# Appendix — Carson Harbor Village, Ltd. v. Braley

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1104%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2002
- **Citation:** 535 U.S. 971

## Text

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IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT
SITTING EN BANC

| q CARSON HARBOR VILLAGE, LTD.,

a limited partnership dba Carson Harbor Village
Mobilehome Park,
Plaintiff-counter-defendant-Appellant
vz.

UNOCAL CORPORATION,

a Delaware Corporation
Defendant-cross-defendant

and

CITY OF CARSON,
Defendant-cross-defendant-cross-claimant-Appellee

270 F.3d 863

Appeal from the United States District Court
for the Central District of California

Filed October 24, 2001

Before: Mary M. Schroeder, Chief Judge, and
Procter Hug, Jr., Betty B. Fletcher, Harry Pregerson, Alex
Kozinski, Thomas G. Nelson, Michael Daly Hawkins, M.
Margaret McKeown, Richard A. Paez, Marsha S. Berzon,
and Richard C. Tallman, Circuit Judges.

App. 2
McKEOWN, Circuit Judge:

This appeal stems from the environmental cleanup of
a contaminated wetlands site used originally for petroleum
production and later as a mobile home park. The current
property owner, Carson Harbor Village, Ltd. (“Carson
Harbor”), brought suit principally under the Comprehensive
Environmental Response, Compensation, and Liability Act
(“CERCLA”), 42 U.S.C. § 9601 et seq., for reimbursement
of costs associated with the cleanup. We are called upon to
determine whether, as a matter of law, those cleanup costs
were “necessary” and whether certain of the defendants are
“potentially responsible parties” (“PRPs”) under CERCLA §
107(a), 42 U.S.C. § 9607(a).

The touchstone for determining the necessity of
response costs is whether there is an actual threat to human
health or the environment; that necessity is not obviated
when a party also has a business reason for the cleanup.
Because the district court erred in focusing on the ulterior
business motive for remediation and because there are
genuine issues of material fact regarding whether Carson
Harbor’s response costs were, in fact, “necessary,” we
cannot uphold summary judgment on this ground.

Even if we assume that those costs were necessary,
we still must decide whether defendants Carson Harbor
Village Mobile Home Park, Richard G. Braley, and Walker
Smith, Jr. (the “Partnership Defendants”) are PRPs; if not,
summary judgment was nonetheless appropriate. Parsing the
meaning of the term “disposal” in § 9607(a)(2) lies at the
heart of this question. We conclude that the migration of
contaminants on the property does not fall within the
statutory definition of “disposal.” Thus, on the CERCLA
claim, we affirm the district court’s grant of summary
judgment for the Partnership Defendants. ;

App. 3

We must also address the remaining issues. We
affirm the district court’s grant of summary judgment to
defendants City of Carson, County of Los Angeles, and City
of Compton on Carson Harbor’s state claims. Finally, with
respect to Carson Harbor’s claim for indemnity against the
Partnership Defendants, in view of our holding that there are
genuine issues of material fact regarding the necessity of
Carson Harbor’s response costs, we reverse the grant of

summary judgment.
BACKGROUND

Carson Harbor owns and operates a mobile home
park on seventy acres in the City of Carson, California. From
1977 until 1983, prior to Carson Harbor’s ownership,
defendant Carson Harbor Village Mobile Home Park, a
general partnership controlled by defendants Braley and
Smith (the “Partnership Defendants”), owned the property.
They, like Carson Harbor, operated a mobile home park on
the property. Beginning over thirty years earlier, however,
from 1945 until 1983, Unocal Corporation held a leasehold
interest in the property and used it for petroleum production,
operating a number of oil wells, pipelines, above-ground
storage tanks, and production facilities.

An undeveloped open-flow wetlands area covers
approximately seventeen acres of the site. Properties located
upstream from the property are in the Cities of Carson and
Compton and unincorporated areas within the County of Los
Angeles (i.e., the “Government Defendants”). Storm water
feeds into the wetlands from those properties through storm
drains. California Highway 91 (the Artesia Freeway), which
is operated by the California Department of Transportation
(“Caltrans”), is also located immediately upstream from the

App. 4

property. Runoff from approximately three miles of the
highway drains into the wetlands.

While attempting to refinance the property in 1993,
Carson Harbor discovered hazardous substances on the site.
The prospective lender commissioned an environmental
assessment, which revealed tar-like and slag materials in the
wetlands area of the property. Subsequent investigation
revealed that the materials were a waste or by-product of
petroleum production and that they had been on the property
for several decades prior to its development as a mobile

home park.

Much of the tar-like and slag materials was covered
with soil and vegetation. A portion of the tar-like material,
however, was visibie on the surface in an area measuring
approximately twenty feet wide by thirty feet long. The slag
material appeared to have been deposited on top of the tar-
like material and was visible in an area approximately thirty
feet by 170 feet. Subsequently, it was determined that the
contaminated area covered an area approximately seventy-
five feet wide by 170 feet long and extended from one to five
feet below the surface. The material and surrounding soils
contained elevated levels of petroleum hydrocarbons
(measured in “total petroleum hydrocarbons” or “TPH”) and
lead; and soil samples upgradient of -the materials also
contained elevated levels of lead. These levels exceeded

state reporting limits.

As required by law, Carson Harbor’s environmental
consultants reported their findings to the appropriate
agencies. The Regional Water Quality Control Board (the
“Water Quality Board”) and its Site Cleanup Unit Chief,
James Ross, assumed the lead in the cleanup effort. Carson
Harbor requested a no-further-action letter from the Water
Quality Board before proposing cleanup, and submitted a

App. 5

remedial action plan (“RAP”), proposing to remove the tar-
like and slag materials and impacted soils. Because the
highest concentrations of TPH and lead contamination were
associated with the tar-like and slag materials, the RAP did
not address other areas of elevated TPH and lead
contamination. Ross approved the RAP but required Carson
Harbor to bring the contamination down to a lower level than
that proposed in the RAP.

The tar-like and slag materials were removed from
the property in 1995. Over the course of five days, 1,042
tons of material were removed. In all but four of the soil
samples taken after the cleanup, TPH and lead levels were
within the state-required limits. The Water Quality Board
staff conducted a site visit and independent soil testing. Ross
then sent a closure letter to Carson Harbor, stating that

the removal is complete to the extent required
by this Board. ... We have concluded that all
the requirements established by this Board in
our RAP approval letter . . . have been
complied with. In addition, the contamination
has been successfully removed and the
remaining soil in the bottom of the
watercourse poses no further threat to surface
waters of the State. We, therefore, conclude
that no further action is required at this site.

In 1997, Carson Harbor brought suit against the Partnership
Defendants, the Government Defendants, and Unocal
seeking relief under federal environmental statutes,

' Although Caltrans and James W. van Loben Sels, as the
Director of Caltrans, are also named in the complaint, they are not
identified in any of the causes of action at issue in this appeal.

a |

App. 6

CERCLA, the Resource Conservation and Recovery Act
(“RCRA”), 42 U.S.C. § 6901 ef seg., and the Clean Water
Act (“CWA”), 33 U.S.C. § 1251 ef seg., and for state
common law claims of nuisance, trespass, injury to
easement, indemnity, and negligent nondisclosure. Carson
Harbor sought to recover the costs of its cleanup (which
totaled approximately $285,000) as well as damages arising
from its inability to refinance the property. According to
Carson Harbor, Unocal is responsible for dumping the tar-
like and slag materials on the property; the Partnership
Defendants are liable as past owners of the property; and the
Government Defendants and Caltrans are liable for lead on
the property that resulted from lead-contaminated storm
water runoff, which may have contributed either to the lead
found in the tar-like and slag materials or the elevated lead
levels outside those materials.

The parties stipulated to the dismissal of the
negligent non-disclosure claim and cross-moved for
summary judgment on the remaining claims. The district
court granted the defendants’ motions on all claims except
the state-law nuisance and trespass claims asserted against
Unocal. See Carson Harbor Vill., Ltd. v. Unocal Corp., 990
F. Supp. 1188, 1199 (C.D. Cal. 1997). The court first held
that Carson Harbor’s CERCLA claim fails because it did not
show that its remedial action was “necessary” under 42
U.S.C. § 9607(a)(4)(B) because there was no evidence of an
“actual and real threat” to human health or the environment. —
Id. at 1193-94. In so holding, the district court disregarded
certain evidence to the contrary as inadmissible hearsay. See
id. at 1193 n.4. In the alternative, with respect to the
Partnership Defendants, the district court held that they were
not PRPs within the meaning of 42 U.S.C. § 9607(a)(2)
because “disposal warranting CERCLA liability requires a
showing that hazardous substances were affirmatively
introduced into the environment.” Jd. at 1195. And, with

App. 7

respect to the storm water runoff, there was no direct
evidence that any lead-contaminated storm water entered the
property at any time prior to 1983, when Carson Harbor

purchased the property. Jd.

The district court granted summary judgment on the
RCRA claim because the “evidence shows that there was no
imminent danger” to human health or the environment — a
required element for a RCRA claim. /d. at 1196 (emphasis
added). On the CWA claim, the court concluded that there
was no evidence that the defendants violated a National
Pollutant Discharge Elimination System (“NPDES”) permit,
as required for a CWA violation. Jd. at 1197. With respect
to the common law claims for nuisance, trespass, and injury
to easement against the Government Defendants, the district
court held that CAL. Civ. CODE § 3482, which provides that
nothing done pursuant to express statutory authorization can
be deemed a nuisance, provides a complete defense.
Because Carson Harbor failed to show that the Government
Defendants violated the NPDES permits, the court
concluded, any pollutants discharged into the storm water
were permissible. Jd Finally, the district court rejected
Carson Harbor’s claim for express indemnity against the
Partnership Defendants, because the Water Quality Board
did not require the cleanup. See id. at 1198-99.

Carson Harbor appealed the district court’s rulings on
the CERCLA claim, the state-law claims against the
Government Defendants, and the indemnity claim against the

App. 8

Partnership Defendants.* Following the issuance of a panel
opinion, we agreed to hear this case en banc.’

DISCUSSION

We review de novo the district court’s grant of
summary judgment. Block v. City of Los Angeles, 253 F.3d
410, 416 (9th Cir. 2001). Similarly, “the district court’s
interpretation of a statute is a question of law which we
review de novo.” Pinal Creek Group v. Newmont Mining
Corp., 118 F.3d 1298, 1300 (9th Cir. 1997).

I. CERCLA OVERVIEW

CERCLA “generally imposes strict liability on
owners and operators of facilities at which hazardous
substances were disposed.” 3550 Stevens Creek Assocs. v.
Barclays Bank, 915 F.2d 1355, 1357 (9th Cir. 1990). To
achieve that end, CERCLA “authorizes private parties to
institute civil actions to recover the costs involved in the
cleanup of hazardous wastes from those responsible for their
creation.” Jd.; accord Pinal Creek Group, 118 F.3d at 1300
(“Section 107(a) . . . authorizes suits against certain
statutorily defined ‘responsible parties’ to recover costs
incurred in cleaning up hazardous waste disposal sites.”’)
(internal quotation marks and citation omitted).

To prevail in a private cost recovery action, a

? Carson Harbor did not pursue its appeal of the district
court’s rulings on the RCRA and CWA claims.

> Carson Harbor Vill., Ltd. v. Unocal Corp., 240 F.3d 841
(9th Cir. 2001) (withdrawing Carson Harbor Vill., Lid. v. Unocal
Corp., 227 F.3d 1196 (9th Cir. 2000)).

App. 9

plaintiff must establish that (1) the site on
which the hazardous substances are contained
is a “facility” under CERCLA’s definition of
that term, Section 101(9), 42 U.S.C. §
9601(9); (2) a “release” or “threatened
release” of any “hazardous substance” from
the facility has occurred, 42 U.S.C. §
9607(a)(4); (3) such “release” or “threatened
release” has caused the plaintiff to incur
response costs that were “necessary” and
“consistent with the national contingency
plan,” 42 U.S.C. §§ 9607(a)(4) and (a)(4)(B);
and (4) the defendant is within one of four
classes of persons subject to the liability
provisions of Section 107(a).

3550 Stevens Creek Assocs., 915 F.2d at 1358 (footnote
omitted). The third and fourth of these elements are at issue
here. With respect to the fourth element, 42 U.S.C. §
9607(a) sets out the “four classes of persons subject to the
liability provisions.” Jd. Those persons are “potentially
responsible parties” or “PRPs.” See Pritikin v. Dep't of
Energy, 254 F.3d 791, 795 (9th Cir. 2001). We must decide
in this case whether the Partnership Defendants fit within the
second PRP category; namely, whether they owned the
contaminated property “at the time of disposal of any
hazardous substance.” 42 U.S.C. § 9607(a)(2).

Also relevant to our analysis, although not the basis
of the judgment here, is the fact that even if the plaintiff
establishes the requisite four elements for recovery, a
defendant may assert a variety of defenses to liability. Most
relevant here are the so-called “third party” and “innocent
landowner” defenses, by which a PRP may show that the
release of hazardous substances was caused solely by “an act
or omission of a third party,” 42 U.S.C. § 9607(b)(3), or that

App. 10

“the disposal or placement of the hazardous substance”
occurred before the PRP acquired the property. 42 U.S.C. §
9601(35)(A). In this way, the interpretation of “disposal”
affects the application of these defenses. See infra section III.
B.2.b.

