of
30a
Appendix C
Toxic Substances Control (“DTSC”) against defendant
Neville Chemical Company pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980 (“CERCLA”), 42 U.S.C. §§ 96011 et seg. In an order dated
May 16, 2002, the Court granted plaintiff’s motion for summary
judgment on the issue of defendant’s liability for response costs
incurred by plaintiff pursuant to the CERCLA while supervising
the cleanup of hazardous materials at defendant’s chemical
manufacturing facility. In granting summmary judgment, the Court
found that defendant’s affirmative defense of equitable estoppel
was not available under CERCLA, butt did not explicitly address
defendant’s counterclaim for equitablle estoppel. May 16, 2002
Order Granting Plaintiff's Motion For Summary Judgment
(“May 16, 2002 Order”). Defendant communicated to plainuff
that it intended to proceed with its counterclaim.
On May 22, 2002, plaintiff filed an ex parte application for
“clarification re counterclaims,” and on May 31, 2002, plaintiff
filed a motion for judgment on the pleadings. In both its ex
parte application and its motion, plaintiff argued that: (1) the
Court has already determined the equitable estoppel issue in
plaintiff’s favor; (2) a party found to be liable pursuant to
CERCLA cannot escape liability by claiming equitable estoppel,
whether that claim is characterized as an affirmative defense or
a counterclaim; (3) California law does not provide for an
independent claim for equitable estoppel; and (4) even if
defendant were to properly state a counterclaim for equitable
estoppel, that claim would fail as a matter of law because
defendant cannot establish that DTSC, a government agency,
engaged in affirmative misconduct, or that the injury caused to
defendant by DTSC’s alleged wrongful acts outweighs the
damage to the public of imposing liability on DTSC. On June
Z
|
3la
Appendix C
19, 2002, the Court rejected defendant’s counterclaim to the
extent it was based on a theory of equitable estoppel because it
was merely an attempt to relitigate issues that had already been
decided by the Court, and because under California law equitable
estoppel acts defensively only and cannot form the basis for an
independent claim. June 19, 2002 Order on Plaintiff’s Ex Parte
Application For Clarification Re: Counterclaim and Plaintiff's
Motion For Judgment on the Pleadings (“June 19, 2002 Order’)
at 3. However, the Court found that ‘““defendant’s memoranda
appear to suggest that its counterclaim is actually based on
alleged due process or equal protection violations stemming
from plaintiff’s alleged disparate treatment of defendant in
relation to other CERCLA responsible parties.” /d. The Court
construed defendant’s allegations of due process and equal
protection violations as a request for leave to amend the
counterclaim, and requested additional briefing as to whether
defendant should be permitted to amend the counterclaim.
The parties timely submitted supplemental briefs. Defendant
attaches a proposed amended complaint to its supplemental brief.
The proposed amended complaint contains the following new
allegation:
On information and belief Neville alleges that it has
been the victim of a selective enforcement action in
violation of Neville’s rights to due process and equal
protection under the law as guaranteed by Article 1,
Section 7 of the California Constitution.'
Proposed Amended Counterclaim 4 15.
1. Article I, Section 7 of the California Constitution states, in
relevant part, that “a person may not be deprived of life, liberty, or
property without due process of law or denied equal protection of the
ns
32a
Appendix C
Il. LEGAL STANDARD
Fed. R. Civ. P. 15(a) provides for the amendment of
pleadings by leave of court and notes that such leave “shall
be freely granted when justice so requires.” See Morongo
Band of Mission Indians v. Rose, 893 F.2d 1074, 1079
(9th Cir. 1990). Leave to amend is within the sound discretion
of the district court, but denial is proper if the amendment
would be futile, if there has been any undue delay, bad faith
or dilatory motive on the part of the movant, or if allowing
the amendment would result in undue prejudice to the
opposing party. Foman vy. Davis, 371 U.S. 178, 182 (1962);
Lockman Found. v. Evangelical Alliance Mission, 930 F.2d
764, 772 (9th Cir. 1991).
Ill. DISCUSSION
Plaintiff argues that leave to amend should be denied
because defendant’s proposed amendment is futile.
A proposed amendment is futile if the new claim could be
defeated by a motion to dismiss or a motion for summary
judgment. Johnson v. American Airlines, Inc., 834 F.2d 721,
724 (9th Cir. 1987). Plaintiff argues that there is no basis in
law or fact for defendant’s due process or equal protection
claims brought pursuant to the California constitution.
In order to show a violation of due process rights under
federal law, defendant would have to demonstrate that
plaintiff treated it in a manner that is “clearly arbitrary and
unreasonable, having no substantial relation to the public
health, safety, morals, or general welfare.” Patel v. Penman,
103 F.3d 868, 874 (9th Cir. 1996). Where, as in this case, a
33a
Appendix C
party is alleging deprivation of a defined property right, the
scope of the California constitution’s due process protection
is virtually the same as that of the federal constitution.
Traverso v. People ex rel. Dept. of Transportation, 6 Cal.
4th 1152, 1163 (1993); see also People v. Ramirez, 25 Cal.
3d 260, 268 (1979) (“the touchstone of due process is the
protection of the individual against the arbitrary action of
government’). Furthermore, “selective enforcement of valid
laws, without more, does not make [a particular enforcement]
action irrational.” Freeman vy. City of Santa Ana, 68 F.3d
1180, 1188 (9th Cir. 1995) (citing Bordenkircher v. Hayes,
434 U.S. 357, 364 (1978)). As plaintiff correctly points out,
the Court has already ruled that plaintiff’s conduct in seeking
cost recovery, which forms the basis for defendant’s proposed
counterclaim for due process violations, was not arbitrary
and capricious. June 19, 2002 Order at 3, March 26, 2002
Order Granting in Part Plaintiff's Motion for Summary
Judgment at 23. As a result, the Court finds that there is no
basis upon which defendant can state a claim for violations
of due process.
Defendant’s proposed equal protection claim is founded
on its allegation that it is the “victim of a selective
enforcement action.” However, under both the federal and
California constitutions, selective enforcement of the law
does not constitute an equal protection violation unless it is
“the deliberate product of invidious discrimination based
upon some improper criterion.” People v. Superior Court of
Los Angeles County, 70 Cal. App. 3d 341, 343 (1977);
see also United States v. Kidder, 869 F.2d 1328, 1335 (9th
Cir. 1989) (“‘the conscious exercise of some selectivity in
enforcement is not in itself a federal constitutional violation’
34a
Appendix C
so long as ‘the selection was [not] deliberately based upon
an unjustifiable standard such as race, religion, or other
arbitrary classification.) (quoting Bordenkircher, 434 U.S.
at 364); Murgia v. Municipal Court, 15 Cal. 3d 286, 290
(1975) (“Neither the federai nor state Constitution
countenances the singling out of an invidiously selected class
for special prosecutorial treatment, whether that class consists
of black or white, Jew or Catholic, Irishman or Japanese,
United Farm Worker, or Teamster. If an individual can show
that he would not have been prosecuted except for such
invidious discrimination against him, a basic constitutional
principal has been violated, and such a prosecution must
collapse upon the sands of prejudice.”’). Accordingly, in order
to maintain a claim for equal protection violations based on
selective enforcement, defendant must show that it was
selected for enforcement “on the basis of an impermissible
ground such as race, religion or exercise of [] constitutional
rights.” Kidder, 869 F.2d at 1336. Furthermore, defendant
must show that the selective prosecution was “motivated by
a discriminatory purpose.” Id. (quoting Wayte v. United
States, 470 U.S. 598, 608 (1985)) (emphasis added in
Kidder). Here, defendant has not alleged, much less shown,
facts which suggest that it was selected fora CERCLA cost-
recovery action on any impermissible ground such as race,
religion or the exercise of constitutional rights. In fact, at a
earlier stage of the litigation, Neville’s counsel stated at oral
argument that “[w]e have not alleged that we were treated
differently from other people. . . .” Appendix to Pl’s. Supp.
Brief in Opp’n to Def’s. Request to Amend Counterclaim
(Transcript of March 11, 2002 hearing) at 12:10-12.
In addition, defendant has failed to point to any facts which
would indicate that the government had a discriminatory
35a
Appendix C
motive in choosing to prosecute him. For these reasons, the
Court finds that defendant has stated no basis for going
forward with its equal protection claim.’
IV. CONCLUSION
For the reasons discussed above, defendant’s request to
amend the counterclaim is DENIED. Plaintiff’s motion for
judgment on the pleadings in therefore GRANTED. Plaintiff
shall submit a revised form of judgment to reflect its current
attorneys’ fees and costs.
IT IS SO ORDERED.
Dated: July 10, 2002
s/ Christina A. Snyder
CHRISTINA A. SNYDER
United States District Judge
2. Defendant appears to argue that further discovery as to
plaintiff’s cost-recovery practices may reveal evidence of
discriminatory motive. However, defendant does not support this
argument with any showing whatsoever which would tend to suggest
invidious discrimination. The Court finds that because on the record
before it defendant’s discrimination theory is wholly speculative, it
would be inappropriate to allow further discovery. See People v.
Superior Court of Los Angeles County, 70 Cal. App. 3d at 344
(holding that the office of the Attorney General was not compelled
to answer interrogatories from a defendant in a civil enforcement
action concerning its enforcement policies where that defendant had
made no preliminary showing of invidious discrimination).
