Amicus Curiae Brief — Thomas v. United States

No. 97-795

In The

Supreme Court of the Unite

October Term, 1997

+

THE PINAL CREEK GROUP, consisting of CYPRUS

MIAMI MINING CORPORATION, INSPIRATION

CONSOLIDATED COPPER COMPANY,

and BHP COPPER INC.,

Petitioners,

NEWMONT MINING CORPORATION, OCCIDENTAL

PETROLEUM CORPORATION, CANADIANOXY

OFFSHORE PRODUCTION COMPANY, and

ATLANTIC RICHFIELD COMPANY,

Respondents.

6

vv

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

-

BRIEF FOR THE STATES OF ALABAMA, ARIZONA,

ARKANSAS, GEORGIA, MISSOURI, OHIO,

OKLAHOMA, TENNESSEE, VERMONT, VIRGINIA,

WEST VIRGINIA, THE CITIES OF PHOENIX,

SCOTTSDALE, TEMPE AND TUCSON, ARIZONA,

THE CITY OF CINCINNATI, OHIO, THE CITY OF

FRESNO, CALIFORNIA, AND THE CITY

OF SEATTLE, WASHINGTON AS AMICI CURIAE

IN SUPPORT OF PETITIONERS

°

Ropverick G. McDoucatt

City Attorney

City of Phoenix

Puiuirp M. Haccerty*

Chief Assistant City Attorney

Craic J. Reece

Assistant City Attorney

200 West Washington Street, 13th Floor

Phoenix, Arizona 85003-1611

Telephone: (602) 262-6761

(*Counsel of Record)

Other Counsel Listed Inside Front Cover

COCKLE LAW BRIEF PRINTING CO, (800) 225-6964 :