Once liability is established, the defendant may avoid
joint and several liability by establishing that it caused only a
divisible portion of the harm — for example, it contributed
only a specific part of the hazardous substances that spilled.
Even if a defendant cannot do so, it may seek contribution
from other PRPs under 42 U.S.C. § 9613(f)(1). See Pinal
Creek Group, 118 F.3d at 1300 (noting that Congress’s
amendment of CERCLA to include § 9613(f)(1) “clarifies
and confirms” that contribution is available to PRPs). “A
PRP’s contribution liability will correspond to that party’s
equitable share of the total liability and will not be joint and
several.” Jd. at 1301. The contribution provision aims to
avoid a variety of scenarios by which a comparatively
innocent PRP might be on the hook for the entirety of a large
cleanup bill.

II. GENUINE ISSUES OF MATERIAL FACT
PRECLUDE SUMMARY JUDGMENT ON
WHETHER THE RESPONSE COSTS WERE
“NECESSARY” :

Remediation costs are recoverable under CERCLA
only if “necessary.” It is generally agreed that this standard
requires that an actual and real threat to human health or the
environment exist before initiating a response action. See,
e.g., EPA v. Sequa Corp. (In re Bell Petroleum Servs., Inc.),
3 F.3d 889, 905-06 (Sth Cir. 1993); Southfund Partners III v.
Sears, Roebuck & Co., 57 F. Supp. 2d 1369, 1378 (N.D. Ga.
1999); Foster v. United States, 922 F. Supp. 642, 652
(D.D.C. 1996); Yellow Freight Sys., Inc. v. ACF Indus., Inc.,

App. 11

909 F. Supp. 1290, 1299 (E.D. Mo. 1995); G.J. Leasing Co.
v. Union Elec. Co., 854 F. Supp. 539, 561-62 (S.D. IIl.
1994), aff'd, 54 F.3d 379, 386 (7th Cir. 1995).

Although the district court correctly referenced this
standard, it went on to follow the “ulterior motive” analysis
established by the district court in G.J/. Leasing Co., 854 F.
Supp. at 562. There, the court held that, to the extent
cleanup activities are taken for reasons other than because of
“an actual and real public health threat,” cleanup costs are
not “necessary.” Jd Because there was evidence in G.J.
Leasing that the cleanup of asbestos contamination was
motivated by business reasons (specifically, the desire to
convert the property to new uses), the court held that the
cleanup costs were not “necessary.” Accord Foster, 922 F.
Supp. at 652-53; Yellow Freight Sys., 909 F. Supp. at 1299.

In concluding that Carson Harbor’s response costs
were not “necessary,” the district court relied on G.J.
Leasing’s ulterior motive analysis. Specifically, it relied on
the testimony of James Ross, the Water Quality Board Site
Cleanup Unit Chief. Ross testified that he would “not likely”
have required Carson Harbor to cleanup the site if Carson
Harbor had not come to him with a remediation plan:

Q: If the owners had not come to you with a
remediation plan, if they had simply reported
to you that this is what we see here, would
you have required them to develop some
remediation plan?

A: Not likely.

Q: As far as you were concerned, this stuff,
even the slag and tar-like material, could have
just stayed there?

App. 12

A: Very likely.

Q: So, then, basically, this remediation was
done at their initiative for their own reasons
and not because of any environmental or
health problem that was perceived by the
Regional Board?

A: Yes.
Carson Harbor, 990 F. Supp. at 1193.

The district court’s reliance on this testimony
highlights its adoption of the G.J. Leasing analysis and its
decision to disregard evidence that created a genuine issue of
material fact on the linchpin issue of necessity. In
determining whether response costs are “necessary,” we
focus not on whether a party has a business or other motive
in cleaning up the property, but on whether there is a threat
to human health or the environment and whether the
response action is addressed to that threat. It is unrealistic to
believe that clean up is necessarily motivated by
eleemosynary factors. Although a private plaintiff will
almost always have a business or financial motive for
cleaning up a site, such subjective intent is simply not part of
the calculus. Rather, we focus on the objective
circumstances of each case. The issue is not why -the
landowner decided to undertake the cleanup, but whether it
was necessary. See Cadillac Fairview/Cal., Inc. v. Dow
Chem. Co., 840 F.2d 691, 695 (9th Cir. 1988) (necessity is a
factual question). To hold otherwise would result in a
disincentive for cleanup. Indeed, the cleanup may be
motivated by many factors, such as fear of a government
enforcement action, landowner liability, and even self-
serving economic reasons.

App. 13

Nor must a plaintiff show agency action as a
prerequisite to cost recovery. Agency inaction is not
dispositive of the question whether contamination presents
an environmental risk worthy of response. See id. (“The
district court erred in ruling that some governmental entity
must authorize and initiate a response action for that action
to be necessary and consistent with the national contingency
plan.”); NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th
Cir. 1986) (holding that response costs can be “necessary”
even though the agency that required cleanup never
approved the response actions taken). Whether the Water
Quality Board would have ordered remediation is not a
definitive determination of whether there is a health or
environmental risk.

Although agency inaction is not dispositive, an actual
agency cleanup order is highly relevant and, in some cases,
compelling on the necessity question. Here, there was
conflicting evidence on this point. Some evidence in the
record also suggests that the Water Quality Board required
the remediation and that it perceived a threat to public health
or the environment. In his deposition, Ross conceded that
lead contamination from the tar and slag material presented a
threat to surface and groundwater:

Q: Do you agree that this project was a surface
water quality protection issue?

A: In part, yes.
Q: What do you mean “in part”?

A: Well, it also has the potential to be
groundwater.

App. 14

Q: Okay. So do you think that there might be a
threat to groundwater as a result of the
contamination on the property?

A: Certainly occurred to me.

Q: What hazardous substances on the property
did you think were a threat to groundwater?

A: Lead primarily.

Q: Did the levels of lead that were found on
this property have the potential to get into the
groundwater?

A: Yes, the soluble lead.

Ross also testified that the level of lead contamination on the
property “would require something to be done.”

A review of the Water Quality Board’s conduct also
supports the conclusion that it perceived a threat to public
health or the environment: The Board withheld the no-
further-action letter Carson Harbor’s consultant requested
shortly after he sent the initial notice of contamination on the
property. Instead of adopting the consultant’s recommended
cleanup levels, the Board required lower lead levels. And,
after the cleanup, a Board representative inspected the site to
verify that the contamination had been adequately remedied
before it issued the no-further-action letter. Finally, the letter
predicates closure on a finding that “the remaining soil in the
bottom of the watercourse poses no further threat to surface
waters of the State.”

The district court also excluded certain evidence as
hearsay, namely, the testimony of Carson Harbor’s expert,

App. 15

environmental consultant Dr. Hassan Amini, and a
memorandum written by a Unocal employee. In marked
contrast to Ross’s testimony that in the first instance a
remediation would likely not have been required, Amini
testified that the Water Quality Board ordered the cleanup,
and the memorandum corroborates that testimony, as does
correspondence between Amini and Ross.

When properly considered, this evidence of Ross’s
prior inconsistent statements creates a genuine issue of
material fact about whether Carson Harbor’s response costs
were “necessary.” This evidence falls within the “basic rule
of evidence . . . that prior inconsistent statements may be
used to impeach the credibility of a witness.” United States
v. Hale, 422 U.S. 171, 176, 45 L. Ed. 2d 99, 95 S. Ct. 2133
(1975); accord United States v. Bao, 189 F.3d 860, 866 (9th
Cir. 1999) (“Because a declarant’s prior inconsistent
statement is not offered for its truth, it is not hearsay.”). In
addition, experts are entitled to rely on hearsay in forming
their opinions. See FED. R. Evip. 703 (“If [the underlying
facts or data are] of a type reasonably relied upon by experts
in the particular field in forming opinions or inferences upon
the subject, the facts or data need not be admissible in
evidence in order for the opinion or inference to be
admitted.”); United States v. McCollum, 732 F.2d 1419,
1422-23 (9th Cir. 1984) (applying Rule 703 to affirm the
admission of expert testimony based on hearsay). Thus, the
evidence was admissible because it was part of the basis for
Amini’s expert opinion about whether the contamination
posed a threat to public health or the environment such that
the Water Quality Board would require cleanup. The district
court therefore erred by disregarding this evidence.

In light of this conflicting evidence, genuine issues of
material fact preclude summary judgment on the issue of
whether Carson Harbor’s response costs were “necessary.”

App. 16

Therefore, with respect to Unocal and the Government
Defendants the district court erred by granting summary
judgment in their favor on the CERCLA claim. We discuss
the CERCLA claim against the Partnership Defendants,
below.

We decline to address in the first instance the
Government Defendants’ remaining CERCLA arguments,
including their arguments that they are, nevertheless, entitled
to summary judgment because Carson Harbor’s response
costs were not consistent with the national contingency plan,
see 42 U.S.C. § 9607(a)(4)(B); because federally permitted
releases are exempt from CERCLA coverage under 42
U.S.C. § 9607(j); and because the third party defense applies.
We leave these issues for the district court’s consideration on
remand.

Ill. THE CONTAMINANT MIGRATION AT ISSUE
HERE IS NOT A DISPOSAL UNDER CERCLA

The fourth element of Carson Harbor’s cost recovery
action requires a showing “that the defendant falls within one
of four classes of persons subject to liability under 42 U.S.C.
§ 9607(a).” Kaiser Aluminum & Chem. Corp. v. Catellus
Dev. Corp., 976 F.2d 1338, 1340 (9th Cir. 1992); accord 42
U.S.C. § 9613(f)(1) (“Any person may seek contribution
from any other person who is liable or potentially liable
under section 9607(a) ....” ). Those four categories of
persons are “potentially responsible parties” or “PRPs.”

To determine whether the Partnership Defendants are
PRPs, we must decide whether there was a “disposal” during
their ownership of the property. This inquiry rests on our
interpretation of the statutory definition of “disposal.” Based
upon the plain meaning of the statute, we conclude that there
was no disposal during the Partnership Defendants’

App. 17

ownership. Therefore, they are not PRPs, and they are not
subject to liability. Accordingly, the district court did not err
in granting summary judgment in their favor on the
CERCLA issue.

A. PRPs, THE MEANING OF “DISPOSAL,”
AND CIRCUIT COURT
INTERPRETATIONS

Section 9607(a), which sets out the four PRP categories,
provides:

(1) the owner and operator of a vessel or a
facility,

(2) any person who at the time of disposal of
any hazardous substance owned or operated
any facility at which such hazardous
substances were disposed of,

(3) any person who by contract, agreement, or
otherwise arranged for disposal or treatment,
or arranged with a transporter for transport for
disposal or treatment, of hazardous substances
owned or possessed by such person, by any
other party or entity, at any facility or
incineration vessel owned or operated by
another party or entity and containing such
hazardous substances, and

(4) any person who accepts or accepted any
hazardous substances for transport to
disposal or treatment facilities, incineration
vessels or sites selected by such person, from
which there is a release, or a threatened
release which causes the incurrence of

App. 18

response costs, of a hazardous substance, shall
be liable... .

42 U.S.C. § 9607(a) (emphasis added). Carson Harbor
argues that the Parmership Defendants fit within the second
PRP category as owners of the property “at the time of
disposal” under § 9607(a)(2).

CERCLA defines “disposal” for purposes of §
9607(a) with reference to the definition of “disposal” in
RCRA, see 42 U.S.C. § 9601(29), which in turn defines
“disposal” as follows:

The term “disposal” means the discharge,
deposit, injection, dumping, spilling, leaking,
or placing of any solid waste or hazardous
waste into or on any land or water so that such
solid waste or hazardous waste or any
constituent thereof may enter the environment
or be emitted into the air or discharged into
any waters, including ground waters.

42 U.S.C. § 6903(3) (emphasis added). Under this
definition, for the Partnership Defendants to be PRPs, there
must have been a “discharge, deposit, injection, dumping,
spilling, leaking, or placing” of contaminants on the property
during their ownership. /d.

Although we have previously concluded that
RCRA’s definition of “disposal” is “clear,” 3550 Stevens
Creek Assocs., 915 F.2d at 1362, whether the definition
includes passive soil migration is an issue of first impression
in this circuit. Other circuit courts have taken a variety of
approaches. Those opinions cannot be shoehorned into the
dichotomy of a classic circuit split. Rather, a careful reading
of their holdings suggests a more nuanced range of views,

App. 19

depending in large part on the factual circumstances of the
case. Compare United States v. 150 Acres of Land, 204
F.3d 698, 706 (6th Cir. 2000) (concluding that absent “any
evidence that there was human activity involved in whatever
movement of hazardous substances occurred on the
property,” there is no “disposal”), ABB Indus. Sys., Inc. v.
Prime Tech., Inc., 120 F.3d 351, 359 (2d Cir. 1997) (holding
that prior owners are not liable for the gradual spread of
contamination underground), and United States v. CDMG
Realty Co., 96 F.3d 706, 722 (3d Cir. 1996) (“The passive
spreading of contamination in a landfill does not constitute
‘disposal’ under CERCLA.”), with Nurad, Inc. v. William E.
Hooper & Sons Co., 966 F.2d 837, 846 (4th Cir. 1992)
(holding past owners liable for the “disposal” of hazardous
wastes that leaked from an underground storage tank).