36a
APPENDIX D — MINUTE ORDER OF THE UNITED
STATES DISTRICT COURT FOR THE CENTRAL
DISTRICT OF CALIFORNIA ISSUED JUNE 19, 2002
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
MINUTE ORDER
Case No.: CV 00-10205 CAS (Ex) June 19, 2002
Title: STATE OF CALIFORNIA v. NEVILLE CHEMICAL
CO. et al.
PRESIDING: HONORABLE CHRISTINA A. SNYDER,
U.S. DISTRICT JUDGE
Maynor Galvez, none present,
Deputy Clerk Court Reporter
PLAINTIFF COUNSEL PRESENT
DEFENDANT COUNSEL PRESENT
PROCEEDINGS: (1) PLAINTIFF’S EX PARTE APPLI-
CATION FOR (1) CLARIFICATION
RE COUNTERCLAIM; (2) STAY OF
DISCOVERY; (3) CORRECTION
OF CLERICAL MISTAKE IN MAY
16, 2002 ORDER (filed May 22, 2002)
(2) PLAINTIFF’S MOTION FOR
JUDGMENT ON THE PLEAD-
INGS (filed May 31, 2002)
RE NA RA Ia DOS ie is
37a
Appendix D
The Court finds plaintiff's motions appropriate for decision
without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15.
Accordingly, the hearing date of June 24, 2002, is hereby vacated
and the matter taken under submission.
I. INTRODUCTION
This case is a cost-recovery action brought by plaintiff
State of California on behalf of the Department of Toxic
Substances Control (“DTSC’)' under the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980 (“CERCLA”), 42 U.S.C. §§ 9601 et seq. In an order dated
May 16, 2002, the Court granted plaintiff’s motion for summary
judgment on the issue of defendant’s liability for response costs
incurred by plaintiff pursuant to the CERCLA while supervising
the cleanup of hazardous materials at defendant’s chemical
manufacturing facility. In granting summary judgment, the Court
found that defendant’s affirmative defense of equitable estoppel
was not available under CERCLA, but did not explicitly address
defendant’s counterclaim for equitable estoppel. May 16, 2002
Order Granting Plaintiff's Motion For Summary Judgment
(“May 16, 2002 Order’).
On May 22, 2002, plaintiff filed an ex parte application for
(1) clarification re counterclaim, (2) stay of discovery, and
(3) correction of a clerical mistake in the May 16, 2002 Order.’
1. The Court will refer to plaintiff as DTSC.
2. Page 11 of the May 16, 2002 Order mistakenly states that
Neville, rather than DTSC, “is entitled to interest on those costs and
its reasonable attorneys’ fees.” The Court hereby corrects that error
pursuant to Fed. R. Civ. P. 60(a).
38a
Appendix D
Plaintiff argues that the Court’s holding on summary
judgment to the effect that defendants do not have an
affirmative defense of equitable estoppel under CERCLA also
operates to compel summary judgment in plaintiff’s favor
on defendant’s counterclaim for equitable estoppel. Plaintiff
further argues that the issues surrounding defendant’s
counterclaim for equitable-estoppel were fully briefed and
argued in the context of defendant’s claimed affirmative
defense. In its opposition to the ex parte application,
defendant argues that its counterclaim for equitable estoppel
differs from its affirmative defense of equitable estoppel
because it is governed by state law, rather than CERCLA.
On May 29, 2002, the Court issued an order staying discovery,
and requested supplemental briefing on the question of
whether Neville’s counterclaim should be denied on the basis
of the Court’s earlier grant of summary judgment. May 29,
2002 Order on Plaintiff’s Ex Parte Application. On May 31,
2002, plaintiff filed a motion for judgment on the pleadings.
In its motion, plaintiff argues that: (1) the Court has already
determined the equitable estoppel issue in plaintiff’s favor: ©
(2) a party found to be liable pursuant to CERCLA cannot
escape liability by claiming equitable estoppel, whether that
claim is characterized as an affirmative defense or a
counterclaim; (3) California law does not provide for an
independent claim for equitable estoppel; and (4) even if
defendant were to properly state a counterclaiin for equitable
estoppel, that claim would fail as a matter of law because
defendant cannot establish that DTSC, a government agency,
engaged in affirmative misconduct, or that the injury caused
to defendant by DTSC’s alleged wrongful acts outweighs the
damage to the public of imposing liability on DTSC.
ny ee ae er Oe ee
_—— oer? ke
39a
Appendix D
Il. DISCUSSION
Defendant’s counterclaim alleges that according to
representations made to it by plaintiff, and according to
plaintiff’s policy at the time, its payment of an activity fee in
1989 in the amount of $46,636 operated as a full settlement
of its obligation to plaintiff to reimburse it for additional
response costs. Defendant argues that due to this justifiable
reliance, plaintiff should be equitably estopped from
collecting further response costs. The Court has already held
that equitable estoppel is not a valid affirmative defense to
CERCLA lhiability. The Court has also previously determined
that the specific conduct on the part of plaintiff which forms
the basis for defendant’s counterclaim is not arbitrary and
capricious. Based on what is alleged in the counterclaim,
the Court finds that defendant’s counterclaim is simply an
attempt to relitigate issues that have already been decided
by the Court by recasting its affirmative defenses as a
counterclaim. Further, California does not recognize an
affirmative claim for equitable estoppel. See Money Store
Corp. v. Southern California Bank, 98 Cal App. 4th 722
(2002) (equitable estoppel cannot form the basis for a separate
claim because “[t]he doctrine acts defensively only”).
See also Pacific Gas & Electric v. Zuckerman, 189 Cal. App.
3d 1113, 1144 (1987); Peskin v. Phinney, 182 Cal. App. 2d
632, 636(1960). For these reasons, defendant’s counterclaim
for equitable estoppel must fail.
Although :t does not appear on the face of the
counterclaim, defendant’s memoranda appear to suggest that
its counterclaim ts actually based on alleged due process or
equal protection violations stemming from plaintiff's alleged
= A ee ee Sn: i. _ ate ee eS oe Zl
) _ = eee eee eae
40a
Appendix D
disparate treatment of defendant in relation to other CERCLA
responsible parties. The Court will construe defendant’s
allegations of due process and equal protection violations as
a request for leave to amend its counterclaim. The Court finds
that additional briefing is necessary in order to evaluate this
request. The Court therefore directs defendant to file a
supplemental brief, not to exceed 10 pages, explaining the
nature and basis of the due process and equal protection
claims they seek to advance. Defendant’s brief shall be filed
no later than June 26, 2002. Plaintiff is directed to file a
response, also not to exceed 10 pages, explaining why
defendant should not be permitted to amend its counterclaim.
Plaintiff’s response shall be filed no later than July 3, 2002.
The matter will thereafter be taken under submission.
IT IS SOQ ORDERED.
x
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3
3
4
3
2
4la
APPENDIX E — ORDER GRANTING PLAINTIFF'S
MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE, PARTIAL SUMMARY JUDGMENT
OF THE UNITED STATES DISTRICT COURT FOR
THE CENTRAL DISTRICT OF CALIFORNIA,
WESTERN DIVISION FILED MAY 10, 2002
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
Case No. CV-00-10205 (Ex)
STATE OF CALIFORNIA, on behalf of the California
Department of Toxic Services,
Plaintiff,
VS.
NEVILLE CHEMICAL COMPANY, a corporation; and
DOES 1-10,
Defendant.
ORDER GRANTING PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT OR IN THE
ALTERNATIVE, PARTIAL SUMMARY JUDGMENT
I. INTRODUCTION
This case is a cost-recovery action brought by plaintiff
State of California on behalf of the Department of Toxic
42a
Appendix E
Substances Control (“DTSC”)' under the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980 (“CERCLA”), 42 U.S.C. §§ 9601 et seg. DTSC
seeks to recover costs associated with the cleanup of
hazardous substances at a chemical manufacturing plant
owned and operated by defendant Neville Chemical Company
(“Neville”). In an Order dated March 26, 2002, the Court
granted in part plaintiff’s motion for summary judgment that
Neville was liable for all recovery costs not inconsistent with
the National Consistency Plan (“NCP”), but permitted
supplemental discovery and briefing on the issue of whether
DTSC’s recovery costs were inconsistent with the NCP. Order
Granting in Part Plaintiff's Motion For Summary Judgment
(“March 26, 2002 Order’) at 16, 25.? Both parties submitted
supplemental briefing, and the Court heard oral argument at
an April 29, 2002 status conference.
Il. LEGAL STANDARD
Summary judgment is appropriate where “there is no
genuine issue as to any material fact” and “the moving party
is entitled to a judgment as a matter of law.” Fed.R.Civ.P.
56(c). The moving party has the initial burden of identifying
relevant portions of the record that demonstrate the absence
of a fact or facts necessary for one or more essential elements
of each cause of action upon which the moving party seeks
judgment. See Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986).
1. The Court will refer to plaintiff as DTSC.
2. The factual background to this case is set forth in the March
26, 2002 Order.