OR CALL COLLECT (402) 342-2831 a 2

Bit. Pryor

Attorney General of

Alabama

Office of the Attorney

General

11 South Union Street

Montgomery, Alabama

36130

(334) 242-7300

GRANT Woops

Attorney General

State of Arizona

1275 West Washington

Phoenix, Arizona

85007-2926

(602) 542-8302

WINsTton BRYANT

Attorney General

State of Arkansas

323 Center Street,

Suite 200

Little Rock, Arkansas

72201-2610

(501) 682-2007

THuRBERT E. BAKER

Attorney General

State of Georgia

40 Capitol Square, S.W.

Atlanta, Georgia

30034-1300

(404) 656-3383

JEREMIAH W. (Jay) Nixon

Attorney General of

Missouri

Supreme Court Building

207 West High Street

Jefferson City, Missouri

~ 65101

(573) 751-3321

Betty D. MONTGOMERY

Attorney General of Ohio

30 East Broad Street

Columbus, Ohio 43215

(614) 466-3376

W.A. Drew EDMONDSON

Attorney General of

Oklahoma

2300 North Lincoln Blvd.,

Suite 112

Oklahoma City, Oklahoma

73105

(405) 521-3921

JoHN Knox WaALKuP

Attorney General and

Reporter

State of Tennessee

2nd Floor Cordell Hull

Building

425 Fifth Avenue North

Nashville, Tennessee

37243-0495

(615) 741-3491

WitutAM H. Sorrecyi

Attorney General

Office of the Attorney

General

109 State Street

Montpelier, Vermont

05609-1001

(802) 828-3171

ans ana omen ie

RICHARD CULLEN

Attorney General of the

Commonwealth of

Virginia

800 East Main Street

Richmond, Virginia 23218

(804) 786-2071

Darre_t V. McGraw

Attorney General of

West Virginia

Office of the Attorney

General

Building 1, Room 26-E

1900 Kanawha Boulevard,

East

Charleston, West Virginia

25305-0220

(304) 558-2021

Fay D. Dupuis

City Solicitor

W. Peter Here

Deputy City Solicitor

City of Cincinnati

City Hall, Room 214

801 Plum Street

Cincinnati, Ohio 45202

(513) 352-3334

Hitpa Montoy

City Attorney

Martin D. KoczANowicz

Deputy City Attorney

City of Fresno

2600 Fresno Street

Fresno, California

93721-3602

(209) 498-1326

Freppa BISMAN

City Attorney

BARBARA R. GOLDBERG

Assistant City Attorney

City of Scottsdale

3939 Civic Center

Boulevard

Scottsdale, Arizona 85251

(602) 994-2405

Mark H. Sipran

City Attorney

Davip BRUCE

Assistant City Attorney

City of Seattle

Environmental Protection

Section

600 Fourth Avenue,

10th Floor

Seattle, Washington

98104-1877

(206) 233-2164

Davip MERKEL

City Attorney

KAREN S. GAYLORD

Assistant City Attorney

City of Tempe

140 East Fifth Street, #301

Tempe, Arizona 85280

(602) 350-8227

THomMaAs J. BERNING

City Attorney

STEPHEN L. WETHERELL

Senior Assistant City

Attorney

City of Tucson

255 West Alameda,

7th Floor

Tucson, Arizona 85701

(520) 791-4221

as tren ree

QUESTION PRESENTED

Whether courts must apply the plain language that

Congress used in Section 107(a) of the Comprehensive

Environmental Response, Compensation, and Liability

Act (“CERCLA”), allowing “any other person” to recover

from other liable parties the necessary costs expended in

cleaning up sites contaminated by hazardous substances,

or whether courts may read into the statute the additional

requirement that only “any innocent person” — that is,

one who is not liable for any of the contamination — may

proceed under Section 107(a) to recover such costs?

il

TABLE OF CONTENTS

Page

COLTRI Eee Wee EES b 5 5 bis ee aaa cee pia edunees i

of 1 OR BS BY ag soc a. RRR erie renee iii

INTERESTS OF THE AMICI CURIAE.............. 1

REASONS FOR GRANTING THE PETITION....... 4

I. CERCLA’s Plain Language, Structure, and Policy

Support a Working PRP’s Use of Section 107(a)... 5

A. The Plain Language of CERCLA........... 5

B. CERCLA’s Structure and Policies........... 10

II. The Ninth Circuit Decided an Important Federal

Question in Conflict with This Court’s Opinion

in Key Trosic U. United Sieles. os ois civ cenieess 16

CA ARIE 4 Awa Oo 9 OSs COs eee ee emer 18

iii

TABLE OF AUTHORITIES

CASES:

3550 Stevens Creek Assocs. v. Barclays Bank of

Calif., 915 F.2d 1355 (9th Cir. 1990), cert. denied,

Us OT A a ee

Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761

OO Ce a

Arizona v. Motorola, Inc., 139 F.R.D. 141 (D. Ariz.

BOON nite tk eee ey

Arizona v. Nucor Corp., 825 F. Supp. 1452 (D.

Ariz. 1992), aff'd, 66 F.3d 213 (9th Cir. 1995)...

Bethlehem Iron Works, Inc. v. Lewis Indus., Inc.,

OFi -. Sep. 221 CEs Pai’ 3909) ois cn a ce ae

Burlington Northern R.R. Co. v. Time Oil Co., 738

B. Supp. 1599 (W.D. Wash. 1990). ic ce 6 cece ses

Cadillac Fairview/California, Inc. v. Dow Chemi-

cal Co., 840 F2d 691 (9th Cir. 1988) ...........

Colorado v. Idarado Mining Co., 916 F.2d 1486

(10th Cir. 1990), cert. denied, 499 U.S. 960 (1991)....

General Electric Co. v. Litton Indus. Automation

Sys., Inc., 920 F.2d 1415 (8th Cir. 1990), cert.

ema, eG CR irks wt eas tsk vee bane

Idylwoods Assocs. v. Mader Capital, Inc., 915 F.

Susp. 1200 (WOODY, 1996). - 5 ois cs

In re Pacific-Atlantic Trading Co., 64 F.3d 1292

EU RIE BO. a on eT es See Ee hs lee ws

Page

iv

TABLE OF AUTHORITIES —- Continued

Key Tronic Corp. v. United States, 511 U.S. 809

SOE es Nac exuro dae ska ce ceumeweene 4, 5, 6, 14,

Levin Metals Corp. v. Parr-Richmond Terminal

Co, 799 F.2d 13512 (9th Cis. 1906) oes e. Seine.

Nurad, Inc. v. William E. Hooper & Sons Co., 966

F.2d 837 (4th Cir.), cert. denied, 506 U.S. 940

COPS Fo 808i 52 Ors CN eRe ee eke Ce TERS

Price v. U.S. Navy, 39 F.3d 1011 (9th Cir. 1994)...

Securities and Exchange Comm’n v. United Bene-

fit Life Ins. Co., 367 U.S. 202 (1967) ......5%%...