The first circuit court to face the question was the
Fourth Circuit in Nurad. There, the court addressed whether
leaking from underground storage tanks is a “disposal.” 966
F.2d at 844-46. The current owner brought suit against two
prior owners for reimbursement costs under CERCLA,
claiming that the past owners were PRPs under § 9607(a)(2).
Id. at 840. The court rejected the “active-only” approach,
stating:

This circuit has already rejected the “strained
reading” of disposal which would limit its
meaning to “active human conduct.” United
States v. Waste Ind., Inc., 734 F.2d 159, 164-
65 (4th Cir. 1984). In Waste Industries, the
court held that Congress intended the 42
U.S.C. § 6903(3) definition of disposal “to
have a range of meanings,” including not only
activé conduct, but also the reposing of
hazardous waste and its subsequent movement
through the environment. Jd. at 164.

App. 20

Id. at 845. The Fourth Circuit concluded “that § 9607(a)(2)
imposes liability not only for active involvement in the
‘dumping’ or ‘placing’ of hazardous waste at the facility, but
for ownership of the facility at a time that hazardous waste
was ‘spilling’ or ‘leaking.”” Jd at 846; accord Crofton
Ventures Lid. P’ship v. G & H P’ship, No. 00-1517, 2001
WL 829885, at *6 (4th Cir. July 24, 2001) (holding that,
“given the breadth of the statutory definition of ‘disposal,’
the district court must be able to conclude that the buried
drums did not leak” when the defendants owned or operated
the facility “to make a finding that [they] were not liable
under § 9607(a)(2)”).

Four years later, in CDMG Realty, the Third Circuit
addressed whether the spread of contamination within a
landfill is a “disposal.” 96 F.3d at 710. There, as in Nurad,
the current owner of contaminated property sought
contribution from the prior owner, asserting that the prior
owner was a PRP under § 9607(a)(2). Jd. The Third Circuit
heid, based on the plain meaning of the words used to define
“disposal” and the structure and purposes of CERCLA, see
id. at 714-18, that “the passive migration of contamination
dumped in the land prior to [the past owner’s] ownership
does not constitute disposal,” id at 711. The court
specifically declined, however, “to reach the question
whether the movement of contaminants unaided by human
conduct can ever constitute ‘disposal,’” id, concluding that
“while ‘leaking’ and ‘spilling’ may not require affirmative
human conduct, neither word denotes the gradual spreading
of contamination alleged here.” Jd. at 714.

The next year, the Second Circuit, in ABB Industrial
Systems, similarly addressed whether a current owner could
recover cleanup costs under § 96U7(a)(2) from several
companies that had previously controlled the property. 120

App. 21

F.3d at 353. As in CDMG Realty, the Second Circuit
addressed whether there was a “disposal” where hazardous
chemicals “continued to gradually spread underground”
while the defendants controlled the property. /d. at 357. The
Second Circuit, relying on the Third Circuit’s analysis of
CERCLA’s language, structure, and purposes in CDMG
Realty, affirmed the district court’s grant of summary
judgment to the defendants, holding “that prior owners and
operators of a site are not liable under CERCLA for mere
passive migration.” Jd. at 359. The court stated:

There is no genuine issue of triable fact as to
whether the dismissed defendants spilled
chemicals or otherwise contaminated the
property; moreover, although hazardous
chemicals may have gradually spread
underground while the dismissed defendants
controlled the property (passive migration),
we conclude that prior owners are not liable
under CERCLA for passive migration ... .

Id. at 354. The Second Circuit, however, “expressed no
opinion” on whether “prior owners are liable if they acquired
a site with leaking barrels [and] the prior owner’s actions are
purely passive.” Jd. at 358 n.3.

In 150 Acres of Land, the Sixth Circuit interpreted
“disposal” for purposes of the “innocent landowner” defense.
204 F.3d at 704-05. In that context, the Sixth Circuit
explicitly required active conduct for a “disposal.” See id. at
706. The court concluded that the current owners, whose
status as PRPs arises under § 9607(a)(1), acquired the
property after the “disposal” under § 9601(35), because there
is no “disposal” “in the absence of any evidence that there
was human activity involved in whatever movement of
hazardous substances occurred on the property since [the

App. 22

current owners] have owned it.” Jd; see also Bob's
_ Beverage, Inc. v. Acme, Inc., No. 00-3045, 2001 U.S. App.
LEXIS 19589, at *12-13 (6th Cir. Sept. 4, 2001).

In sum, although all of the cases reference the
active/passive distinction in some manner, there is no clear
dichotomy among the cases that have interpreted “disposal.”
Rather, the cases fall in a continuum, with the Sixth Circuit
taking an “active-only” approach in /50 Acres of Land; the
Third Circuit, in CDMG Realty, and the Second Circuit, in
ABB Industrial Systems, addressing only the spread of
contamination (and leaving open whether migration must
always be “active” to be a “disposal”); and, finally, the
Fourth Circuit in Nurad, concluding that “disposal” includes
passive migration, at least in the context of leaking
underground storage tanks.

We have not addressed whether “disposal” in §
9607(a) includes the passive movement of contamination.
We have held, however, that the movement of contamination
that does result from human conduct is a “disposal.” See
Kaiser Aluminum & Chem. Corp., 976 F.2d at 1342 “ _iding
that “disposal” under § 9607(a)(2) includes _ party’s
movement and spreading of contaminate: soil to
uncontaminated portions of property and that “Congress did
not limit [‘disposal’] to the initial introduction of hazardous
material onto property”).‘ In another context, we have held

* Similarly, under the Clean Water Act (“CWA”), 33
U.S.C. § 1311(a), the movement of soil in the context of an
agricultural activity called “deep ripping” (i.e., deep plowing) can
be a “discharge” of pollutants into wetlands. See Borden Ranch
P’ship v. United States Army Corps of Eng’rs, No. 00-15700, 2001
WL 914217, at *3 (9th Cir. Aug. 15, 2001). Although we
acknowledge that the CWA is a different statutory scheme from
CERCLA, it is noteworthy that, under both environmental statutes,

App. 23

that “disposal” refers “only to an affirmative act of
discarding a substance as waste, and not to the productive
use of the substance.” 3550 Stevens Creek Assocs., 915 F.2d
at 1362 (concluding that there was no “disposal” of asbestos
in a building when it was installed for use as insulation and
fire retardant). We have also held that the definition of
“disposal” is the same under § 9607(a)(2) and § 9607(a)(3).
See id. (“Because the [‘disposal’] definition applicable to
actions under § 107(a)(2) and (a)(3) is the same, and there is
no meaningful difference for purposes of CERCLA between
a party who sells or transports a product containing or
composed of hazardous substances for a productive use, and
a party who actually puts that product to its constructive use,
we see no reason to adopt a different definition in this
case.”).

B. STATUTORY CONSTRUCTION *

When interpreting a statute, “our task is to construe
what Congress has enacted.” Duncan v. Walker, 150 L. Ed.
2d 251, 121 S. Ct. 2120, 2124 (2001). “We look first to the
plain language of the statute, construing the provisions of the
entire law, including its object and policy, to ascertain the
intent of Congress.” Northwest Forest Res. Council v.
Glickman, 82 F.3d 825, 830 (9th Cir. 1996) (internal
quotation marks and citation omitted). We will resort to

there is no question that the movement of soil that results from
affirmative conduct can subject responsible persons to liability.

* Although we would normally address the agency’s
interpretation of the statute, see Chevron U.S.A. Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 844-45, 81 L. Ed. 2d 694,
104 S. Ct. 2778 (1984), here there is no EPA determination as a
point of reference or deference.

App. 24

legislative history, even where the plain language is
unambiguous, “where the legislative history clearly indicates
that Congress meant something other than what it said.”
Perlman v. Catapult Entm’t, Inc. (In re Catapult Entm't,
Inc.), 165 F.3d 747, 753 (9th Cir. 1999). The plain
meaning of the terms used to define “disposal” compels the
conclusion that there was no “disposal” during the
Partnership Defendants’ ownership, because the movement
of the contamination, even if it occurred during their
ownership, cannot be characterized as a “discharge, deposit,
injection, dumping, spilling, leaking, or placing.” 42 U.S.C.
§ 6903(3). This approach is consistent with CERCLA’s
purposes, minimizes internal inconsistency in the statute, and
presents no conflict with CERCLA’s legislative history.

1. PLAIN MEANING

“We begin, as always, with the language of the statute.”
Duncan, 121 S. Ct. at 2124; accord Perlman, 165 F.3d at
750. In examining the statutory language, we follow the
Supreme Court’s instruction and adhere to the “Plain
Meaning Rule”:

It is elementary that the meaning of a statute
must, in the first instance, be sought in the
language in which the act is framed, and if
that is plain, . . . the sole function of the courts
is to enforce it according to its terms.

Where the language is plain and admits of no
more than one meaning the duty of
interpretation does not arise, and the rules
which are to aid doubtful meanings need no
discussion.

App. 25

Caminetti v. United States, 242 U.S. 470, 485, 61 L. Ed. 442,
37 S. Ct. 192 (1917) (citations omitted); accord Negonsott v.
Samuels, 507 U.S. 99, 104-05, 122 L. Ed. 2d 457, 113 S. Ct. -
1119 (1993).

“When a statute includes an explicit definition, [however,]
we must follow that definition, even if it varies from that
term’s ordinary meaning.” Stenberg v. Carhart, 530 U.S.
914, 942, 147 L. Ed. 2d 743, 120 S. Ct. 2597 (2000).
Therefore, we return to the definition of “disposal.” Under §
6903(3), there is a “disposal” when there has been a

- discharge,
- deposit,

- injection,
Py dumping,
- spilling,

- leaking, or
- placing

of solid or hazardous wastes on the property. 42 U.S.C. §
6903(3). CERCLA does not define these terms, but we gain
some insight into their statutory meaning by examining
CERCLA’s definition of “release,” which includes some of
the words used to define “disposal,” as well as the word

“disposing”:

The term “release” means any spilling,
leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the
environment (including the abandonment or
discarding of barrels, containers, and other
closed receptacles containing any hazardous
substance or pollutant or contaminant)... .

App. 26

42 U.S.C. § 9601(22) (emphasis added). “We must presume
that words used more than once in the same statute have the
same meaning.” Boise Cascade Corp. v. United States Envil.
Prot. Agency, 942 F.2d 1427, 1432 (9th Cir. 1991).
Therefore, from these definitions, we can conclude that
“release” is broader than “disposal,” because the definition
of “release” includes “disposing” (also, it includes “passive”
terms such as “leaching” and “escaping,” which are not
included in the definition of “disposal”). But, at the same
time, the definitions of “disposal “and “release” have several
words in common: “discharge”/"discharging”;
“injection”/injecting”; “dumping”; “spilling”; and
“leaking.”

We thus focus on the plain meanings of the terms
used to define “disposal.” We first note that one can find
both “active” and “passive” definitions for nearly all of these
terms in any standard dictionary.* We therefore reject the
absolute binary “active/passive” distinction used by some
courts. Indeed, the substantial overlap in terms used to
define “disposal” and “release” and the presence of both
“active” and “passive” terms in both definitions suggests that
something other than an active/passive distinction governs
the terms.

® The doctrine of noscitur a sociis is, thus, not particularly
helpful. That doctrine stands for the proposition that “‘a word is
known by the company it keeps.’” United States v. King, 244 F.3d
736, 740 (9th Cir. 2001) (quoting Gustafson v. Alloyd Co., 513
U.S. 561, 575, 131 L. Ed. 2d 1, 115 S. Ct. 1061 (1995)). That is,
“‘words are to be judged by their context and . . . words in a series
are to be understood by neighboring words in the series.” Id. at
740-41 (quoting United States v. "Carpenter, 933 F.2d 748, 750-51
(9th Cir. 1991)).

——

App. 27

Instead of focusing solely on whether the terms are
“active” or “passive,” we must examine each of the terms in
relation to the facts of the case and determine whether the
movement of contaminants is, under the plain meaning of the
terms, a “disposal.” Put otherwise, do any of the terms fit
the hazardous substance contamination at issue?

Examining the facts of this case, we hold that the
gradual passive migration of contamination through the soil
that allegedly took place during the Partnership Defendants’
ownersh‘p was not a “discharge, deposit, injection, dumping,
spilling, leaking, or placing” and, therefore, was not a
“disposal” within the meaning of § 9607(a)(2). The
contamination on the property included tar-like and slag
materials. The tar-like material was highly viscous and
uniform, without any breaks or stratification. The slag
material had a vesicular structure and was more porous and
rigid than the tar-like material. There was some evidence
that the tar-like material moved through the soil and that lead
and/or TPH may have moved from that material into the soil.
If we try to characterize this passive soil migration in plain
English, a number of words come to mind, including gradual
“spreading,” “migration,” “seeping,” “oozing,” and possibly
“leaching.” But certainly none of those words fits within the
plain and common meaning of “discharge, . . . injection,
dumping, . . . or placing.” 42 U.S.C. § 6903(3). Although
these words generally connote active conduct, even if we
were to infuse passive meanings, these words simply do not ©
describe the passive migration that occurred here. Nor can
the gradual spread here be characterized as a “deposit,”
because there was neither a deposit by someone, nor does the
term deposit encompass the gradual spread of contaminants.’

’ The dissent’s construction of “deposit” is so broad as to
include virtually any contamination. As used in the statute, the
term is akin to “putting down,” or placement. Nothing in the

App. 28

The term “spilling” is likewise inapposite. Nothing spilled
out of or over anything. Unlike the spilling of a barrel or the
spilling over of a holding pond, movement of the tar-like and
slag materials was not a spill.