Dot EL GLIAL AAD Lahn tithetndne i
43a
Appendix E
If the moving party has sustained its burden, the
nonmoving party must then identify specific facts, drawn
from materials on file, that dentonstrate that there is a dispute
as to material facts on the elements that the moving party
has contested. See Fed.R.Civ.P. 56(c). The nonmoving party
must not simply rely on the pleadings and must do more
than make “conclusory allegations [in] an affidavit.”
Lujan y. National Wildlife Fed'n, 497 U.S. 871, 888 (1990).
See also Celotex Corp., 477 U.S. at 324. Summary judgment
must be granted for the moving party if the nonmoving party
‘fails to make a show’ng sufficient to establish the existence
of an element essential to that party’s case, and on which
that party will bear the burden of proof at trial.” /d. at 322.
See also Abromson v. American Pacific Corp., 114 F.3d 898,
902 (9th Cir.1997).
In light of the facts presented by the nonmoving party,
along with any undisputed facts, the Court must decide
whether the moving party is entitled to judgment as a matter
oflaw. See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors
Ass'n, 809 F.2d 626, 631 & n.3 (9th Cir.1987). When deciding
a motion for summary judgment, “the inferences to be drawn
from the underlying facts ... must be viewed in the light
most favorable to the party opposing the motion.” Matsushiia
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986) (citation omitted); Valley Nat'l Bank of Ariz. v. A.E.
Rouse & Co., 121 F.3d 1332, 1335 (9th Cir.1997). Summary
judgment for the moving party is proper when a rational trier
of fact would not be able to find for the nonmoving party on
the claims at issue. See Matsushita, 475 U.S. at 587.
44a
Appendix E
III. DISCUSSION
CERCLA holds responsible parties liable for “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.” 42 U.S.C.
§ 9607(a)(4)(A) (emphasis added). Under CERCLA, a party
may recover costs related to actions necessary to effectuate
cleanup or removal from the environment of released
hazardous substances, actions taken in the event of the threat
of release of hazardous substances, actions to monitor, assess
and evaluate the release or threatened release of hazardous
substances, the disposal of removed material, and actions
consistent with a permanent remedy. 42 U.S.C. § 9601(23)-
(24). Response costs recoverable under CERCLA include
oversight costs incurred by a government agency in an effort
to ensure that a site is being adequately investigated and
remediated by responsible parties. State of California v.
Celtor Chemical Corp., 901 F.Supp. 1481, 1489-90
(N.D.Cal.1995); State of California v. SnyderGeneral Corp.,
876 F.Supp. 222, 224-25 (E.D.Cal.1994). Recoverable
response costs also include reasonable attorneys’ fees for
bringing cost-recovery litigation, as well as indirect costs,
or overhead. Chapman, 146 F.3d at 1175 (attorneys’ fees);
United States v. R.W. Meyer, 889 F.2d 1497, 1503
(6th Cir.1989) (indirect costs). DTSC contends that its
employees have spent thousands of hours since 1985
responding to the releases of hazardous substances at the
Neville site. DTSC also contends that attorneys in the
California Attorney General’s Office have spent more than
one thousand hours litigating the present case. Declaration
of Laurie Pearlman In Support of Plaintiff’s Motion For
f
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$
A
ss hisipi bi AOD iin nO tN CANE L LAG RIEL AOI AE SIS 6
ai Svcd
4Sa
Appendix E
Summary Judgment (“Pearlman Decl.”) §7, Declaration of
Harrison Pollak In Support of Plaintiff’s Motion For
Summary Judgment (“Pollak Decl.) 45. Neville concedes
“that DTSC has incurred costs 1n overseeing the investigation
and remediation of environmental contamination associated
with the Neville site.” Pearlman Decl., Ex. A at 30:3-4, but
argues that DTSC is not entitled to recover those costs
because they are inconsistent with the NCP.
A. Inconsistency with the NCP
Response actions undertaken by a federal or state
governmental entity, or an Indian tribe, are presumed to be
consistent with the NCP. Washington State Dept. of
Transportation v. Washington Natural Gas Co., (“WSDOT”),
59 F.3d 793, 799-800 (9th Cir.1995). Thus, when a
governmental body such as DTSC seeks to recover its costs,
it is the defendant’s burden to prove that a particular
government action is inconsistent with the NCP in order to
preclude the government from recovering the costs of taking
that action. /d. at 800. In order to meet this burden of proof,
the defendant must show that the government’s particular
action was arbitrary and capricious. /d. at 803; 42 U.S.C.
§ 9613(j)(2).
In opposition to DTSC’s motion for summary judgment,
Neville argues that DTSC’s actions are inconsistent with the
NCP because: (1) DTSC acted in an arbitrary and capricious
manner when it allegedly represented that it would not seek
cost recovery against Neville, but later did so; and (2) DTSC
has offered insufficient documentary evidence to support the
recovery of some of its claimed costs. In its March 26, 2002
46a
Appendix E
Order, the Court held that Neville had not raised a material
question of fact to support its first argument. Therefore, the
only question remaining is whether there is a material
question of fact that DTSC’s alleged failure to document its
claimed costs properly was arbitrary and capricious.
The NCP provides that:
During all phases of response, the lead agency
shall complete and maintain documentation to
support all actions taken under the NCP and to
for the basis for cost recovery. In general,
documentation shall be sufficient to provide...
accurate accounting of federal, state, or private
party costs incurred for response actions...
40 C.F.R. § 300.160(a)(1). The regulation does not further
define “accurate accounting” or elaborate on what is meant
by “sufficient.” United States v. Chrysler Corp., 168
F.Supp.2d 754, 769 (N.D.Ohio 2001). Neville argues that
DTSC’s documentation is not sufficient to provide for
accurate accounting, and is thus arbitrary and capricious, in
the following respects: (1) DTSC’s documentation of
employee labor costs does not provide a specific description
of the duties of particular employees who worked at the
Neville site; (2) DTSC’s documentation of travel expenses
fails to explain what necessitated the travel; (3) three invoices
issued by DTSC contain discrepancies; (4) DTSC failed to
explain fluctuations in the calculation of indirect cost ratios
between 1989 and 1995; and (5) DTSC failed to explain why
some direct labor costs were funded using bond funds, while
others were not. The Court will consider each of these
arguments below.
betes ail edllar Nig hc el TRE AE
ti a Wee cet cd il cba AAT AEA ch SS IER Ae BNI SA I DARN AR AA ob
Be he Milets)
47a
Appendix E
1. Employee Labor Costs
Neville argues that DTSC’s employee labor costs are
inconsistent with the NCP because the timesheets prepared
by DTSC employees:
“fail to provide an adequately detailed explanation
of the actual services performed by the employees
[because] [p]roject activity codes (‘PCA’) used to
designate DTSC site related functions are too
general to allow one to determine what specific
employee activity a given [Summary By Activity
(‘SBA’)] entry documents. Without more specific
information regarding the actual work performed
by an employee, the labor charges cannot be
verified as to their reasonableness, necessity and/
or association with environmental activities
associated with the Neville property.”
Declaration of Peter Johnson in Support of Defendant’s
Supplemental Brief in Opp’n to Plaintiff’s Motion For
Summary Judgment (“Johnson Suppl. Decl.) 43.* DTSC has
provided Neville with employee time sheets documenting
all the time which DTSC employees allegedly spent on the
Neville project dating back to 1985. According to a
declaration filed by Jeffrey Mahan, who served as DTSC’s
3. DTSC objects to the Johnson declaration on the grounds that
he is not qualified as an expert. Johnson declares that he has been
engaged in the environmental engineering and cost analysis field since
1981. Johnson Suppl. Decl. §1. The Court finds that Johnson is
sufficiently qualified by knowledge, skill, experience, training or
education to testify as an expert pursuant to Fed.R.Evid. 701.
eer BR
48a
Appendix E
Chief of Audits Unit from 1989 to 1997 and is -currently
DTSC’s Special Assistant for Cost Recovery and
Reimbursement Policy, DTSC’s time sheets are attested to
by the employee and then reviewed and certified by the
employee’s direct supervisor. Declaration of Jeffrey Mahan
in Support of Plaintiff’s Motion For Summary Judgment
(“Mahan Decl.”) 4 2, 3, 11. The time sheets require that
every hour worked by a DTSC employee be allocated to an
activity code, or PCA, and a site code. /d. 49. The PCAs
correlate to relatively broad activity categories, such as
“Remedial Investigations/Feasibility Study,” “Removal
Actions,” “Public Participation Plan Development and
Implementation,” and “Cost Recovery.” DTSC periodically
issues a coding manual, available to the public, that provides
information about what specific activities fall into each PCA
category. The site codes correlate to specific DTSC projects.
The thrust of Neville’s argument is that DTSC’s time sheets
do not provide a specific description of exactly what task an
employee was engaged in at a particular time on the Neville
site. However, Neville has not cited any case where a specific
description of exactly what task the employee performed at
a particular time was held to be required by 40 C.F.R.
§ 300.160(a)(1). Several courts, including the Ninth Circuit,
have accepted documentation such as that presented by DTSC
as adequate for the purposes of 40 C.F.R. § 300.160(a)(1).