Standard Oil Co. v. Federal Trade Comm’n, 340

Re I CRED Ss vs chased we kek ohee co Cee eens

The Pinal Creek Group v. Newmont Mining Corp.,

et al., 926 F. Supp. 1400 (D. Ariz. 1996), rev'd,

116 F.3d 1298 (Stn Cir. 1997)..... 2.0536. 11, 12,

United States v. Cannons Eng’g Corp., 899 F.2d 79

CRUE Se FOS i os vi asd ea caeserer sO nseaarers

United States v. Pretty Products, Inc., 780 F. Supp.

oe 3s ee. | Oe orate parece ae

United States v. South Carolina Recycling and Dis-

posal, Inc., 653 F. Supp. 984 (D.S.C. 1984)......

United States v. Turkette, 452 U.S. 576 (1981).....

Wehner v. Syntex Agribusiness, Inc., 616 F. Supp.

Be CE MO, BOP 6 ose cbc iaseawincererneenen

STATUTES

Se. Tes NES 86s Rea eL ER EEA ORE DMEM EERE oie

Se en I WIRE 0 ceed tahuks decane Ree aees

Page

16, 17

oe 6 ©

: Vv

TABLE OF AUTHORITIES — Continued

Page

GE es A ENE EH RINES Veh tense ede swal iste vas 2

Se ee Ces ea Re eee EDR EOE RKERS CeaES 16

A TL. MERE is SN Hen hick aba nekts Uae owe 4, 6, 335

TR UE Ne UD isso 0k Kalan g's Lewes aan kakewn 6

A Nain TUTTO os anaes bisse cosnebwebebens 6

aes PEE ou 6 GARE SON ASO AREA OOO Cas 12

Se a I FE ech cdl cee de ewan dae uaeigee chee 7

we Oe a. Sy eee mip ear ep ume geer DE ypu tae! 9

Als RE 3c a ene Seda hk kee eR ns kab ke cee rks 2

Ree ae Eo 5 hx ha Sas da OH eRe eens ues 16

Se AEs Oe Ek ioe oe ca ved bees bes bw kane ee eeks 4

ee Sak ae PE 0S) eV KECh cas onc whedene teyanses 10

Oe Fes a RD 6 5 05 FE ba Ada cheese eAa 10

Superfund Amendments and Reauthorization Act

(“SARA”), Pub. L. 99-499, 100 Stat. 1613 (1986) ..... 6

REGULATIONS

ee Pe UE Gira CRNA SEERA Rea sueriebh eae iwanns 6

) f_.2.m. Past 300, Appendix Bi... cece. caves cece 2

Oe Gelce: () ARIEIE RS Sisk pk And ore whee » Pdwid'n wld Gees 2

OTHER

“National Priorities List for Uncontrolled Hazard-

ous Waste Sites,” 62 Fed. Reg. 50442 (Sept. 25,

PAR Led Wah 05g As SENG CU RENN MASS Feo 2

vi

TABLE OF AUTHORITIES — Continued

Page

H. Rep. No. 1016, 96th Cong., 2d Sess. (1980),

reprinted in 1990 USC.C.ALN. GUD). cise a scciesd: 9

Milton Russell, et al., “Hazardous Waste Remedia-

tion: The Task Ahead,” (Univ. of Tenn. 1991)....... 2

National Research Council, Alternatives for Ground

Water Cleanup (Nat'l Acad. Press. 1994) ............ 2

Office of Technology Assessment, “State of the

State on Brownfields: Programs For Cleanup

and Reuse of Contaminated Sites,” OTA-BP-

ERR RIOD: ROUEAs Ve NRR RAM Cad eh eee ee eee eek 2

Restatement (Second) of Torts Section 886A(1)....... 15

U.S. EPA, “Setting the Record Straight” (Office of

Solid Waste and Emergency Response, April 3,

SPP 5k eae Oe ii ON 6 Ce ee Pi eo iceac 1

INTERESTS OF THE AMICI CURIAE

The States of Alabama, Arizona, Arkansas, Georgia,

Missouri, Ohio, Oklahoma, Tennessee, Vermont, Virginia,

West Virginia, the Cities of Phoenix, Scottsdale, Tempe

and Tucson, Arizona, the City of Cincinnati, Ohio, the

City of Fresno, California, and the City of Seattle, Wash-

ington (collectively, the “States and Cities”) share sub-

stantial interests in the cleaning up of the environment

and, hence, preserving the nation’s ability to remediate

sites contaminated by hazardous substances under the

Comprehensive Environmental Response, Compensation,

and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq.

(commonly known as Superfund). While most States have

adopted parallel statutes, CERCLA’s strict, joint, several

and retroactive liability scheme typically makes it the

favored vehicle for governments and private parties seek-

ing to obtain funds for cleanup from those responsible.