Of the terms defining “disposal,” the only one that
might remotely describe the passive soil migration here is
“leaking.” But under the plain and common meaning of the
word, we conclude that there was no “leaking.” The
circumstances here are not like that of the leaking barrel or
underground storage tank envisioned by Congress, as
discussed infra, or a vessel or some other container that
would connote “leaking.” Therefore, there was no
“disposal,” and the Partnership Defendants are not PRPs. On
this basis, we affirm the district court’s grant of summary
judgment to the Partnership Defendants on the CERCLA
claim.

In adopting this plain meaning construction, we are
mindful that the statute will be applied in a myriad of
circumstances, many of which we cannot predict today. And
although most of the terms generally connote active conduct,
we agree with the Third Circuit that, for example, “‘leaking’
and ‘spilling’ may not require affirmative human conduct,
[although] neither word denotes the gradual spreading of
contamination alleged here.” CDMG Realty, 96 F.3d at 714.
This approach does not rule out the scenario in which
“spilling,” “leaking,” or perhaps other terms in some
circumstances, encompasses passive migration. As discussed

context of the statute or the term “disposal” suggests that Congress
meant to include chemical or geologic processes or passive
migration. Indeed, where Congress intended such a meaning, it
employed specific terminology, such as “leaching,” see 42 U.S.C.
§ 9601 (22).

App. 29

below, this approach is consistent with the purpose of
CERCLA.

2. READING THE STATUTE AS A WHOLE

No statutory provision is written in a vacuum.
Complex regulatory statutes, in particular, often create a web
— or, in the case of CERCLA, perhaps a maze — of sections,
subsections, definitions, exceptions, defenses, and
administrative provisions. Thus, we examine the statute as a
whole, including its purpose and various provisions. See
McCarthy v. Bronson, 500 U.S. 136, 139, 114 L. Ed. 2d 194,
111 S. Ct. 1737 (1991) (“In ascertaining the plain meaning
of [a] statute, the court must look to the particular statutory
language at issue, as well as the language and design of the
statute as a whole.”) (quoting K Mart Corp. v. Cartier, Inc.,
486 U.S. 281, 291, 100 L. Ed. 2d 313, 108 S. Ct. 1811
(1988)).

As outlined in section I, CERCLA is structured in
such a way as to, first, implicate a range of operators,
owners, and transporters as PRPs; second, offer certain of
these PRPs affirmative defenses that allow them to avoid
liability entirely; and third, provide judicial or administrative
mechanisms limiting liability or encouraging early
settlement. The interpretation of “disposal” controls the
scope of parties designated as PRPs; thus, it has ripple
effects on the applicability and effectiveness of the available
defenses and administrative tools that complete the statutory
structure. In examining this statute as a whole, then, we
assess whether our interpretation of “disposal” is in accord
with the statute’s purpose, and creates or minimizes any
internal inconsistency in CERCLA.

App. 30
A. STATUTORY PURPOSE

“CERCLA was enacted to protect and preserve
public health and the environment by facilitating the
expeditious and efficient cleanup of hazardous waste sites.”
Pritikin, 254 F.3d at 794-95 (internal quotation marks and
citation omitted); accord 3550 Stevens Creek Assocs., 915
F.2d at 1357 (“CERCLA was enacted to ‘provide for
liability, compensation, cleanup, and emergency response for
hazardous substances released into the environment and the
cleanup of inactive hazardous waste disposal sites.””)
(quoting Pub. L. No. 96-510, 94 Stat. 2767 (1980)). But
CERCLA also has a secondary purpose — assuring that

“responsible” persons pay for the cleanup:

CERCLA was a response by Congress to the
threat to public health and the environment
posed by the widespread use and disposal of
hazardous substances. Its purpose was [(1)] to
ensure the prompt and effective cleanup of
waste disposal sites, and [(2)] to assure that
parties responsible for hazardous substances
bore the cost of remedying the conditions they
created.

Pinal Creek Group, 118 F.3d at 1300 (quoting Mardan
Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454, 1455 (9th Cir.
1986)). “We construe CERCLA liberally to achieve these ~
goals.” Kaiser Aluminum, 976 F.2d at 1340. At the same
time, we have cautioned that “we must reject a construction
that the statute on its face does not permit, and the legislative
history does not support.” 3550 Stevens Creek Assocs., 915
F.2d at 1363.

Our conclusion that “disposal” does not include
passive soil migration but that it may include other passive

App. 31

migration that fits within the plain meaning of the terms used
to define “disposal” is consistent with CERCLA’s dual
purposes. Holding passive owners responsible for migration
of contaminants that results from their conduct and for
passive migration ensures the prompt and effective cleanup
of abandoned storage tanks, which, as discussed infra, is one
of the problems Congress sought to address when enacting
CERCLA. Indeed, if “disposal” is interpreted to exclude all
passive migration, there would be little incentive for a
landowner to examine his property for decaying disposal
tanks, prevent them from spilling or leaking, or to clean up
contamination once it was found.

B. INTERNAL CONSISTENCY AND
AVOIDING ILLOGICAL
RESULTS

Our plain-language interpretation of “disposal” also
makes sense within the liability provisions of CERCLA --
the sections identifying the parties that are “potentially
responsible.” As explained in section III.A, CERCLA creates
four categories of PRPs: current owners or operators,
owners or operators at the time of a disposal, arrangers, and
transporters. See 42 U.S.C. § 9607(a). This categorization
makes the best sense only under a _plain-meaning
interpretation of “disposal;” the extreme positions on either
side render the structure awkward. For example, had
Congress intended all passive migration to constitute a
“disposal,” then disposal is nearly always a perpetual
process. See, e.g., CDMG Realty, 96 F.3d at 716. Hence,
every landowner after the first disposal would be liable, and
there would be no reason to divide owners and operators into
categories of former and current. See, e.g, id at 715;
Ecodyne Corp. v. Shah, 718 F. Supp. 1454, 1457 (N.D. Cal.
1989). On the other extreme, had Congress intended
“disposal” to include only releases directly caused by

App. 32

affirmative human conduct, then it would make nv sense to
establish a strict liability scheme assigning responsibility to
“any person who at the time of disposal . . . owned or
operated any facility.” 42 U.S.C. § 9607(a)(2). Rather, the
statute would have a straightforward causation requirement.

Similarly, our interpretation of “disposal” is sensible
in light of CERCLA’s twin concepts of “disposal,” on one
hand, and “release,” on the other. As explained in section I,
CERCLA holds a PRP liable for a disposal that “releases or
threatens to release” hazardous substances into the
environment. Some courts, examining this structure, note
that it would be reasonable to conclude that Congress meant
“disposal” and “release” to mean entirely different things —
in other words, because “release” clearly requires no
affirmative human conduct, “disposal” must be limited to
affirmative human actions that make possible a “release.”
See, e.g., 150 Acres of Land, 204 F.3d at 706 (“It makes
sense . . . to have ‘disposal’ stand for activity that precedes
the entry of a substance into the environment and ‘release’
stand for the actual entry of substances in to the
environment.”).

Working on a blank slate, it might make sense to
design a statute with such clearcut, distinct, and interlocking
concepts. Sadly, the words of the statute:stand in the way of
such an easy explanation. The definition of “disposal,” as we
have noted, includes the terms “discharge, deposit, injection,
dumping, spilling, leaking, or placing.” 42 U.S.C. § 6903(3).
The definition of “release” includes “spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing.” 42
U.S.C. § 9601(22). Even a quick glance reveals two
important aspects of these definitions. First, each term
encompasses some form of five words: “dump,” “spill,”

App. 33

“discharge,” “injection,” and “leaking.” Second, “release”
even incorporates the term “disposing” itself.

This structure defeats the notion that the two terms
are mutually exclusive, or that subtle differences between
them mean that “disposal” always requires affirmative
human conduct and “release” does not. With five terms in
common, the definitions compel the conclusion that there is
at least substantial overlap between “disposal” and “release,”
and the overlap includes some of those terms whose
definitions do not necessarily require human conduct, such
as “spilling” and “leaking.” § Thus, we reject the
interpretation that the difference in the definitions requires us
to put a gloss on “disposal” that would make the terms
mutually exclusive.*

This analysis suggests that the plain-meaning
interpretation of “disposal” makes a good fit with the first
part of CERCLA’s overall structure — the assignment of
presumptive liability to various parties.

CERCLA next allows certain PRPs to avoid liability
by asserting various defenses. Most relevant here is the so-
called “innocent owner” defense, which absolves from
liability landowners who can show that “the real property on
which the facility concerned is located was acquired by the
defendant after the disposal or placement of the hazardous
substance on, in, or at the facility” and that “at the time the
defendant acquired the facility the defendant did not know

* Our assessment does not diminish the real difference
between the two definitions. For example, as the court in CDMG
Realty noted, “leach” is included in the definition of “release,” but
not included in the definition of “disposal.” See CDMG Realty, 96
F.3d at 715.

App. 34

and had no reason to know that any hazardous substance
which is the subject of the release or threatened release was
disposed of on, in, or at the facility.” 42 U.S.C. §
9601(35)(A). Our interpretation of “disposal” preserves the
purpose and role of this defense within the statutory
structure. The alternatives, on the other hand, would render
the defense either impossible to present or entirely
superfluous.

Were we to adopt an interpretation of “disposal” that
encompassed all subsoil passive migration, the innocent
landowner defense would be essentially eliminated. As
discussed above, in all but a tiny fraction of cases,’ such an
interpretation would lead to the conclusion that disposal is a
never-ending process, rendering liable every landowner after
the initial disposal. For those subsequent landowners, the
innocent landowner defense would be available only if one
could show that the land was purchased after the hazardous

. substances were “placed” there. Thus, the defense would

only be available to a small portion of the landowners who
have no actual culpability in the disposal of the hazardous
substances. '

Commentators have written the obituary for the
innocent landowner defense many times since it was created
in 1986. See, eg., Rosemary J. Beless, Superfund’s
“Innocent Landowner” Defense: Guilty until Proven

* Those cases would presumably be limited to subsoil
migration that halts because it reaches an impermeable barrier
(such as a shale layer or retaining wall that completely blocks
migration in any direction). Of course, the availability of the
defense assumes that the landowner would be able to prove that
the contamination hit the impermeable barrier before the land was
purchased, and that migration had halted completely.

App. 35

Innocent, 17 J. LAND RESOURCES & ENVTL. L. 247 (1997);
Shane Clanton, Passive Disposal of the Innocent Landowner
Defense, 9 J. NAT. RESOURCES & ENVTL. L. 255 (1993-
1994); L. Jager Smith, Jr., Note, CERCLA’s Innocent
Landowner Defense: Oasis or Mirage?, 18 COLUM. J.
ENVTL. L. 155 (1993). And, to be sure, Congress intended
the defense to be very narrowly applicable, for fear that it
might be subject to abuse. See infra section III.B.3.b.
Nevertheless, we need not narrow the defense any more than

Congress did in creating it.

The opposite extreme is no better fit. Were we to
interpret “disposal” to include only actions caused by
affirmative human conduct, we would eliminate the need for
an innocent landowner defense altogether. Such an
interpretation of “disposal” would exclude from liability
even a landowner whose facilities “spill” or “leak” without
affirmative human conduct — that is, anything short of an
intentional dump during an owner’s tenure. Under this
interpretation, there would exist no landowner capable of
presenting an innocent landowner defense who would not
already be excluded from liability in the first place." We
doubt, even in the uncertain world of CERCLA, that
Congress went to the trouble of amending the statute to
create a defense that no one would need.

Our interpretation, on the other hand, preserves the
defense and confirms the role chosen for it by Congress. It

'© It is an open question whether the innocent owner
defense is available to only current owners, or both current and
past owners. Compare CDMG Realty, 96 F.3d at 716-17
(suggesting that the defense is only available to current owners)
with ABB Indus., 120 F.3d at 358 (concluding that it is available
to current and past owners).

App. 36

must be acknowledged, however, that our interpretation of
“disposal” does not leave a seamless statute. The defense is
phrased so as to extend to those who purchase property after
“disposal or placement.” 42 U.S.C. § 9601(35)(A) (emphasis
added). Courts facing this wording have read it in a number
of ways. Some have concluded that “or placement” is
surplusage, and can be discarded. See CDMG Realty, 96
F.3d at 716 (concluding that the innocent landowner defense
is available only “after the disposal”); see also Robert L.
Bronston, Note, The Case Against Intermediate Owner
Liability for Passive Migration of Hazardous Waste, 93
MICH. L. REV. 609, 628 (1994). We are bound, though, to
give meaning to every word of a statute. Frustratingly, this
canon of construction leads to the shortest of logical cul-de-
sacs in this case. If we give meaning to both “disposal” and
“placement,” how are the words different, particularly if we _
consider that “placement” is included in the statutory
definition of “disposal”? And if the defense is available to
anyone who purchases after “disposal,” why repeat
“placement” — a mere subcategory of “disposal”?

Clearly, neither a logician nor a grammarian will find
comfort in the world of CERCLA. It is not our task,
however, to clean up the baffling language Congress gave us
by deleting the words “or placement” or the word “disposal”
from the innocent landowner defense. Transported to
Washington, D.C. in 1980 or 1986, armed with a red pen and
a copy of Strunk & White’s Elements of Style, we might
offer a few clarifying suggestions. But in this time and
place, we can only conclude that Congress meant what it
said, and offered the innocent landowner defense to both
those who purchased land after “disposal” or after
“placement,” thereby giving “disposal” its statutory meaning
and “placement” its ordinary one, despite their overlap.

App. 37

In sum, we conclude that the plain-meaning

interpretation of disposal preserves the scope and the role of
the defenses established by Congress.