See Chapman, 146 F.3d at 1171 (government agency’s
documentation of costs was consistent with the NCP where
the agency “kept extensive records of recovery costs in the
form of timesheets, cost estimates, and accountant and
attorney declarations”); United States v. Chromalloy
American Corporation, 158 F.3d 345, 352 (Sth Cir.1998)
(government agencies documentation of costs was sufficient
peach i atc ai ARSE RA WARRIOR I NEES SS
49a
Appendix E
where it submitted “detailed cost summaries of its oversight
expenses”); Chrysler Corp., 168 F.Supp.2d at 769
(contractor’s invoices, which broke down expenses into eight
general categories such as labor, travel and subsistence, were
sufficiently specific standing alone to meet the requirements
of 40 C.F.R. § 300.160(a)(1), in spite of contractor’s failure
to provide “project daily summaries, project daily details,
reimbursable travel and subsistence logs, contractor
personnel reports, equipment usage logs, and subcontractor
reports... .”).* In the instant case, the time sheets provided
by DTSC show in detail how much time individual employees
spent at the Neville site, as well as their billing rate and the
general category of activity in which they were engaged.
Furthermore, Neville has submitted no evidence suggesting
that DTSC’s decision not to document precisely what activity
employees were engaged in at the Neville site at any particular
time led to any accounting problems during the Neville site
cleanup.° Accordingly, the Court finds that the time sheets
utilized by DTSC provide sufficient documentation to permit
accurate accounting, and DTSC’s procedures for accounting
for employee labor costs are not arbitrary and capricious,
4. The Chrysler Corp., court held that summary judgment was
inappropriate on some of the contractor’s expenses, due to mistakes
and inconsistencies in the invoices themselves. Chrysler Corp., 168
F.Supp.2d at 769-70.
5. The activities necessary to effectuate the Neville site cleanup
are described in detail in several documents, most notably the
Remedial Action Order and Final Remedial Action Plan.
See Declaration of Harlan Jeche in Support of Plaintiff’s Motion For
Summary Judgment, Exs. A and B. Neville has not alleged that the
cleanup was not performed, or that DTSC failed to oversee the
cleanup.
aa |
S0a
Appendix E
because the time sheets clearly allocate costs by site and by
category of activity.
2. Travel Expenses
Neville argues that DTSC’s documentation of site-related
travel is inadequate, because “no specific information is
provided [on travel expense reports] as to what site related
activities necessitated the particular travel expense.” Johnson
Suppl. Decl. 44. According to Neville, this may result in its
being charged for travel expenses unrelated to the Neville
site. As evidence that this has in fact occurred, Neville offers
a memo dated April 14, 2000, documenting an attorney’s trip
from Sacramento to Glendale to meet with DTSC staff.
Declaration of Dennis Byrne in Support of Neville’s
Supplemental Brief in Opp’n to Motion for Summ. Judg.,
Ex. D. The memo states that the purpose of the trip was to
“meet with staff’ regarding “Neville,” “El Toro,” “El Centro,”
“Angeles,” and “Western Lead Products.” Jd. The full cost
of the trip was apparently charged to Neville. Neville argues
that the memorandum demonstrates the shortcomings of
DTSC’s accounting for travel, as well as documenting costs
which were improperly allocated to it.
DTSC responds that regardless of which projects were
discussed at the Glendale office, there is no evidence that
the disputed travel was occasioned by anything other than
the Neville discussion. DTSC also offers the declaration of
its expert, Jeffrey Mahan, that when travel is occasioned by
more than one site, DTSC allocates the costs among the
different sites. Declaration of Jeffrey Mahan in Support of
DTSC’s Supplemental Brief in Support of Motion for Summ.
cot De
Sla
Appendix E
Judg. (“Mahan Suppl. Decl.) §6. The Court finds that a
single alleged misailocation of travel expenses is not
sufficient to create a material question of fact that DTSC’s
accounting practices with regard to travel expenses were so
inadequate as to be arbitrary and capricious.°
3. Invoices
Neville argues that DTSC’s charges between 1985 and
1996 are suspect because of “discrepancies ... in different
invoices DTSC issued for work performed during a given
time period.” Johnson Suppl. Decl. 4 5. In particular, Neville
argues that invoice No. 12687, dated March 17, 1994, invoice
No. 13058, dated August 23, 1996, and a Summary By
Activity (“SBA”) dated April 17, 1997, reflect different
amounts for the same period of time. DTSC argues that the
discrepancy in the amounts shown by the three documents is
due to revisions in its calculation of indirect cost rates, and
that the later dated invoices explicitly state that they
supersede the earlier dated invoices. DTSC submits a letter,
sent to Neville in conjunction with invoice No. 13058, which
explains that the new invoice reflects revised indirect cost
rates for the fiscal periods July 1987 through June 1996, and
which explicitly instructs Neville to disregard invoice
No. 12687 “since it .as been superseded by enclosed invoice
No. 13058.” Mahan Decl., Ex. B at 56. Similarly, when
DTSC provided the April 17, 1997 SBA to Neville, it
enclosed a letter explaining that there had been adjustments
6. However, DTSC is instructed to properly allocate the travel
expenses with regard to the trip described in the April 14, 2000
memorandum.
“4.
Jaa
Appendix E
“which modify the previous SBA sent to you on August 26,
1996.” Mahan Suppl. Decl. 910, Ex. G The April 17, 1997
SBA itself states that it “supersedes any previously issued
SBA for the time periods noted.” /d. The Court finds that
Neville has not demonstrated a material question of fact that
the discrepancies it points to in the invoices demonstrate that
DTSC is improperly accounting for its costs.
4. Indirect Costs
Neville argues that DTSC has not adequately explained
significant fluctuations in the indirect cost ratios (“ICRs”’)
used to calculate the indirect costs charged to Neville.
Neville’s expert Johnson states that:
t appears the indirect cost pool used in calculating
the ICR ha[{s] nearly doubled during the years
1989 through 1995. This ICR cost-pool inflation
increased DTSC’s overhead costs, which were
used to calculate the ICR. DTSC provided no
documentation to account for the significant
fluctuations noted in ICR used to calculate the
indirect costs charged to Neville.
Johnson Suppl. Decl. { 6. DTSC responds that the NCP does
not require it to speculate as to why the indirect cost pool
has increased, but merely to document its methodology for
calculating the ICR. DTSC calculates ICRs by dividing
DTSC’s indirect costs (i.e. overhead) by its total direct labor
costs. ICRs are derived in accordance with “Indirect Cost
7. These adjustments consisted mainly of revisions to the rate
for calculating indirect costs.
‘Nn
Appendix E
Rate Proposals” prepared by DTSC which set forth the data,
formulas, and calculations used to arrive at every ICR. Mahan
Suppl. Decl. 97, Ex. E (example of an ICRP). DTSC’s
methodology is in turn based on federal guidelines. See id.
Ex. E (stating that the ICRP 1s prepared “in accordance with
the requirements of the State and Federal OMB Circular
A-87, ‘Principles for State and Local Governments’ ”’).
The Court finds that Neville has not provided any evidence
to support its claim that DTSC’s indirect cost rates are not
properly documented. Cf Chrysler Corp., 168 F.Supp.2d
at 770 (conditioning government’s recovery of indirect costs
on its ability to produce “any formula supporting the
calculation of indirect costs”).
5. Bond Expenditures
Neville challenges two aspects of DTSC’s costs related
to its use of bond funds to pay for part of the Neville cleanup.*
First, Neville argues that DTSC did not sufficiently explain
why some direct labor costs were funded using bond funds
while others were not. However, Neville provides no
authority for its argument that DTSC must explain its decision
to fund particular aspects of cleanup projects from bond funds
as opposed to non-bond funds. DTSC has provided ample
documentation of its use of bond funds, and of its
8. DTSC has the option of funding part of its site mitigation
costs through bonds issued by the State Treasurer’s Office. Because
interest on the bond funds must be paid to holders of the bonds, state
law directs DTSC to recover this expense as a response cost.
See Cal. Health & Safety § 25360.1. Accordingly, DTSC charges
responsible parties for the bond interest on that portion of a site
cleanup for which bond funds are utilized.
54
Appe
methodology for calculating bond interest, and the Court
finds this sufficient to meet the requirements of 40 C.F.R.
§ 300.160(a)(1). Second, Neville argues that there are
discrepancies in different DTSC documents showing the bond
principal amount, from which bond interest 1s calculated.
However, even according to Neville’s calculations, these
discrepancies are in the nominal amounts of $2.94 and
$133.39. Johnson Suppl. Decl. 48. DTSC states that these
discrepancies appear to be due to data-entry errors, and that
the most recent SBA, which forms the basis for DTSC’s
present cost recovery claim, shows fhe correct amount.
Mahan Supp. Decl. 412. The Court finds that these minor
discrepancies, which appear to have been corrected, do not
create a material question of fact as to the propriety of
DTSC’s accounting practices.
In sum, the Court finds that there is no material question
of fact as to the proper documentation of DTSC’s costs.
B. DTSC’s Request For Interest and Attorneys’ Fees
In its March 26, 2002 Order, the Court held that DTSC
was entitled recover all properly documented cleanup costs,
as well as interest on those costs, but did not grant summary
judgment because there were outstanding issues concerning
documentation of costs. Based on the conclusion set forth
herein, the Court finds that Neville is entitled to interest on
those costs and its reasonable attorneys’ fees. See Chapman,
146 F.3d at +175 (recoverable response costs include
reasonable attorneys’ fees for bringing cost-recovery
litigation).