The amici represent the public interest in remediating the

overwhelming number of contaminated sites, many pol-

luted years or decades ago by numerous parties. Given

the limited public enforcement resources available to

address them, the plain language of the Superfund law

must not be disregarded in favor of an interpretation that

discourages liable private parties from undertaking reme-

dial action. The decision of the United States Court of

Appeals for the Ninth Circuit at issue does precisely that.

The legacy of past hazardous waste disposal prac-

tices has left the nation with some 40,000 sites actively

being addressed by the United States Environmental Pro-

tection Agency (“U.S. EPA”), the States, and municipal

governments. See U.S. EPA, “Setting the Record Straight”

(Office of Solid Waste and Emergency Response, April 3,

1995). Beyond that, there may be as many as 400,000

additional contaminated sites, meaning that government

enforcement cannot be awaited at all of them. See Office

of Technology Assessment, “State of the State on Brown-

fields: Programs for Cleanup and Reuse of Contaminated

Sites,” OTA-BP-ETI-153 (June 1995), p. 2 (contaminated

sites in United States may number 450,000); see also

National Research Council, Alternatives for Ground Water

Cleanup 27 (Nat'l Acad. Press. 1994) (number of sites

where ground water may be contaminated ranges

between 300,000 to 400,000). U.S. EPA generally takes

enforcement action only with respect to the 1,204 sites on

the agency’s National Priorities List. See “National Priori-

ties List for Uncontrolled Hazardous Waste Sites,” 62 Fed.

Reg. 50442 (Sept. 25, 1997) (to be codified at 40 C.F.R. Part

300, Appendix B); 40 C.F.R. § 300.425(b)(1). That leaves

the bulk of the cleanup task for the States and munici-

palities, including the amici, and willing private parties.

States and cities, unlike the federal government, must do

so without the benefit of the federal Hazardous Substance

Trust Fund (the “Superfund” which U.S. EPA uses as a

revolving enforcement fund) and without the ability to

unilaterally order private parties to conduct CERCLA

cleanups. See 42 U.S.C. §§ 9611 (establishing tax on petro-

leum and certain feedstock chemicals) and 9606(a) (allow-

ing U.S. EPA to issue unilateral cleanup orders not

subject to pre-enforcement review); Colorado v. Idarado

Mining Co., 916 F.2d 1486, 1494 (10th Cir. 1990) (injunctive

relief under Section 106 is not available to States), cert.

deniea, 499 U.S. 960 (1991). See also Milton Russell, et al.,

“Hazardous Waste Remediation: The Task Ahead,” (Univ.

of Tenn. 1991) (over next 30 years, nation likely will

spend $480 billion to $1 trillion, with “best guess” of $750

billion, to clean up ground water contamination). Fiscal

realities accordingly force the States and Cities to rely

upon private parties to conduct the majority of the

cleanup of these sites. Usually, potentially responsible

parties (“PRPs”) conduct cleanup at a site and then seek

to recover the necessary costs incurred from other PRPs

who did not perform any cleanup in a CERCLA action.

Therefore, ensuring that CERCLA provides incentives to

a liable but working party to conduct cleanups is of vital

importance to the States and Cities.

The Ninth Circuit’s decision limits PRPs to pursuing

contribution actions under CERCLA Section 113, thus

frustrating one of CERCLA’s overarching goals — promot-

ing prompt voluntary cleanups by private parties. Absent

the distinct advantages afforded by cost recovery actions

under Section 107(a), such as strict, joint and several

liability, a shifted burden of proof as to liability alloca-

tion, and a longer statute of limitations, PRPs will have

no incentive to come forward, settle their liability, and

undertake costly remedial activities. This is of grave con-

cern to the States and Cities.

The States and Cities also have an interest in ensur-

ing that CERCLA is enforced uniformly across the nation.

The current judicial conflict regarding whether a PRP

may proceed under Section 107(a) renders the law unsta-

ble and unpredictable. This split of authority and the

unpredictability it fosters makes it unlikely that PRPs will

initiate cleanups voluntarily and, additionally, could lead

PRPs that have begun cleanups to stop their work.

*

REASONS FOR GRANTING THE PETITION

The Pinal Creek Group’s Petition seeks resolution of

the conflict in the federal courts regarding the nature of

the cost recovery claim that liable parties who conduct

remediation (“Working PRPs”) may bring under

CERCLA. Some courts allow liable parties who perform

cleanup work to seek cost recovery from other PRPs

pursuant to Section 107(a), 42 U.S.C. § 9607(a), for those

out-of-pocket response costs. Other courts limit PRPs to

seeking contribution pursuant to Section 113(f), 42 U.S.C.