The third part of CERCLA’s structure includes a
variety of provisions that instruct courts or the agency how
to administer the liability provisions. These provisions, for
example, allow a court to allocate liability on the basis of
culpability, see, e.g., Pinal Creek Group, 118 F.3d at 1300-
01; create a system by which de minimis contributors can
escape joint and several liability, 42 U.S.C. § 9622(g); and
authorize administrative policies encouraging early
settlement with the EPA, shielding the settler from suit by
other parties, see infra note 11. These mechanisms are often
overlooked, but are crucial to the day-to-day realities of
CERCLA administration and litigation. None of them has a
direct impact on the interpretation of the term “disposal,” so
we will not discuss them in detail. But each of them, in
different ways, attempts to ensure that a PRP with minimal
responsibility — such as an owner without culpability but
outside the technical parameters of the innocent owner
defense — does not get stuck with more than his fair share of
the financial responsibility for cleanup. In the real-world
administration of the statute as a whole, these are the
provisions that allow a court or the EPA to ensure that the
parade of horribles — the liability of the five-minute
landowner, the one-drop contributor, or the unknowing
home-buyer -- does not come to pass."

'! See, e.g., U.S. ENVIRONMENTAL PROTECTION AGENCY,
POLICY TOWARD OWNERS OF PROPERTY CONTAINING
CONTAMINATED AQUIFERS (May 24, 1995) (“where hazardous
substances have come to be located on or in a property solely as
the result of subsurface migration in an aquifer . . . EPA will not
take enforcement action . . . . Further, EPA may consider de
minimis settlements . . . where necessary to protect such

App. 38

Based on this analysis, we conclude that the plain
meaning interpretation of “disposal” is consistent with the
statute both in its constituent parts and as a whole.

3. LEGISLATIVE HISTORY

Because the conclusion we reach is compelled by the
plain meaning of the statute’s text, our inquiry into
legislative history is strictly limited. Although the Supreme
Court has advised that recourse to legislative history is not
necessary where a statute’s plain meaning is clear, the Court
does suggest that we review the legislative history to ensure
that there is no clearly contrary congressional intent. See,
e.g., Salinas v. United States, 522 U.S. 52, 57-58, 139 L. Ed.
2d 352, 118 S. Ct. 469 (1997); Dunn v. Commodity Futures
Trading Comm'n, 519 U.S. 465, 471 & n. 8, 473-74, 478
(1997); Darby v. Cisneros, 509 U.S. 137, 147, 125 L. Ed. 2d
113, 113 S. Ct. 2539 (1993); John Doe Agency v. John Doe
Corp., 493 U.S. 146, 155, 107 L. Ed. 2d 462, 110 S. Ct. 471

landowners from contribution suits.”); U.S. ENVIRONMENTAL
PROYECTION AGENCY, MEMORANDUM REGARDING SUPPORT OF
REGIONAL EFFORTS TO NEGOTIATE PROSPECTIVE PURCHASER
AGREZMENTS (PPAS) AT SUPERFUND SITES AND CLARIFICATION
OF "PA GUIDANCE (January 10, 2001) (encouraging use of PPAs
for purchasers of potentially contaminated sites); U.S.
ENVIRONMENTAL PROTECTION AGENCY, POLICY TOWARDS
OWNERS OF RESIDENTIAL PROPERTY AT SUPERFUND SITES (July
3, 1991) (“EPA . . . will not take enforcement actions against an
owner of residential property to require such owner to undertake
response actions or pay response costs, unless the residential
homeowner’s activities lead to a release or threat of a release of
hazardous substances ... .” ).

App. 39

(1989). Here, we scan CERCLA’s legislative history to
determine whether intentions contrary to the plain meaning
are present. Our review reveals no such indication. On the
contrary, the available materials demonstrate that the public,
the EPA, and drafters of the legislation used and understood
the words “discharge, deposit, injection, dumping, spilling,
leaking, or placing” in their ordinary, plain-meaning sense,
encompassing events both caused by affirmative human
conduct and, particularly in the case of “spill” and “leak,”
occurring solely in a passive context as well. Because we
find no indication that Congress intended anything other than
what it said, we present here only a few brief examples.

A. CERCLA

Any inquiry into CERCLA’s legislative history is
somewhat of a snark hunt. Like other courts that have
examined the legislative history, we -have found few truly
relevant documents. See, e.g., CDMG Realty, 96 F.3d at 706
n.2. This is not surprising, given the circumstances
surrounding the bill’s passage.’ One searches in vain for

"2 Accord Perlman, 165 F.3d at 753 (stating that, where
the plain statutory language is unambiguous, we resort to
legislative history only to discern whether there is a clear
indication “that Congress meant something other than what it
said”); 3A NORMAN J. SINGER, STATUTES AND STATUTORY
CONSTRUCTION § 75.05, at 428 (6th ed. 2000) (when interpreting
hazardous waste statutes, “the courts have sought to give effect to
the contemporaneous construction given the act by the legislators,
the EPA and the public and the central focus is on effecting the
intent of Congress as evidenced by legislative history” (footnote
omitted)).

' By November 1980, Congress had considered
emergency response and hazardous substance cleanup proposals
for at least three years. The bill that ultimately became law was an

App. 40

committee reports or floor statements explaining the purpose
of subtle or even dramatic changes from early versions of the
bill to final passage.“ See generally Frank P. Grad, A
Legislative History of the Comprehensive Environmental
Response, Compensation, and Liability (“Superfund”) Act of
1980, 8 COLUM .J. ENVTL. L. 1 (1982). Nevertheless, those
materials that do exist confirm the plain-meaning

interpretation of “disposal.”

As an initial matter, it is evident that CERCLA’s
primary targets included spills and leaks from abandoned
sites — sites at which there was no longer any affirmative
human activity. The two incidents of hazardous substance

eleventh-hour compromise hastily assembled by a bipartisan
leadership group of senators; it was introduced and passed by the
Senate with only days remaining in a lame-duck session, and went
to the House for an up-or-down vote. Statements in both houses
reflected members’ belief that the bill was flawed, but was the best
that might pass given the circumstances; the pressure on both
houses to pass something was compounded by the impending
party switch in the Senate. and the presidency. See Letter from
Senators Robert T. Stafford and Jennings Randolph to
Representative James J. Florio (December 2, 1980), reprinted at |
SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS,
97TH CONG., A LEGISLATIVE HISTORY OF THE COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY
ACT OF 1980 (SUPERFUND) 774-75 (Committee Print 1983)
(hereinafter “COMMITTEE PRINT”).

'* No committee or conference reports address the version
of the legislation that ultimately became law. “It was only last
minute, unrecorded compromises and acceptance of deliberate
ambiguity in some of the bill’s more controversial provisions that
permitted the legislation’s passage into law.” ALLAN J. TOPOL
AND REBECCA SNOW, SUPERFUND LAW AND PROCEDURE § 1.1, at
5 (1992).

App. 41

contamination that most prominently prompted
congressional action — Love Canal and the Valley of the
Drums” -- were both abandoned hazardous waste sites that
were described as spilling or leaking with no affirmative
human conduct.

Hearing testimony further confirmed that both the
EPA and the legislators understood that hazardous
substances legislation would deal with a wide range of
disposal events, not predicated on an “active/passive”
dichotomy. EPA Assistant Administrator Thomas Jorling
testified that one “common problem” is abandoned sites with
“barrels and tanks . . . leaking, allowing contamination of
surface and ground waters and frequently producing a severe
fire or explosion potential . . . The effects of the abandoned
waste disposal sites are similar to spills of hazardous
substances . . . .” Hazardous and Toxic Waste Disposal:
Joint Hearings Before the Subcommittees on Environmental
Pollution and Resource Protection of the Senate Committee
on Environment and Public Works, 96th Cong. 34 (1979)
(statement of Thomas C. Jorling, Assistant Administrator,

'S “During the 1940s and 1950s, Hooker Chemical &
Plastics Corporation used the Love Canal, which was built as part
of an electrical power project, to dispose of hundreds of 55-gallon
drums of chemicals. Hooker then donated the land to the Niagara
Falls Board of Education, which, in turn, constructed a school on
the site.” Topol, supra note 14, § 1.1, at 4n.10. At the “Valley of ©
the Drums” in Kentucky, “users had littered a large ravine with
some twenty thousand drums that were spilling hazardous
materials into the soil. The pollutants were then percolating into
the groundwater.” Jd. § 1.1, at 3. These two high-profile incidents
are often cited as the impetus for Congressional action. See id. §
1.1, at 1 (“In the beginning man created the Valley of the Drums,
Love Canal, and other similar blights upon the earth. Congress
saw these horrors and was not pleased.”).

App. 42

Water and Waste Management, Environmental Protection
Agency), reprinted at 1 COMMITTEE PRINT, supra note 13, at
89-90. Assistant Administrator Jorling further explained
why a leak or discharge can occur without human
interaction:

[Lagoons and ponds] as a group represent a
large potential danger to public health and the
environment. . . . In those areas where
precipitation exceeds evaporation . . . surface
impoundments will eventually either leak or
overflow and discharge to surface waters.

Id. at 88.

In addition, the primary legislative sponsors and
relevant committees regularly used the words “spill” or
“leak” to describe passive events at abandoned sites.
Representative Florio summarized the evils that CERCLA
aimed to fix: “Hundreds, possibly thousands, of neglected,
leaking disposal sites presently dot the country -- threatening
to release their lethal contents, despoiling water supplies and
menacing public health.” 126 CONG. REC. 26377 (1980),
reprinted at 2 COMMITTEE PRINT, supra note 13, at 226."
House committee reports included similar statements
reflecting the passive aspects of “spill” or “leak.”"’ Similar

' See also 126 CONG. REC. 26795 (1980) (statement of
Rep. Goldwater) (“This bill would establish a sizable “superfund”
which would pay for the cleanup costs of inactive or abandoned
dumpsites which leak hazardous wastes .. . .” ), reprinted at 2
COMMITTEE PRINT, supra note 13, at 381.

'” See, e.g., H.R. Rep. No. 96-1016, at 18 (1980) (“At the
Valley of the Drums, thousands of barrels were stacked illegally in
the hauler’s backyard. These drums are in a seriously deteriorating

App. 43

statements were made by individual senators,"* as well as
Senate committee reports.'*
B. SARA

In 1986 - Congress enacted the Superfund
Amendments and Reauthorization Act (“SARA”), aimed at
speeding cleanup and forcing quicker action by the EPA.”
Most significantly for our purposes, Congress created the
innocent landowner defense that we have already discussed.
See 42 U.S.C. § 9601(35)(A). It did not do so, however, by
creating a straightforward exception to CERCLA liability.
In a single stroke, SARA first clarified that one who
purchases land from a polluting owner or operator cannot
present a third-party defense, then set conditions under

state, and some have already burst and spilled their contents on the
ground.”), reprinted at 1 COMMITTEE REPORT, supra note 13, at
49.

'8 See, e.g., 126 Cong. Rec. 30931 (statement of Sen.
Randolph) (1980) (“Last summer, PCB’s leaked from a broken
transformer into animal feed at a feed processing plant. The
leakage was not discovered in time . . . The dangers posed by
buried chemical wastes have only recently begun to make a dent in
our national consciousness, largely as a result of the severe health
problems discovered at Love Canal.”), reprinted at 1 COMMITTEE
PRINT, supra note 13, at 683-84.”

"9 See, e.g., S. Rep. No. 96-848, at 5 (1980) (“Spills have
taken place because of transportation accidents involving
pipelines, trucks, rail cars, and barges or tankers, and also non-
transportation facilities such as storage tanks, holding lagoons and
chemical processing plants.”), reprinted at 1 COMMITTEE PRINT,
supra note 13, at 312.

© For a more complete discussion of the circumstances
surrounding SARA, see Topol, supra note 14, § 1.3 at 14-15.

App. 44

which this limit would not apply — that is, if the property
were purchased after disposal or placement, and the
purchaser did not know and had no reason to know that
hazardous substances were disposed of there. The plain-
meaning interpretation of “disposal” we adopt leaves in
place the narrow applicability of the defense. This reading is
confirmed by floor statements of the defense’s author,
Representative Frank, who indicated that the innocent owner
defense was unavailable to anyone who contributed, actively
or passively, to the release of the substance:

This amendment says that wholly innocent
landowners will not be held liable. We have
had problems before with the leases being
granted improvidently.

This amendment, I must say, is drafted in a
way to make that extremely unlikely. To get a
release from liability under this section, a
landowner must not have himself or herself
allowed or permitted any storage, not have
contributed to the release of any substance
and, and this is very important, the landowner
has the burden of proof to show that this
landowner had neither actual nor constructive
knowledge at the time of purchase that the
property had been used for hazardous waste
materials. In other words, you can get a
release under this only if you can show by the
preponderance of the evidence that you not
only did not contribute to it; you did not even
know when you bought it that it had this there.

131 CONG. REC. 34715 (1985) (statement of Rep. Frank).
Accordingly, the legislative history of the innocent owner

App. 45
defense does not contradict the plain meaning interpretation
of “disposal,” but rather is consistent with this formulation.

C. CONCLUSION

In sum, we hold that, in light of the plain meaning of
the terms used to define “disposal” in § 6903(3), the alleged
passive migration of contaminants through soil during the
Partnership Defendants’ ownership was not a “disposal”
under § 9607(a\(2). This plain-meaning approach is
consistent with the statute as a whole and its legislative
history. The Partnership Defendants are thus entitled to
summary judgment on the CERCLA claim.