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S5a
Appendix E
IV. CONCLUSION
For the reasons discussed above, plaintiff's motion for
summary judgment is GRANTED as to defendant’s liability
for all disputed recovery costs. Piaintiff is also entitled to
recover interest and reasonable attorneys’ fees. The Court
hereby orders plaintiff to prepare and file a form of judgment,
consistent with this order, setting forth the exact amount of
its recovery costs, and substantiating its claim for interest
and attorneys’ fees.
IT IS SO ORDERED.
Dated: May 8, 2002
s/ Christina A. Snyder
CHRISTINA A. SNYDER
United States District Judge
S6a
APPENDIX F — ORDER GRANTING IN PART
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
OR-IN THE ALTERNATIVE, PARTIAL SUMMARY
JUDGMENT OF THE UNITED STATES DISTRICT
COURT FOR THE CENTRAL DISTRICT OF
CALIFORNIA, WESTERN DIVISION
FILED MARCH 26, 2002
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVSION
Case No. CV-00-10205 CAS (Ex)
STATE OF CALIFORNIA, on behalf of the California
Department of Toxic Services,
Plaintiff,
VS.
NEVILLE CHEMICAL COMPANY, a corporation;
and DOES 1-10,
Defendant.
ORDER GRANTING IN PART PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT OR IN THE
ALTERNATIVE, PARTIAL SUMMARY JUDGMENT
I. INTRODUCTION
This case is a cost-recovery action brought by plaintiff
State of California on behalf of the Department of Toxic
anak inh ia ant AN iI RL a BA WA Tae en NA
57a
Appendix F
Substances Control (“DTSC”)' under the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980 (“CERCLA”), 42 U.S.C. §§ 9601 et seg. DTSC
seeks to recover costs associated with the cleanup of
hazardous substances at a chemical manufacturing plant
owned and operated by defendant Neville Chemical Company
(“Neville”). The parties are now before the Court on DTSC’s
motion for summary judgment.
II. FACTS
A. Background
Neville is the owner and operator of a 3.5 acre industrial
facility in Santa Fe Springs, California (the “site”). Compl.
4/6. From 1952 to approximately 1987, Neville manufactured
chemical compounds for use in insecticides, solvents,
metalworking lubricants and flame retardants at the site.
Id. 48. Investigations at the site found that the soil and
groundwater were significantly contaminated with hazardous
substances from Neville’s past handling, storage and disposal
practices. Jd. §11. In 1986, DTSC? ordered Neville to clean
up the site pursuant to a Remedial Action Order (“RAO”).
Declaration of Harlan Jeche in Support of Pl’s. Mot. for
Summ. Judg. (“Jeche Decl.”) 49. The RAO required Neville
to prepare a remedial investigation and feasibility study
1. The Court will refer to plaintiff as DTSC.
2. DTSC was a division of the California Department of Health
Services (“DHS”) until it became a separate department sometime
in 1991. For ease of reference, the Court will utilize the term DTSC
throughout.
58a
Appendix F
(“RI/FS”), and a remedial action proposal (“RAP”), both in
accordance with the National Contingency Plan (“NCP”).
Id., Ex. B at 174 (RI/FS), 181(RAP). According to the terms
of the RAO, Neville would then have to implement the RAP,
and would be responsible for all operation and maintenance
requirements of the RAP until the remediation goals of the
RAP were met. /d., Ex. B at 182. The RAO contains a
provision for recovery of certain costs pursuant to state law.
Id., Ex. B at 188.
DTSC alleges that its employees have spent thousands
of hours since 1985 responding to releases and threatened
releases of hazardous substances at the Neville facility, and
overseeing Neville’s own response measures. Jeche Decl.
410. The response measures undertaken at the Neville facility
include: the removal of twenty one drums containing
dichlorobenzenes, carbon tetrachloride, and chlorinated
paraffins that had been illegally buried at the site;
recontouring the soil and capping it with asphalt; installing
a groundwater extraction-and-treatment system; and
recording a deed restriction to prevent future uses of the site
which would be harmful to humans and the environment.
Id. 411. DTSC alleges that as of September 30, 2001, its
response costs for the Neville facility total $759,368.29,
exclusive of interest and attorneys’ fees.’
B. Cost Recovery
In April 1985, DTSC filed suit against Neville in Superior
Court for the County of Los Angeles. The relief sought in
3. This total includes a $46,636.38 “activity fee” that Neville
has already paid to DTSC.
59a
Appendix F
that action included the recovery of costs pursuant to
California Health and Safety Code Section 25360 (“Section
25360”). Declaration of Dennis J. Byrne in support of
Neville’s Opp’n to Mot. for Summ. Judg. (“Byrne Decl.”’),
Ex. A. Section 25360 provides:
Any costs incurred and payable from the state
account [the Hazardous Substance Account] shall
i be recovered by the department from the liable
; person or persons. In addition, such person or
: persons shall be liable to the department for
; administrative costs actually incurred, or five
: hundred dollars ($500), whichever is greater.
The amount of costs determined pursuant to this
section shall be recoverable in a civil action.
On December 10, 1986, DTSC issued the RAO to
Neville, instructing it to conduct an RI/FS, and prepare and
implement an RAP. Section III of the RAO stated a number
. of conclusions of law, which were based upon the application
of California law. Byrne Decl., Ex. C at 16. Section 8.16 of
the RAO, entitled “Cost Recovery,” provided that
Failure or refusal of [Neville] to comply with this
Order may make [Neville] liable for any
government costs incurred, including those
payable from the Hazardous Substance Cleanup
Fund for any remedial action at the site, as
provided in Section 25360 of the Health and
Safety Code and other applicable provisions of
law. These costs inciude DHS’s direct costs and
DHS’s administrative overhead costs in an amount
eT ee ee Oe ee. he
60a
Appendix F
equal to 10 percent of the reasonable cost actually
incurred, or five hundred dollars ($500),
whichever is greater. In addition, [Neville] may
be liable for the costs of oversight by DHS of
[Neville’s] activities at the site as provided in
Section 25360 of the Health and Safety Code.
Respondents may also be liable to the Department
for punitive damages up to three times the amount
of any costs incurred by the state account pursuant
to Section 25359 of the Health and Safety Code.
Id., Ex. C at 32.
On January 30, 1987, Angelo Bellomo, Chief of the
Southern California Section of DTSC, wrote to Neville
informing it that the Neville facility had been listed on the
Hazardous Substance Cleanup Bond Act Expenditure Plan
as a site requiring assessment and cleanup action. /d., Ex. D.
Attached to the correspondence was a document entitled
“Detailed Site Expenditure Plan Neville Chemical
Company.” In a section entitled “Projected Revenue
Sources,” the document lists Neville as a responsible party,
and then states that “it appears at this time that it may be
necessary to utilize bond funds to remediate this site. If bond
funds are expended, the Department will undertake cost
recovery action.” /d. The document then sets forth estimated
costs for DTSC’s cleanup of the site, to be “funded from
bond sale proceeds (to the extent that Federal Superfund or
responsible party funding in not available).” Jd. The estimated
costs are listed as $265,000 for site characterization, $60,000
for remedial action plan, and $1,110,000 for remedial
action. /d.
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61a
Appendix F
In January 1987, Neville’s Vice President and General
Counsel, Thomas McKnight, attended a meeting with
representatives of DTSC to discuss the RAO. According to
McKnight:
At this meeting DTSC threatened legal action
against Neville pursuant to Sections 8.15 and 8.16
of the RAO if Neville failed to fully comply with
the RAO. At this meeting, DTSC specifically
represented to Nevilie that it would not be subject
to cost recovery litigation 1f it agreed to voluntarily
and fully comply with the RAO. DTSC indicated °
that they were prepared to perform the site
assessment required under the RAO if Neville
refused to cooperate.
Byrne Decl., Ex. E, McKnight Decl. 46.
In September 1987, DTSC approved the workplan
Neville submitted for the remedial investigation of the site.
McKnight Decl. 413. On February 19, 1988, DTSC dismissed
its pending cost recovery claim against Neville in the Superior
Court for the County of Los Angeles. Byrne Decl., Ex. G
In 1989, the California legislature enacted Chapter 269,
1989 Cal. Stats. Ch. 269, which amended portions of the
Health and Safety Code to restructure state funding of the
cleanup of hazardous waste sites. Chapter 29 did not amend
the cost recovery provisions of Section 25360. However,
pursuant to the new legislation, DTSC initiated a program
whereby it assessed an “activity fee” program intended to
partially cover DTSC’s oversight costs in circumstances
62a
Appendix F
where a responsible party such as Neville was conducting
the actual investigation and remedial activity at a site.
On September 29, 1989, Dennis Dickerson, Regional
Administrator for DTSC, sent Neville a letter explaining the
activity fee program and assessing an initial activity fee of
$46,636.38 for the RI/FS phase of the project. Jeche Decl.,
Ex. C. The letter reads in relevant part:
The Department of Health Services (Department)
has identified you as the party primarily
responsible for taking action to characterize and
remedy the public health and/or environmental
threats posed by the uncontrolled release of
hazardous substances at [the Neville site].