§ 9613(f), just like those who have been ordered to reim-

burse another party that has directly incurred cleanup

costs. This split of authority and the unpredictability of

what will happen when millions of dollars have been

spent by Working PRPs in reliance on the federal statute

make it unlikely that PRPs will initiate cleanups volun-

tarily. Additionally, Working PRPs that have started

cleanup work at a site might choose to stop these cleanup

efforts in light of the uncertainty of the law.

The plain language and structure of CERCLA, cou-

pled with the statute’s policies encouraging early settle-

ments and voluntary cleanups by private parties, compel

a determination that PRPs who incur response costs -

that is, expend resources conducting the actual cleanup

activities - should be allowed to seek recovery of those

costs under Section 107(a). In point of fact, this Court’s

decision in Key Tronic Corp. v. United States, 511 U.S. 809

(1994), while not explicitly addressing this issue, applied

the plain language of Section 107(a) and permitted a

Working PRP to assert a cost recovery claim for its neces-

sary costs of response. The Ninth Circuit, however, disre-

garded CERCLA’s plain language and the clear

implications of the Key Tronic decision by imposing

unnecessary and counterproductive constraints on Work-

ing PRPs. Unless this Court makes clear that Working

PRPs may pursue cost recovery under Section 107(a), the

Superfund program will be crippled by the loss of signifi-

cant incentives to voluntary remediation, leaving the

States and Cities with an insurmountable cleanup bur-

den The singular importance of this issue to the future of

this nation’s ability to address the tens of thousands of

sites contaminated by hazardous substances, and the

need to clarify the Key Tronic decision to meet that chal-

lenge, merit granting the Petition for a Writ of Certiorari.

Cf. Securities and Exchange Comm'n v. United Benefit Life

Ins. Co., 387 U.S. 202, 207 (1967) (certiorari granted to

address important issue and to clarify prior decision);

Standard Oil Co. v. Federal Trade Comm'n, 340 U.S. 231, 234

(1951) (certiorari granted to decide important statutory

issue not settled by this Court).

I. CERCLA’s Plain Language, Structure, and Policy

Support a Working PRP’s Use of Section 107(a).

A. The Plain Language of CERCLA.

Previously, the Ninth Circuit has properly noted that

a court should follow the plain language of Section 107

rather than adopt “an interpretation of CERCLA that

would create a significant obstacle to private response

actions not contemplated by Congress.” Cadillac Fairview/

California, Inc. v. Dow Chemical Co., 840 F.2d 691, 695 (9th

Cir. 1988). Inexplicably, the Ninth Circuit failed to heed

its own instruction in the ruling below.

It is well-established that CERCLA Section 107(a)

generally imposes strict, joint, and several liability upon

four classes of responsible parties. 42 U.S.C. § 9607(a);

3550 Stevens Creek Assocs. v. Barclays Bank of Calif., 915

F.2d 1355, 1357 (9th Cir. 1990), cert. denied, 500 U.S. 917

(1991); Levin Metals Corp. v. Parr-Richmond Terminal Co.,

799 F.2d 1312, 1316-17 (9th Cir. 1986). With respect to

most governmental plaintiffs, this liability is for “all

costs” of response “not inconsistent with the National

Contingency Plan” (the CERCLA cleanup blueprint found

at 40 C.F.R. Part 300). 42 U.S.C. § 9607(a)(4)(A). With

respect to private parties and local governments, this

liability is for “any other necessary costs of response

incurred by any other person consistent with the National

Contingency Plan,” 42 U.S.C. § 9607(a)(4)(B) (emphasis

added). This provision “unquestionably provides a cause

of action for private parties to seek recovery of cleanup

costs.” Key Tronic, 511 U.S. at 818.

Nothing in Section 107(a)’s plain language precludes

its use by liable parties who actually incur response costs.

Indeed, it is the modifying phrase “costs of response

incurred” that defines a private party’s right to bring a

cost recovery action. It is not, as has been argued, the

imagined and judicially engrafted modifier “innocent,” as

in “any other [innocent] person,” which determines pri-

vate-party standing under Section 107(a). Congress could

easily have limited the action to “innocent” persons, but

it did not.! Cf. Idylwoods Assocs. v. Mader Capital, Inc., 915

1 Elsewhere in the statute, Congress did choose to

distinguish between liable and “innocent” parties. Section

101(f) of the Superfund Amendments and Reauthorization Act

F. Supp. 1290, 1313 (W.D.N.Y. 1996) (“If, when Congress

recognized contribution as an available remedy in

CERCLA actions, it wished to require a PRP to utilize

only § 113 in seeking reimbursement of response costs, it

could easily have said so.”).