IV. OTHER ISSUES

A. STATE CLAIMS AGAINST
GOVERNMENT DEFENDANTS

The district court held that California Civil Code §
3482 precludes Carson Harbor’s state claims against the
Government Defendants. Section 3482 provides that
“nothing which is done or maintained under the express
authority of a statute can be deemed a nuisance.” CAL. Civ.
CODE § 3482. Here, the Water Quality Board issued NPDES
permits to the Government Defendants in 1990 and 1996.
Those permits authorized the discharge of storm water
containing pollutants, and there is no evidence that there was
any lead-contaminated storm water runoff to the property
prior to 1994 or a violation of the permits. Therefore, the
district court properly granted summary judgment to the
Government Defendants on the state law claims.

B. INDEMNITY CLAIM AGAINST
PARTNERSHIP DEFENDANTS

App. 46

The district court granted the Partnership Defendants’
motion for summary judgment on Carson Harbor’s
indemnity claim under the purchase and sale agreement,
based on its conclusion that the response costs were not
“necessary” under § 9607(a)(4)(B). See Carson Harbor, 990
F. Supp. at 1198. Under the purchase and sale agreement,
which the Partnership Defendants and Carson Harbor
executed in 1983, the Partnership Defendants agreed to
indemnify and hold Carson Harbor harmless “from and
against any . . . damage, cost, expense . . . liability .. .
suffered by [Carson Harbor] resulting, directly or indirectly,
from .. . any liability or obligation of [the Partnership
Defendants] which [Carson Harbor] is not specifically
required to assume hereunder.” Thus, the Partnership
Defendants are liable for damages and costs Carson Harbor
suffered in connection with its cleanup of the property if the
Partnership Defendants would have been required to clean
up the property in 1983.

To survive summary judgment on this claim, Carson
Harbor must raise a genuine issue of material fact. Carson
Harbor argues that, because it was required to remove the
hazardous substances in 1995, the Partnership Defendants
would have been required to remove them in 1983. Because
we conclude that there is a genuine issue of material fact
concerning whether Carson Harbor’s 1995 cleanup costs
were “necessary” (i.e., whether the Water Quality Board
perceived a threat to public health or the environment and
whether it required the remediation), we reverse the grant of
summary judgment in favor of the Partnership Defendants.

CONCLUSION

We REVERSE the grant of summary judgment in
favor of Unocal and the Government Defendants on the
CERCLA claim. With respect to the Partnership

App. 47

Defendants, we AFFIRM the grant of summary judgment in
their favor on the CERCLA claim. We also AFFIRM the
grant of summary judgment to the Government Defendents
on the state claims. Finally, we REVERSE the district
court’s grant of summary judgment to the Partnership
Defendants on Carson Harbor’s indemnity claim under the
purchase agreement. The case is REMANDED for further
proceedings consistent with this opinion. Each party shall
bear its own costs on appeal.

AFFIRMED in part, REVERSED in part, and REMANDED.

App. 48
DISSENT:

B. FLETCHER, Circuit Judge, with whom Judges Pregerson
and Paez, Circuit Judges, join, Concurring in Part and
Dissenting in Part.

I agree with the majority that CERCLA’ is not a
model of legislative clarity. Inconsistencies and
redundancies pervade the statute. As a result, our task in
interpreting CERCLA is to search for a construction that
produces the fewest inconsistencies and at the same time
remains true to the statute’s remedial purposes. In holding
that passive migration of hazardous waste through soil in this
case cannot constitute “disposal” under the Act, the majority
misses the mark. If there is a plain meaning in CERCLA’s
definition of “disposal,” it encompasses the sort of passive
migration at issue here. Finding such passive migration as a
form of “disposal” is consistent with CERCLA’s strict
liability scheme, that broadly defines “potentially responsible
parties” as including those who may have done nothing
affirmative to contribute to the contamination of a site and
that requires such parties to disprove causation as an
affirmative defense. By contrast, excluding this sort of
passive migration from the definition of “disposal,” as the
majority does, frustrates CERCLA’s two central purposes:
to encourage prompt, voluntary private action to remedy
environmental hazards and to ensure that those responsible
for the hazards pay their fair share of cleanup costs.

Accordingly, I respectfully dissent from Part III of the
majority’s opinion.

' 1 shall use the majority opinion’s abbreviations
throughout.

App. 49

One of the ways in which CERCLA encourages
current landowners to clean up environmental hazards on
their properties is to allow them to clean up the hazard and
then bring suit to recover clean up costs from those who have
some responsibility for the existence of the hazard. In order
to prevail, the current owner must establish that the
defendant is a “potentially responsible party,” a party who
falls within one of four classes of persons subject to
CERCLA liability. See 42 U.S.C. § 9607(a). In this case,
Carson Harbor argued that the Partnership Defendants are
PRPs because they are persons “who at the time of disposal
of any hazardous substance owned or operated any facility at
which such hazardous substances were disposed of.” Id. §
9607(a)(2). The district court granted the Partnership
Defendants’ motion for summary judgment on Carson
Harbor’s CERCLA claim because it concluded that the
Partnership Defendants did not own the property “at the time
of disposal of any hazardous substances.” Thus, the majority
rightly focuses on the meaning of “disposal” in deciding
whether the district court’s grant of summary judgment was
proper. If there was a “disposal” of hazardous waste during
the period that the Partnership Defendants owned the
property, then, as the majority notes, the Partnership
Defendants are PRPs and the district court was wrong to

grant them summary judgment. Majority Op. at 15085.

CERCLA defines “disposal” as “the discharge,
deposit, injection, dumping, spilling, leaking, or placing of
any solid waste or hazardous waste into or on any land or
water so that such solid waste or hazardous waste or any
constituent thereof may enter the environment or be emitted
into the air or discharged into any waters, including ground
waters.” 42 U.S.C. § 6903(3) (emphasis added); see id §
9601(29) (referring to § 6903(3) for the definition of

App. 50

“disposal”). Although the majority recognizes that almost all
of the terms defining “disposal” have both active and passive
meanings, it concludes that these terms “simply do not
describe the passive migration that occurred here.” Majority
Op. at 15094. In reaching this conclusion, the majority
purports to engage in a plain meaning analysis. However,
the majority’s analysis is nothing more than ipse dixit.
Remarkably, nowhere does the majority consider the
ordinary, contemporary, common meaning of the terms
defining “disposal.” See Williams v. Taylor, 529 U.S. 420,
431, 146 L. Ed. 2d 435, 120 S. Ct. 1479 (2000) (“We give
the words of a statute their ordinary, contemporary, common
meaning, absent an indication Congress intended them to
bear some different import.” (internal quotation marks and
citation omitted)). Had it done so, the majority would have
discovered that a common meaning of “deposit” exactly “fits
the hazardous substance contamination at issue” in this case.
Majority Op. at 15094.

The Oxford English Dictionary provides the
following as one of the common definitions of the transitive
form of the verb “deposit”: “Said of the laying down of
substances held in solution, and of similar operations
wrought by natural agencies; to form as a natural deposit.”
IV THE OXFORD ENGLISH DICTIONARY (OED) 482 (J.A.
Simpson & E.S.C. Weiner, eds., 2d ed. 1989). Webster’s
Dictionary offers a similar definition: “to lay down or let fall
or drop by a natural process: foster the accretion or
accumulation of as a natural deposit.” WEBSTER’S THIRD
NEW INTERNATIONAL DICTIONARY OF THE ENGLISH

? The OED provides the following illustration, from T.H.
Huxley’s Physiography (1878), of this sense of deposit: “[The
water] deposits more or less of the matter which it holds in
suspension.” IV OED 482 (insertion in original)

App. 51

LANGUAGE (Webster’s) 605 (Philip Babcock Gove, ed.-in-
chief, Unabridged ed. 1993). In addition, both dictionaries
state that an intransitive definition of “deposit” is “to be laid
down or precipitated, to settle.” IV OED 482; see Webster's
605.

The evidence in the record is that the slag and tar-like
waste was located within a 17-acre open-flow wetlands area
of the plaintiff's property. The evidence also indicates that
the slag and tar-like substance had high concentrations of
lead and TPH. In addition, there is evidence that water
flowing through the wetlands carried lead and TPH and that
these hazardous wastes settled in the soil throughout the
wetlands. Thus, contrary to the majority’s conclusory
assertion, the plain meaning of “disposal” that includes
“deposit” exactly describes the spread of hazardous waste
throughout the wetlands: The wastes were carried by the
water flowing through the wetlands and deposited in the
surrounding soil. Cf Majority Op. at 15094 (“Nor can the
gradual spread here be characterized as a ‘deposit,’ because
there was neither a deposit by someone, nor does the term
deposit encompass the gradual spread of contaminants.”).’ n3

The plain meaning of “deposit” applies to the soil
contamination that occurred in this case. Thus, the
Partnership Defendants were owners of the property “at the
time of disposal.” 42 U.S.C. § 9607(a)(2). As a result, the

> Although I focus on the meaning of “deposit,” I note that
the plain meaning of other terms defining “disposal” aptly
describe the spread of hazardous waste at issue in this case. The
term “discharge,” for example, has an especially broad meaning.
See Webster’s 644 (including in the definition of “discharge,” “to
give outlet to : pour forth : emit . . . to release or give vent to . . . to
emit or give vent to fluid or other contents”).

App. 52

Partnership Defendants are PRPs and the district court was
wrong to grant them summary judgment dismissing Carson
Harbor’s CERCLA claim as to them.

II.

As we have noted, CERCLA has two central purposes: “to
ensure the prompt and effective cleanup of waste disposal
sites, and to assure that parties responsible for hazardous
substances [bear] the cost of remedying the conditions they
created.” Pinal Creek Group v. Newmont Mining Corp., 118
F.3d 1298, 1300 (9th Cir. 1997) (internal quotation marks
and citation omitted). To effectuate the first purpose,
Congress designed CERCLA to broadly define PRPs. See
42 U.S.C. § 9607(a). To effectuate the second purpose,
Congress created affirmative defenses to allow PRPs who
bore no responsibility for the hazardous waste to avoid
liability. See id §§ 9601(35)(A), 9607(b). Also in
furtherance of the second purpose, Congress provided for the
equitable distribution of cleanup costs among PRPs who
cannot avail themselves of an affirmative defense. See id. §
9613(f); United States v. Colo. & E.R.R. Co., 50 F.3d 1530,
1536 n. 5 (9th Cir. 1995) (describing some of the equitable
factors courts consider in determining the proper allocation
of cleanup costs among PRPs). The majority’s exclusion of
parties such as the Partnership Defendants from the class of
PRPs frustrates both of CERCLA’s central purposes.

a. Prompt and Effective Cleanup

While it holds that the “passive soil migration” at
issue in this case does not constitute “disposal,” the majority
also concludes that “disposal” may include other sorts of
passive migration. Majority Op. at 15097. Specifically, the
majority opines that the passive spilling or leaking of
hazardous wastes may count as “disposal.” See, e.g., id. at

App. 53

15097, 15107. The majority notes that counting passive
spilling or leaking as “disposal” furthers CERCLA’s purpose
to encourage prompt and effective cleanup of hazardous
wastes. Id. at 15097. It also notes that were “disposal” read
to exclude passive spilling or leaking, there would be little
incentive for a landowner to examine her property for
hazardous wastes and to clean up any contamination that was
discovered. Jd. at 15097. But, of course, counting the
passive migration at issue in this case as “disposal” also
would encourage prompt cleanup, and excluding it produces
the decreased incentives about which the majority frets: The
majority’s holding would allow a property owner who
discovers hazardous waste passively migrating through the
soil to escape all CERCLA liability simply by selling the
property to another.

The majority’s parsimonious reading of “disposal”
also leads to plainly nonsensical results. Hazardous waste
that is placed directly on or in land and is actively
discharging or depositing waste throughout the soil, as is the
case here, is likely a more immediate and direct
environmental threat than that which is placed into drums or
containment pools which may or may not eventually leak.
Under the majority’s interpretation, however, CERCLA
gives the owner of land on which hazardous waste has
previously been directly placed less of an incentive to clean
up the waste than it does an owner whose land contains
leaking drums. The failure to count the passive migration of ©
contaminants through soil as “disposal” thus frustrates
CERCLA’s first central purpose.

The majority reaches this untenable result for two
reasons. First, it believes that the plain meanings of “spill”
and “leak” describe the passive spread of hazardous waste
but that the plain meaning of “deposit” and other terms in the
definition of “disposal” that could potentially describe the

App. 54

passive migration at issue in this case do not. /d at 33.
Second, the majority relies on statements in CERCLA’s
legislative history that indicate that Congress enacted
CERCLA in part out of concern for the spillage and leakage
of hazardous waste from storage tanks at such places as
Love Canal and the Valley of the Drums. /d. at 36, 48-50.

However, the majority’s plain meaning analysis is
patently flawed: Water, flowing through the wetlands,
carried the hazardous waste and “deposited” it in the soil
throughout the contaminated area. See supra Part I. In
addition, the majority recognizes that its reliance on
legislative history is a weak reed. As the majority itself notes
with candor, “any inquiry into CERCLA’s legislative history
is somewhat of a snipe hunt.” Majority Op. at 15105.
CERCLA was “an eleventh-hour compromise hastily
assembled by a bipartisan leadership.” Jd. at 15104 n.12. As
such, there is precious little congressional commentary
interpreting the bill that eventually became CERCLA. See
id. at 15105 n.13 (“No committee or conference reports
address the version of the legislation that ultimately became
law.”). Thus, while the majority finds isolated statements
from congressional witnesses, senators, and representatives
indicating a concern with the passive spillage or leakage of
hazardous waste, this is hardly evidence that Congress meant
to limit CERCLA’s reach to only those forms of passive
contamination that could be described as “spills” or “leaks.”

b. Fair Share of Remedial Costs

The majority’s refusal to give full effect to the
meaning of “deposit” and other terms also frustrates
CERCLA’s second central purpose: to ensure that the
parties responsible for hazardous waste bear their fair share
of cleanup costs.