Pursuant to legislation (Chapter 269, Statutes of
1989) which was recently signed into law by the
Governor, you are obligated to pay activity fees
beginning July 1, 1989, to partially cover the
Department’s cost of overseeing your action to
characterize and satisfactorily remediate this site.
KI
j
4
Chapter 269 sets out specific fees for the various
phases of activity associated with characterizing
and abating hazardous substance release sites
based on the relative size of each site as estimated
by the Department.... For purposes of ;
establishing a fee for the current phase of activity
being conducted at the Neville Chemical
Company, the Department has made a preliminary
determination that the site is a large as defined by
Chapter 269. However, the law does provide for
1 Sat AIT SS
63a
Appendix F
a separate fee ($5,000) to have the Department
undertake a study to more accurately determine
site size. If you wish to have the Department
undertake such a study and pay the additional
$5,000 fee you should advise me immediately.
In making this decision you should be aware that
the law does allow the Department to make
adjustments to initial site size determinations so
that fee levels may be raised or lowered for
subsequent phases of activity based on additional
data. However, the law does not allow for
retroactive application of such adjustments.
Another feature of Chapter 269 is the proration
of fees for phases of investigation and cleanup
activity that were underway when the new law
took effect on July 1, 1989. Basically, the law says
that any identified costs borne by the Department
for oversight of an activity which occurred prior
to July 1, 1989, will be cost recovered and that
the Department must prorate the fee to be assessed
for this phase based either on the amount of work
completed as of July 1, 1989, or based on the
amount of work left to be completed as of that
date as estimated by the Department and based
on the guidelines established by Chapter 269.
The Department estimates that it will take
18 months to complete the Remedial Investigation/
Feasibility Study that was underway at the site
on July 1, 1989. Based on the Department’s
preliminary determination that this site is a large,
64a
Appendix F
and the monthly fee quotient is $2,590.91, the
prorated fee for this phase of activity is, therefore,
$46,636.38.
Chapter 169 requires the State Board of
Equalization (Board) to collect the fees
established by the Department under the Act. You
may expect to receive a demand from the State
Board in the near future based on the fee leveis
described herein. As each phase of activity
associated with a fee is completed at the site, a
demand for the fee that is associated with the next
phase of activity will be sent to you by the State
Board. In cases where fees are not paid promptly,
the State Board is empowered to seize personal
as well as business assets and take other
enforcement actions to ensure payment.
oo ee
Id. In response to the Dickerson letter, Neville promptly paid
the activity fee. McKnight Decl. 417.
In conjunction with the implementation of the activity
fee program, DTSC issued policy statements to the effect
that where a responsible party was complying with the RAO
and conducting its own remediation efforts, the activity fee
would be the full extent of cost recovery sought by DTSC.
For example, DTSC Management Memo 91-1 dated April
17, 1991, states:
Chapter 269, Statutes of 1989, established an
activity fee program which partially covers the
Department’s cost of overseeing hazardous
77 OD NY ot OS
il
:
i
i
:
65a
Appendix F
substance release site investigation and cleanup
activities. Under the fee legislation, responsible
parties are generally liable for the Department’s
full cost for performing oversight activities prior
to July 1, 1989 when the fee program took effect.
For oversight activities conducted after July 1,
1989, responsible parties are expected to pay the
activity fees. Although current law (H & SC
25360) continues to provide authority for full cost
recovery after giving credit for any activity fees
paid, it continues to be the Department’s policy
(per OPP # 90-1)* to only collect direct program
expenditures (generally laboratory or contract
expenditures) beyond activity fees in cases where
the responsible parties are being cooperative.
Byrne Decl., Ex. H; see also Pollak Decl., Ex. B.
On April 27, 1992, DTSC issued Management Memo
# 91-9, in which it determined that its previously stated policy
limiting cost recovery from cooperating responsible parties
to the payment of their activity fees “is in conflict with the
4. OPP # 90-1 is a Toxic Substances Control Program Cost
Recovery Policy and Procedure manual dated March 1990.
The manual provides that cost recovery will be pursued against
responsible parties who are conducting their own remediation
activities only in extraordinary circumstances including, inter alia,
violation of an RAO, failure to pay activity fees, unapproved delays
in cleanup schedules caused by the responsible party, and submission
of poor quality workplans and/or work products. See Declaration of
Harrison Pollak in support of Pl’s. Mot. for Summ. Judg. (“Pollak
Decl.”), Ex. B at 40.
66a
Appendix F
provisions of H & SC 25360 which essentially requires DTSC
to attempt to recover all identified Hazardous Substances
Account/bond expenditures.” Byrne Decl., Ex. lI.
The memorandum then announced that “the policy reflected
in OPP # 90-1 ... regarding the acceptance of fees as full
compensation for oversight costs is rescinded immediately.”
/d. Finally, the memorandum stated that
since there has been no hiatus in the cost recovery
requirements of H & SC 25360, [responsible
parties] will be liable for all costs identified, in
excess of fees paid beginning July 1, 1989, which
is the date of inception of the fee program. This
revision provides for full cost recovery regardless
of whether DTSC has aetermined that a
[responsible party] is recalcitrant.
ld.
On September 21, 2000, DTSC filed a complaint seeking
(1) recovery of response costs already incurred by DTSC in
conjunction with the cleanup of the Neville site, including
interest and attorneys’ fees, and (2) a declaration that Neville
would be responsible for any future DTSC response costs
incurred at the Neville site.
Il. LEGAL STANDARD
Summary judgment is appropriate where “there is no
genuine issue as to any material fact” and “the moving
party is entitled to a judgment as a matter of law.”
Fed.R.Civ.P. 56(c). The moving party has the initial burden
ne ei ae oe a
67a
Appendix F
of identifying relevant portions of the record that demonstrate
the absence of a fact or facts necessary for one or more
essential elements of each cause of action upon which the
moving party seeks judgment. See Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986).
If the moving party has sustained its burden, the
nonmoving party must then identify specific facts, drawn
from materials on file, that demonstrate that there is a dispute
as to material facts on the elements that the moving party
has contested. See Fed.R.Civ.P. 56(c). The nonmoving party
must not simply rely on the pleadings and must do more than
make “conclusory allegations [in] an affidavit.” Lujan v.
National Wildlife Fed’n, 497 U.S. 871, 888 (1990). See also
Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548. Summary
judgment must be granted for the moving party if the
nonmoving party “fails to make a showing sufficient to
establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at
trial.” Jd. at 322. See also Abromson v. American Pacific
Corp., 114 F.3d 898, 902 (9th Cir.1997).
In light of the facts presented by the nonmoving party,
along with any undisputed facts, the Court must decide
whether the moving party is entitled to judgment as a matter
oflaw. See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors
Ass'n, 809 F.2d 626, 631 & n.3 (9th Cir.1987). When deciding
a motion for summary judgment, “the inferences to be drawn
from the underlying facts ... must be viewed in the light
most favorable to the party opposing the motion.” Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986) (citation omitted); Valley Nat'l Bank of Ariz. v. A.E.
68a
Appendix F
Rouse & Co., 121 F.3d 1332, 1335 (9th Cir.1997). Summary
judgment for the moving party is proper when a rational trier
of fact would not be able to find for the nonmoving party on
the claims at issue. See Matsushita, 475 U.S. at 587.
III. DISCUSSION
A. Prima Facie Liability Under CERCLA
To establish a prima facie case for liability under
CERCLA, DTSC must prove: (1) the site is a “facility”;
(2)-a “release” or “threatened release” of a hazardous
substance occurred; (3) DTSC incurred costs in responding
to the release or threatened release; and (4) the defendant
falls within one of the four classes of responsible persons
defined by the statute. 42 U.S.C. § 9607(a); United States
v. Chapman, 146 F.3d 1166, 1169 (9th Cir.1998). Once DTSC
has established a prima facie case, the burden shifts to Neville
to prove that DTSC’s action in response to the CERCLA
violation was inconsistent with the NCP, id., or to assert
affirmative defenses.
DTSC argues that it has made out a prima facie case for
Neville’s liability on undisputed evidence. CERCLA defines
a “facility” as “any site or area where a hazardous
substance has been deposited, stored, disposed of, or
placed, or otherwise come to be located....” 42 U.S.C.
§ 9601(9). DTSC argues, and Neville does not deny, that
CERCLA-defined hazardous substances, including
dichlorobenzenes, polychlorinated debenzodioxins,
polychlorinated dibenzofurans, chloroform, copper, zinc, and
lead, have been detected at the Neville site. See 40 C.F.R.,
bata ath thet eB ein
69a
Appendix F
Part 302.4 (designation of CERCLA hazardous substances);
Jeche Decl. 417 (describing substances found at the Neville
site). Therefore, it is undisputed that the Neville site is a
“facility” as defined by CERCLA.
CERCLA defines a “release” as “... any spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing into the
environment... .”’42 U.S.C. § 9601(22). Neville admits that
there have been releases or threatened releases of hazardous
substances into the environment from the Neville facility.
Amended Answer, §/6, 16. The RAP also confirms that
hazardous substances were detected in the soil, groundwater,
surface water, and air at the Neville site, and identifies
potential sources of those releases. Jeche Decl. 497-8,
Ex. Aat 36. Thus, it is undisputed that there was a release of
hazardous substances at the Neville facility.