A review of the other provisions of Section 107 also

precludes courts from inserting the term “innocent” into

Section 107(a)(4)(B). Neither subsection (a)(4)(A) (which

creates federai, state and tribal governmental standing)

nor subsection (b) (which enumerates the defenses to

subsection (a) liability), makes any distinction between

innocent and non-innocent plaintiffs. In fact, with respect

to defenses, courts have consistently rejected those alleg-

ing a plaintiff’s liability status as being beyond the scope

of the enumerated defenses in Section 107(b). E.g., General

Electric Co. v. Litton Indus. Automation Sys., Inc., 920 F.2d

1415, 1418 (8th Cir. 1990) (“CERCLA does not provide for

an ‘unclean hands’ defense”), cert. denied, 499 U.S. 937

(1991). The only distinction drawn between private par-

ties in Section 107(a) is between those who have incurred

response costs and those who have not.

Moreover, nothing in the plain language of Section

113 prohibits Working PRPs that have incurred response

costs from asserting claims under Section 107(a). For

(“SARA”), Pub.L. 99-499, 100 Stat. 1613, codified at 42 U.S.C.

§ 9601(35), introduced the “innocent landowner” defense to

CERCLA liability. This provision operates in concert with

CERCLA Section 107(b)(3), 42 U.S.C. § 9607(b)(3), one of the

enumerated defenses to Section 107(a) liability. Congress’

particularized focus on the “innocence” of certain landowner

parties indicates that it was aware of the distinction and did not

intend it to be imported into the other provisions of Section 107.

example, nowhere in the text of Section 113(f) did Con-

gress express any intention that contribution actions

would be the exclusive reimbursement remedy for PRPs.

See, e.g., Bethlehem Iron Works, Inc. v. Lewis Indus., Inc., 891

F. Supp. 221, 225 (E.D. Pa. 1995).

Additionally, Section 113(g), which sets forth the dif-

fering statutes of limitations applicable to Sections 107(a)

and 113(f), actually favors an interpretation of the statute

permitting Working PRPs to bring cost recovery actions.

The three-year limitations period for contribution actions

runs from the date of a judgment, an administrative

order, or entry of a judicially-approved settlement con-

cerning costs or damages. See Section 113(g)(3). Con-

versely, the six-year limitations period for cost recovery

under Section 107(a) begins after “initiation of physical

on-site construction of the remedial action.” See Section

113(g)(2). Limiting PRPs who voluntarily initiate and

carry out cleanups to contribution actions under Section

113(f) would create the truly odd situation where there is

no applicable statute of limitations, a result Congress

could not logically have intended. See, e.g., United States

v. Turkette, 452 U.S. 576, 580 (1981) (in interpreting stat-

utes, “absurd results are to be avoided”); In re Pacific-

Atlantic Trading Co., 64 F.3d 1292, 1303 (9th Cir. 1995)

(courts do not presume Congress intended statute to have

an absurd result). Only by interpreting CERCLA to allow

Working PRPs to bring cost recovery actions under Sec-

tion 107(a), subject to the six-year statute of limitations

under Section 113(g)(2), can one avoid this absurd out-

come, while giving meaning to the statute’s express

terms.

CERCLA’s legislative history also supports the view

that Congress did not intend to prohibit PRPs from using

Section 107(a). In adopting the section, Congress stated

that, among other objectives, the 1980 CERCLA provi-

sions “would also establish a federal cause of action in

strict liability . . . to induce such persons voluntarily to

pursue appropriate environmental response actions with

respect to inactive hazardous waste sites.” H. Rep. No.

1016, 96th Cong., 2d Sess., at 17 (1980), reprinted in 1980

U.S.C.C.A.N. 6119, 6120. Prior to the enactment of SARA,

the right of action given to working parties under Section

107 was clear enough. Less certain then was whether

contribution was available to non-working parties who

litigated and lost claims brought by others who had con-

ducted cleanup. Burlington Northern R.R. Co. v. Time Oil

Co., 738 F. Supp. 1339, 1341 (W.D. Wash. 1990). In these

circumstances, of course, payments made to satisfy judg-

ments or otherwise resolve liability did not appear to

constitute direct incurrence of response costs within the

meaning of Section 107(a)(4)(B). To ameliorate any harsh

consequences that might result, most pre-SARA courts

found that non-working defendants in a cost recovery

action nonetheless could obtain contribution, because

such a right was implied in the legislative history of

CERCLA and in CERCLA Section 107(e)(2), which pre-

serves causes of action available “by subrogation or oth-

erwise.” 42 U.S.C. § 9607(e)(2). See, e.g., Wehner v. Syntex

Agribusiness, Inc., 616 F. Supp. 27, 31 (E.D. Mo. 1985)

(cross-claim for contribution for any amounts found to be

due to plaintiff is implicitly recognized in Section

107(e)(2) and the legislative history of CERCLA); United

States v. South Carolina Recycling and Disposal, Inc., 653 F.