App. 55

This case presents a perfect illustration. The
Partnership Defendants owned the property from 1977 until
1983, when they sold it to Carson Harbor. From 1945 until
1983, Unocal Corporation held a leasehold interest in the
property. As the majority notes, Unocal used the property for
petroleum production, operating a number of oil wells,
pipelines, above-ground storage tanks, and production
facilities. Majority Op. at 15073. The evidence in the record
indicates that the slag and tar-like material were placed on
the property some time prior to the Partnership Defendant’s
ownership. Thus both the Partnership Defendants and
Carson Harbor owned the property while lead and TPH from
the tar and slag discharged into the wetlands. The only
significant distinction between Carson Harbor and the
Partnership Defendants is that during the latter’s ownership,
Unocal was actively engaged in petroleum production on the
property. Thus, the Partnership Defendants had more reason
to suspect the possibility of hazardous waste contamination
than did Carson Harbor. But under the majority’s
interpretation of “disposal,” the Partnership Defendants are
completely exempt from liability for the cleanup costs
incurred by Carson Harbor. This is an absurd result. By
contrast, under the interpretation I urge, the Partnership
Defendants would be PRPs and so liable for some of the
cleanup costs unless they were able to establish an
affirmative defense.

The majority appears to believe that counting the sort
of passive migration at issue here as “disposal” would
“essentially eliminate[]” one of a PRP’s central affirmative
defenses: the “innocent landowner” defense. Majority Op.
15099. This defense provides immunity from liability to a
PRP who acquired property “after the disposal or placement
of [a] hazardous substance” if, “at the time the [PRP]
acquired the facility the [PRP] did not know and had no
reason to know that any hazardous substance which is the

App. 56

subject of the release or threatened release was disposed of
on, in, or at the facility." 42 U.S.C. § 9601(35)(A). The
majority’s reasoning on this point is puzzling. The majority
contends that an interpretation of “disposal” that included
passive soil migration “would lead to the conclusion that
disposal is a never-ending process, rendering liable every
landowner after the initial disposal.” Majority Op. at 15100.
It then notes that for subsequent purchasers, the innocent
landowner defense would be available “only if one could
show that the land was purchased after the hazardous
substances were ‘placed’ there.” Jd. The majority then
concludes that the defense would be available only “to a
small portion of the landowners who have no actual
culpability in the disposal of the hazardous substances.” /d.
But this conclusion is simply a non-sequitur.

Even if we accept for the sake of argument that the
more expansive interpretation of “disposal” implies that
“disposal is a never-ending process,” it just does not follow
that the innocent landowner defense would be available only
to those who have “no actual culpability in the disposal of

* In order to obtain immunity from liability, the PRP must
also demonstrate that “(a) he exercised due care with respect to the
hazardous substance concerned, taking into consideration the
characteristics of such hazardous substance, in light of all the
relevant facts and circumstances, and (b) he took precautions
against foreseeable acts or omissions of any . . . third party and the —
consequences that could foreseeably result from such act or
omissions.” 42 U.S.C. § 9607(b\(3); see 42 U.S.C. § 9601(35 (A).

* The majority’s use of this assumption is highly
questionable. Whether subsoil migration is “a never-ending
process,” is clearly a factual question, the answer to which is not
obvious. However, there is no evidence in the record to support
the majority’s supposition.

App. 57

the hazardous substances.” Majority Op. at 15100 (emphasis
added). Congress made the defense available to any PRP
who purchases property after the disposal or after the
placement of a hazardous substance on the property. 42
U.S.C. § 9601(35)(A). Thus, if a PRP purchases property on
which hazardous waste is passively migrating through the
soil, under my interpretation the innocent landowner defense
is not available to the PRP by virtue of the fact that she did
not purchase the property after the “disposal” of the waste,
since the disposal was on-going. However, if it was a prior
owner who placed the hazardous waste on the property, then
the defense is available to her by virtue of the fact that she
bought the property after the hazardous substance was
initially placed on the property.£ Recognizing that the
dispersal of hazardous waste through soil by water is
“disposal” under the statute does not eliminate the innocent
landowner defense. It “leaves in place the narrow
applicability of the defense.” Majority Op. at 15108.

Nor does the inclusion of passive soil migration give
rise to a parade of horribles. A PRP who cannot avail herself
of an affirmative defense is liable only for her fair share of
cleanup costs. It is up to the district court to apportion costs
equitably among all PRPs. 42 U.S.C. § 9613(f\(1); see
Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1187 (9th Cir.
2000). Among the factors courts consider in allocating
responsibility and liability are:

(i) the ability of the parties to demonstrate that
their contribution to a discharge, release or
disposal of a hazardous waste can be
distinguished; (ii) the amount of the hazardous

® The majority makes this very argument elsewhere in its
opinion. Read its discussion at pages 15100-02.

App. 58

waste involved; (iii) the degree of toxicity of
the hazardous waste involved; (iv) the degree
of involvement by the parties in the
generation, transportation, treatment, storage,
or disposal of the hazardous waste; (v) the
degree of care exercised by the parties with
respect to the hazardous waste concerned,
taking into account the characteristics of such
hazardous waste; and (vi) the degree of
cooperation by the parties with the Federal,
State or local officials to prevent any harm to
the public health or the environment.

Colorado & E.R.R. Co., 50 F.3d at 1536 n.5. Courts also
take into account the existence of contractual or
principal/agent relationships among PRPs, Cadillac
Fairview/California, Inc. v. Dow Chemical Co., Nos. 83-
8034 MRP (Bx), 93-7996 MRP (Bx), 1999 WL 149196, at
*17 (C.D. Cal. Feb. 21, 1997); whether a PRP benefitted
from the disposal of waste at the site, id; whether a PRP has
itself engaged in clean-up efforts, Pinal Creek Group v.
Newmont Mining Corp., 118 F.3d 1298, 1393 n.4 (9th Cir.
1997), and the circumstances surrounding a PRP’s action or
inaction, id., United States v. Shell Oil Co., 13 F. Supp. 2d
1018, 1026-27 (C.D. Cal. 1998); and the relative amount of
time a PRP owned the property, Dant & Russell, Inc. v.
Burlington N.R.R. Co. (In re Dant & Russell, Inc.), 951 F.2d
246, 249 (9th Cir. 1991).? As the majority recognizes,

7 These factors are neither exhaustive nor exclusive. In
apportioning responsibility among PRP’s “a court may consider
several factors, a few factors, or only one determining factor, . . .
depending on the totality of the circumstances presented to the
court.” Colorado & E.R.R. Co., 50 F.3d at 1536 (internal quotation
marks omitted).

App. 59

CERCLA ensures that a PRP’s contribution will be limited
to her equitable share. Majority Op. at 15100-02. Thus,
including as PRPs owners of property in which hazardous
waste is passively migrating through the soil does not expose
such owners to unbounded liability. It merely holds them
accountable for their fair shares of cleanup costs, based upon
the circumstances surrounding their ownership.

Il.

The structure of the statute, despite its redundancies and
inconsistencies, is clear: Liability is not based on causation
or fault. Rather, the liability of previous land owners is
based on ownership at the time hazardous waste is placed or
disposed of on the subject property. The purpose of the
statute is to encourage current owners to clean up and
eliminate the hazard. The “encouragement” contained in the
statute is to allow the current owner to recover aliquot shares
of the cost from prior owners. The statute identifies “PRPs”
as persons who are potentially liable to the current owners.
The statute is clear that PRPs include all persons who owned
or operated any facility at which hazardous substances were
disposed of. Identified PRPs can assert affirmative defenses
to exclude themselves or can advance the reasons why their
share of the cost should be minimal, little, or none.
However, they should not te able to exclude themselves
from PRP status by narrowing or distorting the meaning of
“disposal” as the majority has done. The majority perhaps is
motivated by a sense that the structure of the statute is unfair
by including essentially innocent persons in the process —
requiring them to assert their defenses — but that is the
structure of the statute. Distorting the meaning of “disposal”
under the guise of a “plain meaning” analysis that is
seriously flawed is not appropriate.

- App. 60

The passive migration of hazardous waste through
the soil is a form of “disposal” covered by CERCLA.
Because the Partnership Defendants owned the property “at
the time of disposal,” the district court erred in concluding
that they are not PRPs. I would reverse the district court’s
award of summary judgment to the Partnership Defendants
on Carson Harbor’s CERCLA claim and remand to allow the
Partnership Defendants an opportunity to present an
affirmative defense and, should they be unsuccessful, for
equitable distribution of the cleanup costs. Accordingly, |

respectfully dissent.

App. 61

IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

CARSON HARBOR VILLAGE, LTD.,
a limited partnership dba
Carson Harbor Village Mobilehome Park,
Plaintiff-counter-defendant-Appellant
v.
UNOCAL CORPORATION,
a Delaware Corporation,
Defendant-cross-defendant
and

CITY OF CARSON,
Defendant-cross-defendant-cross-claimant-Appellee

227 F.3d 1196

Appeal from the United States District Court
for the Central District of California

Filed September 14, 2000

Before: Betty B. Fletcher and Harry Pregerson, Circuit
Judges, and Charles R. Weiner, District Judge.'

' The Honorable Charles R. Weiner, Senior United States
District Judge for the Eastern District of Pennsylvania, sitting by
designation.

App. 62

B. FLETCHER, Circuit Judge:

The current owner of land contaminated by storm
water runoff and oil production filed this action against prior
owners and operators of the property, as well as certain local
government entities, to recover cleanup costs under, inter
alia, the Comprehensive Environmental Response
Compensation and Liability Act of 1980 (“CERCLA”), 42 ©
U.S.C. § 9607(a), and California common law. The district
court dismissed the case on cross motions for summary
judgment, reasoning that plaintiff failed to meet its burden
on at least one of the CERCLA elements, and that its
common law claims were without merit.2 We have
jurisdiction over plaintiff's appeal pursuant to 18 U.S.C. §
1291, and we reverse in part, affirm in part, and remand for
further proceedings.

I. Factual and Procedural Background :

Carson Harbor Village, Ltd. (“Carson Harbor”) owns
and operates a mobile home park on 70 acres of land in the
City of Carson, California. Carson Harbor Village Mobile
Home Park, a general partnership run by Richard G. Braley
and Walker Smith, Jr. (collectively, the “Partnership
Defendants”), owned the property from 1977 to 1983 and
also operated a mobile home park there. Between 1945 and
1983, Unocal Corporation (“Unocal”) held a leasehold
interest in the property and used it for petroleum production.
Specifically, Unocal operated a number of oil wells,

? Plaintiff's causes of action under the Resource
Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6972(a),
and the Clean Water Act (“CWA”), 33 U.S.C. § 1365, also
rejected by the district court, are not before this court on appeal.

App. 63

pipelines, above-ground storage tanks, and production
facilities.’

An undeveloped open flow wetlands area covers
approximately 17 acres of the property. The wetlands form a
natural drainage course that bisects the trailer park from the
northeast to the southwest. At the northeast edge of the
wetlands, storm water controlled by the City of Carson, the
City of Compton and the County of Los Angeles
(collectively, the “Government Defendants”), feeds into the
wetlands through two storm drains. The drainage area
immediately upstream from plaintiff's property includes
California Highway 91, operated by the California
Department of Transportation (“Caltrans”), as well as mixed
use industrial and residential properties. Runoff from
approximately three miles of the freeway drains to the
wetlands.

In the course of seeking refinancing for the property

in 1993, plaintiff's lender commissioned an environmental _

assessment which revealed slag and tar like material in the
wetlands. Subsequent investigation disclosed (1) that the
material had been on the property for several decades prior
to its development as a mobile home park; (2) that the
material was some form of—waste- or by-product from
petroleum production; (3) that the material was
approximately four feet thick and covered roughly a 30 by
160 foot area in the wetlands; (4) the material and
surrounding soils contained elevated levels of petroleum
hydrocarbons (measured in terms of total petroleum
hydrocarbons or “TPH”) and lead‘; and (5) soil samples

* The property is located within the Dominguez Oil Field
in Los Angeles County.

* Testing revealed the following concentrations:

App. 64

upgradient of the material also contained elevated [**5]
levels of TPH and lead.°

Because the lead concentrations exceeded state
reporting limits,® plaintiffs environmental consultants
informed the appropriate agencies of their findings. The
Regional Water Quality Control Board (“RWQCB”)
assumed the role of lead agency and plaintiff coordinated its
efforts with James Ross, the RWQCB’s Site Cleanup Unit
Chief. Although the parties dispute whether the RWQCB
“ordered” remedial action at the property or merely
concurred in plaintiff's “voluntary” decision to clean up the
tar and slag contamination, its is undisputed that plaintiff's

TPH Tar sample: 120,000 parts per million (“ppm”)
Slag sample: 35 ppm

Underlying soil: 2,300 ppm

Lead Tar sample: 1600 ppm (TTLC)

Slag Sample: 590 ppm (TTLC) and 12 ppm (STLC)
Underlying soil: 2,300 ppm (TTLC) and 86 ppm (STLC)

“TTLC” refers to “total threshold limit concentrations,” and
“STLC” refers to the “soluble threshold limit concentrations.” The
latter reflects water soluble lead concentrations.