The third-element of CERCLA liability is that the party
seeking to recover costs must have incurred them in response
to the release of hazardous substances at a facility.°
“Response” is defined as “remove, removal, remedy, and
remedial action.” 42 U.S.C. § 9601(25). CERCLA defines
these terms to include the cleanup or removal of released
hazardous substances from the environment, actions taken
5. CERCLA holds responsible parties liable for “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.” 42 U.S.C. § 9607(a)(4)(A) (emphasis added).
However, “failure to comply with the NCP is not a defense to liability,
but rather a factual issue affecting damages.” Washington State Dept.
of Transportation v. Washington Natural Gas Co. (“WSDOT”),
59 F.3d 793, 798 (9th Cir.1995).
70a
Appendix F
in the event of the threat of release of hazardous substances,
actions to monitor, assess and evaluate the release or
’ threatened release of hazardous substances, the disposal of
removed material, and actions consistent with a permanent
remedy. 42 U.S.C. § 9601(23)-(24). Response costs
recoverable under CERCLA include oversight costs incurred
by a government agency in an effort to ensure that a site is
being adequately investigated and remediated by responsible
parties. State of California v. Celtor Chemical Corp., 901
F.Supp. 1481, 1489-90 (N.D.Cal.1995); State of California
v. SnyderGeneral Corp., 876 F.Supp. 222, 224-25
(E.D.Cal.1994). Recoverable response costs also include
reasonable attorneys’ fees for bringing cost-recovery
litigation, as well as indirect costs, or overhead. Chapman,
146 F.3d at 1175 (attorneys’ fees); United States v. R.W.
Meyer, 889 F.2d 1497, 1503 (6th Cir.1989) (indirect costs).
DTSC contends, as discussed above, that its employees have
spent thousands of hours since 1985 responding to the
releases of hazardous substances at the Neville site. DTSC
also contends that attorneys in the State Attorney General’s
Office have spent more than one thousand hours litigating
the present case. Declaration of Laurie Pearlman (“Pearlman
Decl.”) 47, Pollak Decl. 95. In a response to an interrogatory,
Neville conceded “that DTSC has incurred costs in
overseeing the investigation and remediation of
environmental contamination associated with the Neville
site.” Pearlman Decl., Ex. A at 30:3-4. Accordingly, DTSC
has established the third element of CERCLA liability.°
6. The Court will consider below both Neville’s assertion that
DTSC should be barred from recovering any costs associated with
the Neville site, and its narrower challenge to the propriety and
validity of some of the specific response costs put forward by DTSC.
Bie Ae eit ahd New ABA 5 Ask Us Ar hina se hot
71a
_ Appendix F
The final element of liability under CERCLA is that
Neville falls within one of the four classes of statutorily
defined responsible parties. DTSC argues that Neville is
liable under at least two of these categories as (1) “the owner
and operator of a vessel or facility’; and (2) “any person
{including corporations] who at the time of disposal of any
hazardous substance owned or operated any facility at which
such hazardous substances were disposed [.]” 42 U.S.C.
§ 9607(a)(1)-(2).’ Neville admits that it has owned and
operated the Neville facility since 1952. Amended Answer
46,9. It also admits that it owned and operated the facility
at the time of the disposal of hazardous substances. /d. | 16.
Therefore, Neville is hable under CERCLA as the owner and
operator of the Neville facility.
In sum, DTSC has established the four elements of a
prima facie case for CERCLA liability against Neville.
The burden therefore shifts to Neville to refute its liability.
B. Defenses to Liability Under CERCLA
Neville asserts six affirmative defenses to CERCLA
liability in the Amended Answer. These defenses are:
(1) failure to state recoverable CERCLA costs; (2) payment
as satisfaction; (3) plaintiff’s costs [are] inconsistent with
the NCP; (4) statute of limitations; (5) acts or omissions of
third parties; intervening and superseding acts; and (6) no
CERCLA hazardous substances [were present at the site].
Amended Answer at 5-6.
7. The other two statutory categories refer to persons who
arranged for disposal or treatment of hazardous substances at the
facility, and to transporters of hazardous wastes to the facility.
42 U.S.C. § 9607(a)(3)-(4).
72a
Appendix F
Neville’s first, third, fifth and sixth affirmative defenses
do not rebut DTSC’s prima facie case of liability. Neville’s
first and third affirmative defenses challenge only whether
particular costs incurred by DTSC are recoverable, and are
therefore not defenses to liability. See WSDOT, 59 F.3d at
798 (“failure to comply with the NCP is not a defense to
liability, but rather a factual issue affecting damages”).
Neville’s fifth affirmative defense parallels the language of
CERCLA’s “innocent landowner” defense, which provides
a Statutory defense to liability where the release of hazardous
substances was due to
42 U.S.C. § 9607(b)(3). In order to be able to assert this
innocent landowner defense, the statute provides that a party
must also demonstrate, by a preponderance of the evidence,
that
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 [].
(a) [it] 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) [it] took precautions ©
against foreseeable acts or omissions of any such
third party and the consequences that could
foreseeably result from such acts or omissions.
at iced hittin IAD DES
A isthe RS ar te
73a
Appendix F
Id. The defense is unavailable to anyone who contributed,
actively or passively, to the release of a hazardous substance
at a site. Carson Harbor Village, Ltd. v. Unocal Corp., 270
F.3d 863, 887 (9th Cir.2001) (en banc). Neville has provided
no evidence of the involvement of a third party at the Neville
site to whom the release of hazardous substances could be
attributed. Furthermore, Neville has not presented evidence
which, even when considered in the light most favorable to
Neville, would establish that it did not contribute in some
way to the release of hazardous substances at the Neville
site. Therefore, Neville cannot prevail on its fifth affirmative
defense. ;
Neville’s sixth affirmative defense is also not
available here, because Neville has admitted that “there have
been releases, or threatened releases, of hazardous substances
into the environment” from the Neville facility. Amended
Answer 46.°
Neville’s second affirmative defense is based on its
contention that actions taken by the parties limit DTSC’s
recovery to the $46,636.38 activity fee which Neville has
already paid. Although this defense is entitled “payment as
satisfaction” in Neville’s amended answer, in its opposition
to the present motion Neville recasts its defense as an
argument that DTSC should be barred from recovery because
(1) it acted in an arbitrary and capricious manner and (2) its
claims are subject to equitable estoppel. DTSC contends that
Neville’s attempt to assert equitable defenses to liability fails
8. The RAP for the site prepared by Neville also supplies
indisputable evidence of the presence of hazardous substances at the
Neville facility. See Jeche Decl., Ex. A at 35-49.
74a
Appendix F
as a matter of law because CERCLA limits available
affirmative defenses to those enumerated in the statute.
Congress imposed strict, but not absolute, liability under
CERCLA. Levin Metals Corp. v. Parr-Richmond Terminal
Co., 799 F.2d 1312, 1316-17 (9th Cir.1986). Statutorily
defined responsible parties are liable for releases or
threatened releases of a hazardous’ substance
‘“{njotwithstanding any other provision or rule of law,
and subject only to the defenses set forth in [42 U.S.C.
§ 9607(b)].” 42 U.S.C. § 9607(a). The affirmative defenses
set forth in 42 U.S.C. § 9607(b) are that the release of a
hazardous substance was “caused solely by (1) an act of God;
(2) an act of war; (3) the ‘innocent landowner’ defense set
forth above; or (4) any combination of the foregoing... .”
The Ninth Circuit has concluded that these statutory
affirmative defenses are intended to be exclusive. See Levin
Metals, 799 F.2d at 1317 (“in order to state a claim for a
declaration of nonliability, the declaratory judgment plaintiff
must base its claim of nonliability on one or more of
[42 U.S.C. § 9607(b)’s] statutory affirmative defenses”)
(emphasis added); see also United States v. Shell Oil Co.,
1992 WL 144296, *2 (C.D.Cal.1992) (“this Court must
conclude that for the purposes of [liability under § 9607(a)]
of CERCLA, only the enumerated defenses will be
recognized”). Other courts have specifically held that
equitable defenses cannot be used to preclude liability under
§ 9607(a) of CERCLA. See Shell Oil, 1992 WL 144296
at *8 (defendant’s asserted equitable defenses of estoppel,
waiver, laches, and unclean hands must be stricken because
the language of § 9607(a), which provides for CERCLA
liability “notwithstanding any other provision or rule of law,
and subject only to the defenses set forth in subsection (b),”
75a
Appendix F
clearly demonstrates that CERCLA’s enumerated affirmative
defenses are exclusive); United States. v. Stringfellow, 661
F.Supp. 1053, 1062 (C.D.Cal.1987) (accord). Accordingly,
the Court finds that Neville’s second affirmative defense to
CERCLA liability, whether characterized as payment having
been satisfied or as equitable estoppel, is unavailable because
it is not one of the enumerated affirmative defenses set forth
in 42 U.S.C. § 9607(b).?