10

Supp. 984, 995 (D.S.C. 1984) (right of contribution implied

from common law principles and Section 107(e)(2)).

Congress attempted to remedy this confusion in

SARA by, among other things, adding an express right of

contribution for liable parties — Section 113(f)(2). That

Section provides that a “person who has resolved its

liability to the United States . . . may seek contribution”

from non-settling PRPs. 42 U.S.C. § 9613(f)(3)(B)

(emphasis added). Section 113(f) of SARA thus clarified

the right to contribution of PRPs who had not themselves

incurred response costs, but who had paid the govern-

ment or another party for response costs incurred. In

short, Section 113 was added to provide a modest remedy

for the recalcitrant. However, nowhere in Section 113 did

Congress ever express an intent to make Section 113(f)

the exclusive reimbursement remedy for Working PRPs.

B. CERCLA’s Structure and Policies.

Even if the plain language did not so clearly allow a

Working PRP to employ Section 107, any interpretation of

CERCLA limiting Working PRPs to contribution actions

under Section 113(f) would violate the framework of the

statute and its underlying policies, which encourage set-

tlements and create incentives for voluntary cleanups by

threatening non-working parties with disproportionate

liability. See, e.g., 42 U.S.C. § 9613(f)(2); United States v.

Cannons Eng’g Corp., 899 F.2d 79, 91 (1st Cir. 1990) (“Con-

gress explicitly created a statutory framework that left

non-settlors at risk of bearing a disproportionate amount

of liability”); Arizona v. Nucor Corp., 825 F. Supp. 1452,

1463 (D. Ariz. 1992) (adopting Cannons), aff'd, 66 F.3d 213

11

(9th Cir. 1995). Precluding working parties from employ-

ing Section 107(a) would get it precisely backwards, by

threatening settlors with disproportionate liability and

creating an incentive to be the last holdout. As the Dis-

trict Court below correctly noted, loss of the threat of

joint and several liability and other statutory incentives

under Section 107(a) would be “at war with CERCLA

policy, because Plaintiffs would be less likely to volun-

tarily perform a lengthy and costly cleanup if the pros-

pect of recovering their costs is remote and expensive.”

The Pinal Creek Group v. Newmont Mining Corp., et al., 926

F. Supp. 1400, 1408 (D. Ariz. 1996) (Petition at App. 40),

rev'd, 118 F.3d 1298 (9th Cir. 1997).

The District Court’s ruling eloquently described the

CERCLA policies that support allowing a Working PRP to

proceed under Section 107(a). See Petition at App. 38-40.

“Courts have characterized CERCLA’s goals as two-fold:

encouraging the prompt and voluntary cleanup of haz-

ardous wastes; and imposing the costs of cleanup on

responsible parties.” Id. at App. 38. Allowing Working

PRPs to proceed against recalcitrant PRPs under Section

107(a) encourages these twin goals by creating several

incentives. As Judge Silver explained:

These incentives include: (1) shifting the diffi-

cult burden of proof concerning the allocation of

cleanup costs from plaintiffs to defendants; (2)

relieving plaintiffs of the risk of being held lia-

ble for “orphan shares” — cleanup costs that

would otherwise be charged to insolvent or

absent parties; (3) minimizing plaintiffs’ transac-

tion costs involved in tracking down and suing

every PRP; (4) limiting the range of available

defenses to those enumerated in Section

12

107(b);[2] and (5) giving parties who initiate

cleanups the benefit of a longer statute of limita-

tions,

Id. at App. 39. If working PRPs are limited to a contribu-

tion action under Section 113, the Working PRPs

would bear the burden of proving that they had

assumed more than their fair share of cleanup

costs[,] . . . might have to track down and sue

every [recalcitrant PRP], incurring considerable

transaction costs[,] . . . risk being stuck with

cleanup cost shares attributable to absent or

insolvent parties[,] . . . [and] would not be able

to wield the threat of disproportionate liablity

against Defendants to encourage early settle-

ment,

Id. at App. 40. In short, if Working PRPs were limited to a

contribution action under Section 113, the “foregoing

incentive scheme would be turned on its head.” Id.