5 Upgradient testing revealed the following
concentrations:

TPH 13 to 560 ppm
Lead 11 to 220 ppm (TTLC) and 0 to 23 (STLC)

An off-site sample taken from the highway, 1,000 feet upstream
from the tar and slag material, revealed TPH at 1,900 ppm and

lead at 150 ppm (TTLC).

° The mandatory reporting limits for lead are 1,000 ppm
(TTLC) and 5 ppm (STLC). :

App. 65

environmental consultants requested a “no further action”
letter from the RWQCB before proposing cleanup and
submitting a remedial action plan (“RAP”).’

In the RAP, plaintiff proposed to remove the tar and
slag material and impacted soils without addressing other
areas of elevated TPH and lead contamination in the
wetlands because the highest concentrations were associated
with the tar and slag material. The RAP recommended post-
cleanup levels of 1,000 ppm for TPH and 1,000 ppm
TTLC/S ppm STLC for lead. Ross approved the RAP subject
to the condition that plaintiff bring TTLC lead values down
to 50 ppm, rather 1,000 ppm.*

The cleanup went forward in the summer of 1995 and
over the course of five days 1,042 tons of material were
removed, varying in depth from one to four feet and covering
an area approximately 75 feet by 160 feet. In all but four of
the soil samples taken after the excavation, TPH and lead
levels were within the established limits.? After a site visit

” On August 39, 1994, one month after reporting the
contamination to the RWQCB, plaintiff's environmental
consultant wrote to Ross: “Our goal in reporting [the
contamination] to ti: Regional Board is to comply with the legal
reporting requirements and also to obtain in writing any additional
requirements that the Board may deem appropriate. If no further
action is required, we would appreciate a letter so Statiny;.” No
letter came. Instead, Ross met with the consultant at the property
in October 1994 to discuss remedial options and an RAP was
submitted to the RWQCB by January 1995.

* Ross also stated that a health risk assessment would have
to be performed and that, following cleanup, a no further action
letter would cover only the tar and slag area.

” In the four deviant samples, lead levels were still slightly
above the TTLC and STLC limits. In the closure report, plaintiffs

App. 66

and independent soil testing by RWQCB staff, Ross sent a
closure letter stating:

the ...oval is complete to the extent required
by this Board. . . . We have concluded that all
the requirements established by this Board in
our RAP approval letter dated February 27,
1995, have been complied with. In addition,
the contamination has been successfully
removed and the remaining soil in the bottom
of the watercourse poses no further threat to
surface waters of the State. We, therefore,
conclude that no further action is required at
this site.

Within a year of the “no further action letter,”
plaintiff filed suit against the Partnership Defendants, the
Government Defendants, and Unocal, seeking to recover the
costs of its remedial action as well as damiages arising from
its inability to refinance the property." On cross-motions for
summary judgment the district court rejected all of plaintiff's
theories of recovery. See Carson Harbor Village, Ltd. v.
Unocal Corp., 990 F. Supp. 1188 (C.D. Cal. 1997). On the
CERCLA claim, the district court held that plaintiff could
not show that its remedial action was “necessary” within the
meaning of 42 U.S.C. § 9607 (a)(4)(B) because there was no

environmental consultant indicated that “the elevated lead
concentration at those locations may be attributed to a greater
occurrence from the impacts of runoff” because the samples “were
collected along the western edge of the excavation adjacent to the
wetland portion of the stream channel.”

'° Although Caltrans and James Van Loben Sels are also
named in the complaint, they are not identified in any of the
causes of action at issue in this appeal.

App. 67

evidence of an “actual and real threat” to human health or the
environment and (implicitly referring to plaintiff's quest for
refinancing) “CERCLA . . . was not designed to permit
property owners to clean up their property unnecessarily for
business reasons, and then to shift the costs to prior owners.”
990 F. Supp. at 1193. The district court focused on Ross’s
deposition testimony that the remediation plan was initiated
by plaintiff and that the RWQCB would not have required
remedial action but for plaintiff's proposal. Ross’s
testimony is directly controverted by the testimony and
memoranda of others who were at the site meetings when
remedial options were discussed, but the district court
excluded this evidence as inadmissible hearsay. /d. at n.4.
As to the Partnership Defendants, the district court ruled that
plaintiff failed to show a “disposal” of hazardous substances
during their time of ownership - a prerequisite to prior owner
liability under 42 U.S.C. § 9607(a)(2). The court held that
there was no direct evidence of lead-containing storm water
entering the property at any time before 1994 and the court
rejected the argument that migration of lead and TPH from
the tar and slag into the wetlands soil constituted a
“disposal.” Jd. at 1194-95.

With respect to the common law claims of nuisance,
trespass, and injury to easement against the Government
Defendants, the district court held that California Civil Code
§ 3482 provides a complete defense since from 1990 forward
the storm water runoff systems were covered by National
Pollutant Discharge Elimination System (“NPDES”) permits
issued pursuant to the Clean Water Act, and prior to 1990
there was no direct evidence of lead-containing runoff. J. at
1197. Finally, as to the claim for express indemnity under
the purchase agreement with the Partnership Defendants, the
court reasoned that since the cleanup was not required by the
RWOQCB, plaintiff had not discharged an obligation of the
Partnership Defendants. The indemnity provision covered

App. 68

only losses resulting from “any liability or obligation of
seller which buyer is not specifically required to assume
hereunder.” Jd. at 1198 (quoting indemnity provision).

Il. Standard of Review

A grant of summary judgment is reviewed de novo.
Robi v. Reed, 173 F.3d 736, 739 (9th Cir. 1999), cert. denied,
528 U.S. 952, 145 L. Ed. 2d 293, 120 S. Ct. 375 (1999). Our
review is governed by the same standard applied by the trial
court under Federal Rule of Civil Procedure 56(c). Viewing
the evidence in the light most favorable to the nonmoving
party, we must determine whether there are any genuine
issues of material fact and whether the district court correctly
applied the relevant substantive law. Robi, 173 F.3d at 739.

“Whether the district court correctly construed the
hearsay rule is a question of law reviewed de novo.” United
States v. Bao, 189 F.3d 860, 863 (9th Cir. 1999) (citation
omitted). However, “we review for abuse of discretion the
trial court’s decision to exclude evidence under the hearsay
rule.” Jd. at 864.

III. Discussion
A. CERCLA
1. Necessary Costs of Response

A private party seeking to recover the costs of cleaning up
hazardous waste has the burden of proving:

(1) the site on which the hazardous substances
are contained is a “facility” under CERCLA’s
definition of that term, 42 U.S.C. § 9601(9);

App. 69

(2) a “release” or “threatened release” of any
“hazardous substance” from the facility has
occurred, 42 U.S.C. § 9607(a)(4);

(3) such “release” or “threatened release” has
caused the plaintiff to incur response costs that
were “necessary” and “consistent with the
national contingency plan,” 42 U-S. C. §§
9607(a)(4) and (a)(4)(B); and

(4) the defendant is within one of four classes
of persons subject to the liability provisions of
Section 107(a).

3550 Stevens Creek Assoc. v. Barclays Bank of California,
915 F.2d 1355, 1358 (9th Cir. 1990) (citing Ascon
Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1152 (9th
Cir. 1989)).

In order to reach the conclusion that plaintiff's
response costs were not “necessary” within the meaning of
42 U.S.C. § 9607(a)(4)(B), the district court followed GJ.
Leasing Co., Inc. v. Union Electric Co., 854 F. Supp. 539
(S.D. Ill. 1994), aff'd, 54 F.3d 379 (7th Cir. 1995), and
Yellow Freight System, Inc. v. ACF Indus., Inc., 909 F. Supp.
1290 (E.D. Mo. 1995). Appellees also cite Foster v. United
States, 922 F. Supp. 642 (D.D.C. 1996), in support of the
district court’s holding.

In G.J. Leasing, the seminal case followed in Yellow
Freight and Foster, the district court considered a CERCLA
claim brought by a company that purchased a power plant
and decided to convert the plant buildings into a warehouse, -
transportation terminal, and office space. The salvage
company hired to dismantle and remove the plant machinery
exposed widespread asbestos contamination in the buildings

App. 70

and the new owners decided to have the asbestos removed in
order to accommodate the new uses. The owners then filed a
cost recovery action against the power company.

Following a bench trial, the district court held that
none of the removal costs were “‘necessary’ costs of
response as that term is intended under CERCLA.” GJ.
Leasing, 854 F. Supp. at 563. The court admonished that
“Congress did not intend CERCLA to make injured parties
whole or to create a general vehicle for tort actions.” Jd. at
561 (citations omitted). Thus:

In order to show that any response costs were
necessary under CERCLA, plaintiffs must
demonstrate that they responded to a threat to
public health or the environment. Amoco Oil
Co. v. Borden, Inc., 889 F.2d 664, 669-70 (Sth
Cir. 1989); Louisiana-Pacific Corp. v.
ASARCO, Inc., 735 F. Supp. 358, 362 (W.D.
Wash. 1990). A theoretical threat is not
enough. For response costs to be “necessary,”
plaintiffs must establish that an actual and real
public health threat exists prior to initiating a
response action. See, e.g., Matter of Bell
Petroleum Services, Inc., 3 F.3d 889, 904-06
(Sth Cir. 1993). To show that costs incurred
were “necessary” under CERCLA, a party
must show (1) that the costs were incurred in
response to a threat to human health or the
environment, and (2) that the costs were
necessary to address that threat. Artesian
Water Co. v. Government of New Castle
County, 659 F. Supp. 1269, 1278 (D. Del.
1987).

App. 71

854 F. Supp. at § . <2. Applying this standard to the
asbestos removal, the .wurt went on to hold that the response
costs incurred by the new owners were not necessary
because there was evidence that the remediation was
motivated by business reasons (i.e., the desire to convert the
property to new uses) as opposed to “an actual and real
public health threat,” there was no evidence that asbestos in
the building would reach the outside environment, and
employee exposure to asbestos is not a threat redressible
under CERCLA. /d. at 562-63 (“In this case the evidence
established that plaintiffs had other business reasons for
undertaking site investigations and abatement actions. To the
extent that these actions were taken for purposes other than
responding to an actual and real public health threat, there is
no CERCLA liability.”) (emphasis added).'' Here the district

'" Yellow Freight is another asbestos abatement case. The
owner of a former railroad car manufacturing plant decided to
conduct asbestos abatement and PCB removal in the process of
demolishing buildings to make the site suitable for trucking
operations. 909 F. Supp. at 1299. Finding no evidence that the
contamination was likely to reach the outside environment, and no
evidence of “an immediate threat to public health or the
environment,” the court followed G.J. Leasing’s ulterior motive
analysis:

The evidence showed that Yellow Freight had
business reasons for undertaking the investigation,
sampling and abatement actions at the site... . To
the extent Yellow Freight’s actions were taken for
purposes other than responding to a public health
threat, it cannot establish that its costs expended
were necessary under CERCLA.

Id.

Similarly, in Foster, the owner of contaminated land
decided to remove hazardous waste only after a prospective

App. 72

court followed the G.J. Leasing ulterior motive analysis,
emphasizing Ross’s testimony that the RWQCB would “not
likely” have required remediation if Carson Harbor had not
come forward with a plan. Ross testified as follows:

Q: Now, I’ve got another hypothetical
question: If the owners had not come to you
with a remediation plan, if they had simply
reported to you that this is what we see here,
would you have required them to develop
some remediation plan?

Ross: Not likely.

Q: As far as you were concerned, this stuff,
even the slag and tar-like material, could have
just stayed there?

Ross: Very likely.

Q: So then, basically, this remediation was
done at their initiative for their own reasons
and not because of any environmental or
health problem that was perceived by the
Regional Board?

Ross: Yes.

purchaser abandoned negotiations upon discovering the
contamination. Following G./. Leasing’s ulterior motive analysis,
the court held that the costs incurred were unnecessary because
they were not in response to a public health threat. 922 F. Supp. at
652-53 (“The eventual decision to [act] was not taken in response
to a perceived threat to health or the environment, but in order to
further identify barriers to the development of the Site.”).

App. 73

See Carson Harbor, 990 F. Supp. at 1193.

There are three flaws in the district court’s analysis.
First, however well the ulterior motive analysis fits the facts
of G.J. Leasing and its progeny, we decline to endorse it as a
factor of any significance in the determination whether costs
are incurred in response to a palpable threat to human health
or the environment. In the private cost recovery context, the
plaintiff with no business or financial motive for
investigating and cleaning up a site will be rare indeed. Thus
a court must focus on the nature of the threat presented by
the contamination at issue and whether the response action is
addressed to that threat. These are factual questions
requiring attention to the objective circumstances of each
case, not a party’s subjective intent. See Cadillac
Fairview/California, Inc. v. Dow Chemical Co., 840 F.2d
691, 695 (9th Cir. 1988) (recognizing that necessity is a
factual question). That Carson Harbor discovered
contamination and acted to remedy it as part of an effort to
secure financing is immaterial so long as there is evidence
that the contamination presented a palpable threat to human
health or the environment.

Second, although the district court correctly -noted
that “costs associated with voluntary remediation efforts are
recoverable,” Carson Harbor, 990 F. Supp. at 1193, its focus
on whether

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1104%3A2. Public record. Not legal advice.