Neville’s fourth affirmative defense is that DTSC’s cost
recovery action is barred by the statute of limitations.'°
Neville argues that DTSC’s complaint is not timely because
it was not filed “within 6 years after initiation of physical
on-site construction of the remedial action” as required by
CERCLA. 42 U.S.C. § 9613(g)(2)(B). The complaint was
9. Neville also attempts to raise DTSC’s alleged arbitrary and
capricious conduct as a defense to liability. However, this is-a
misapplication of the arbitrary and capricious conduct standard, which
is employed to measure the consistency of particular cleanup actions
with the NCP, and therefore goes to the question of what costs the
government is entitled to recover as damages rather than to the
question of liability. See WSDOT, 59 F.3d at 798 (holding that
WSDOT was not entitled to recover response costs under CERCLA
where its actions in connection with an environmental cleanup were
inconsistent with the NCP to such a high degree as to be arbitrary
and capricious, but also stating that “failure to comply with the NCP
is not a defense to liability, but rather a factual issue affecting
damages”).
10. The evidence presented by the parties in regard to Neville’s
statute of limitations defense is set out more fully in the Court’s
December 18, 2001 Minute Order denying Neville’s motion for
summary judgment.
76a
Appendix F
filed on September 21, 2000, and is therefore barred by the
statute of limitations if on-site construction of the remedial
action was initiated before September 21, 1994. The
applicability of the statute of limitations here depends of
whether the start of construction of groundwater extraction
wells, which the parties agree took place in April 1994,
formed part of a “removal” action or a “remedial” action
prior to September 21, 1994.
CERCLA defines attempts to clean up environmental
contamination as either removal or remedial actions.
A removal action is defined as
the cleanup or removal of released hazardous
substances from the environment, such actions as
may be necessary taken in the event of the threat
of release of hazardous materials into the
environment, such actions as may be necessary to
monitor, assess, and evaluate the release or threat
of release of hazardous substances, the disposal
of removed material, or the taking of such other
actions as may be necessary to prevent, minimize,
or mitigate damage to the public health or welfare
or to the environment, which may otherwise result
from a release or threat of release.
42 U.S.C. § 9601(23). A remedial action is defined as
those actions consistent with permanent remedy.
taken instead of or in addition to removal actions
in the event of a release or threatened release of a
hazardous substance into the environment, to
a
ee RRR DEAR REA AREA DS 0 ANS aN tee
77a
Appendix F
prevent or minimize the release of hazardous
substances so that they do not migrate to cause
substantial danger to present or future public
health or welfare or the environment.
42 U.S.C. § 9601(24). The difficulty presented by these two
definitions 1s that they both may cover the same activity.
See Geraghty and Miller, Inc. v. Conoco, Inc., 234 F.3d 917,
926 (Sth Cir.2000) (“the CERCLA definitions [of removal
and remedial] are expansive enough that certain activities
may well be covered by both’); Public Serv. Co. v. Gates
Rubber Co., 175 F.3d 1177, 1182 (10th Cir.1999) (“Elements
of either response action may overlap and semantics often
obscure the actual nature of the cleanup performed.”).
Advanced Micro Devices v. National Semiconductor
Corporation, 38 F.Supp.2d 802, 812 (N.D.Cal.1999),
provides some guidance on the question of when an action
should be considered a remedial action for purposes of the
CERCLA statute of limitations. Advanced Micro Devices
concerned a situation quite similar to the instant case.
Extraction wells initially drilled by plaintiff at its facility in
1986 as part of an “interim remediation program” were
eventually incorporated into the final remedial plan for the
site in September 1991. Jd. at 806-07. A CERCLA cost
recovery suit for contribution was filed in September 1997.
Id. at 807. The court considered whether the initial
installation of the wells constituted a remedial action which
would trigger CERCLA’s six-year statute of limitations.
Plaintiff argued that no remedial action could take place until
a final remedial plan had been officially approved. /d. at 811.
The court rejected that bright-line test in favor of an analysis
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Appendix F
of the proximity of the action to the “disclosure of the final
remedial design, which may occur prior to approval of the
final remedial plan.” /d. at 812; see also State of California
v. Hyampom Lumber Co., 903 F.Supp. 1389, 1393
(E.D.Cal.1995) (holding that a draft RAP constituted a final
remedial design); Geraghty and Miller, 234 F.3d at 927
(actions cannot be classified as remedial when “Louisiana
Department [of Environmental Quality] had yet to issue its
final decision, and only that decision will define the ultimate
remedial strategy”). The Advanced Micro Devices court
concluded that the extraction wells could not have been
“remedial” in 1986 because there was no final remedial
design until 1991. /d. The court observed that a remedial
design could not be considered final while “different
alternatives for final remedial action were still being
evaluated.” /d. at 812. The court addressed the fact that the
extraction wells were adopted without modification as part
of the final groundwater treatment system by noting
“the system could not, upon its installation, have ‘played a
critical role in the implementation of the permanent remedy,’
because the permanent remedy was not determined until four
years later.... The fact that the extraction activities
ultimately did not turn out to be ‘short-term,’ because they
were implemented in the final remedy four years later, cannot
now be considered in hindsight.” /d. at 813 (citing Hyampom
Lumber, 903 F.Supp. at 1393).
In the instant case, Neville argues that the remedial action
was initiated in April 1994, when it began construction of
the extraction wells.Neville argues that a plan for a
“Groundwater Removal Action,” (“GRA”) approved in April
1993, is identical in all respects to the final remedial plan.
79a
Appendix F
Additionally, Neville alleges that DTSC never considered a
more aggressive strategy for addressing groundwater
contamination on the site than that embodied in the GRA.
DTSC argues that although the final RAP for groundwater is
essentially the same as the GRA, other options for the
treatment of groundwater were evaluated, and there was no
guarantee in April 1994 that the final remedial plan would
take the form that it did. DTSC presents evidence that diverse
solutions to the groundwater contamination problem were
still being discussed in Neville’s draft FS in December 1994,
and that the parties were still considering changes in the
groundwater plan up until the RAP was finalized in
May 1995. DTSC also offers evidence that, at least as late as
an October 6, 1994 letter to Neville, it was insisting that
further sampling and monitoring was necessary before the
wells proposed in the GRA could be considered the final
remedial solution for groundwater at the site. Neville has
presented no countervailing evidence. Therefore, the Court
finds there is no material question of fact that a final remedial
design was not in place on September 21, 1994. Accordingly,
the CERCLA statute of limitations does not bar DTSC’s cost
recovery claim.
In sum, Neville cannot prevail on any of its affirmative
defenses. Thus, DTSC has established a prima facie case of
CERCLA liability against Neville and is entitled to recover
all response costs which are not inconsistent with the NCP.
In addition, DTSC is entitled to a declaration that Neville is
liable for all of DTSC’s future response costs not inconsistent
with the NCP.
80a
Appendix F
C. Inconsistency with the NCP
Response actions undertaken by a federal or state
governmental entity, or an Indian tribe, are presumed to be
consistent with the NCP. WSDOT, 59 F.3d at 799-800.
Thus, when a governmental body such as DTSC seeks to
recover its costs, it is the defendant’s burden to prove that a
particular government action is inconsistent with the NCP
in order to preclude the government from recovering the costs
of taking that action. /d. at 800. In order to meet this burden
of proof, the defendant must Show that the government’s
particular action was arbitrary and capricious. /d. at 803;
42 U.S.C. § 9613(j)(2).
Here, Neville argues that DTSC’s actions are inconsistent
with the NCP in two ways. First, as discussed above, Neville
argues that DTSC acted in an arbitrary and capricious manner
when it allegedly represented that it would not seek cost
recovery against Neville, but later did so. Second, Neville
argues that DTSC has offered insufficient evidence to support
the recovery of some of its claimed costs. The Court will
consider each of these arguments below.
1. DTSC’s Alleged Representations That It Would
Not Seek Cost Recovery.
Neville argues that certain statements and actions by
DTSC constituted representations that DTSC would not seek
cost recovery from Neville. Neville further argues that these
representations render D™SC’s decision to pursue full cost
pected ide hha é
Sla
Appendix F
recovery arbitrary and capricious.'' In particular, Neville
argues that: (1) the record demonstrates that DTSC offered
to dismiss existing cost recovery actions, and to forego future
cost recovery actions, in exchange for Neville’s voluntary
compliance with the RAO, including Neville’s commitment
to remediate the Neville site; and (2) Neville’s payment of
the activity fee assessed by DTSC was, pursuant to DTSC’s
own policy at that time, a full satisfaction of Neville’s
obligation to pay remediation costs for the Neville site, and
DTSC’s later policy change, which resulted in the retroactive
imposition of full cost recovery on Neville, was arbitrary
and capricious.
As a preliminary matter, DTSC argues that, even if it
acted in the way that Neville describes, these actions are
irrelevant to the question of whether DTSC has complied
with the NCP. The NCP “provide[s] the organizational
structure and procedures for preparing for and responding to
... releases of hazardous substances.” WSDOT 59 F.3d at
799 (quoting 40 C.F.R. § 300.1). It “identifies methods for
investigating the environmental and health problems resulting
from a release or threatened release and criteria for
determining the appropriate extent of response activities.”
Id. (quoting Matter of Bell Petroleum Servs., 3 F.3d 889,
894 (Sth Cir.1993)). The NCP does not set forth particular
11. Many of Neville’s arguments are phrased in terms of
equitable estoppel—i.e. that DTSC should be equitably estopped from
pursuing cost recovery because of its alleged representations that it
would not do se. However, given the standard by which compliance
with the NCP is judged,
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