Private parties who come forward, enter settle-

ments,? conduct cleanups, and then seek to recover their

2 These statutory defenses are that the release or threat of a

release of hazardous substances from a facility was caused

solely by: (1) an act of God; (2) an act of war; or (3) an act or

omission of a third party, other than an employee or agent of the

defendant or one whose act or omission occurs in connection

with a contractual relationship with the defendant. 42 U.S.C.

§ 9607(b)(1)-(3).

3 Many voluntary CERCLA settlements are ultimately

embodied in a consent decree for administrative purposes.

Typically, this involves concurrently filing a complaint against a

settling party and a consent decree resolving all claims in the

complaint. See, e.g., Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d

761, 763 (7th Cir. 1994); Arizona v. Motorola, Inc., 139 F.R.D. 141,

13

costs from recalcitrant PRPs must be rewarded for their

willingness to undertake and fund remedial actions. By

no means should they suffer greater exposure and higher

risk than PRPs that do nothing and wait to be sued. Cf.

Price v. U.S. Navy, 39 F.3d 1011, 1015 (9th Cir. 1994)

(“CERCLA was enacted to facilitate the cleanup of envi-

ronmental contamination by hazardous waste

releases. . . . CERCLA employs several mechanisms to

further this purpose. One of those mechanisms is a pri-

vate action for recovery of response costs”); Nurad, Inc. v.

William E. Hooper & Sons Co., 966 F.2d 837, 841 (4th Cir.)

(purpose of private cost recovery under Section 107(a) is

to encourage private cleanup), cert. denied, 506 U.S. 940

(1992).

The Ninth Circuit’s decision to deprive Working

PRPs of these advantages is wrong, unfair, and contrary

to public policy. A Working PRP that initiates and con-

ducts a cleanup must be allowed to seek recovery of its

“necessary costs of response” under Section 107(a). Con-

currently, it should be able to assert a separate action

under Section 113(f) with respect to payments it made to

third parties to resolve liability for response costs

incurred by others, including the government. Non-

working PRPs can, should, and do assert contribution

counterclaims to ensure that the Working PRP does not

avoid paying its equitable share of the cleanup costs. In

other words, Working PRPs are entitled to use Sections

143 (D. Ariz. 1991). Whether a PRP can proceed under Section

107 obviously should not be contingent upon whether it has

engaged in this largely mechanical process, but rather on

whether it has actualiy spent money on response activities.

ee ee ee

14

107 and 113; non-working parties then may invoke Sec-

tion 113. As Judge Silver explained in her opinion below,

this “two-step framework” creates significant incentives

for PRPs to voluntarily conduct cleanups, while ensuring

that all responsible parties bear their fair share of the

costs. See The Pinal Creek Group, 926 F. Supp. at 1407

(Petition at App. 38-39). Among other things, this process

properly places the burden of proving equity on the party

that has refused to spend its own money to remediate

environmental harms that it, at least in part, is responsi-

ble for causing. As previously noted, this Court’s opinion

in Key Tronic confirms the correctness of this analysis. See

511 U.S. at 820-21 (noting that Key Tronic had asserted a

claim under Section 107(a) to recover certain response

costs incurred in searching for other PRPs and asserted a

contribution claim under Section 113 to recover a portion

of money repaid to the government).

The Ninth Circuit’s decision limiting Working PRPs

to assert only contribution actions embraces two ill-

founded and overlapping assumptions: first, that all

PRPs, whether working or recalcitrant, stand on equal

legal footing within the context of CERCLA; and second,

based on that assumed legal parity, that any causes of

action between PRPs are, by definition, contribution

actions. The former assumption disregards the clear dis-

tinction in Section 107(a)(4)(B) between working and non-

working parties (i.e., between those who incur “necessary

costs of response” and those who, at some later date,

merely reimburse another for an equitable share of the

cleanup cost). The latter assumption compounds the error

by erroneously interpreting the Section 113(f) cause of

action as one between joint tortfeasors subject to the

15

common-law rules of contribution expressed in the

Restatement (Second) of Torts Section 886A(1). Such a

misinterpretation fails to recognize that, in enacting Sec-

tion 113 in 1986 as part of SARA Congress intended

merely to “clarify and confirm” the pre-SARA case law

which “recognized the right of culpable private parties to

obtain indemnification and/or contribution from recal-

citrant parties for remediation costs.” The Pinal Creek

Group, 926 F. Supp. at 1410 (Petition at App. 45)

(emphasis in original).

The Ninth Circuit’s decision likewise is premised

upon the assumption that Congress set out to create the

Section 107(a) cause of action for a small universe of

parties —- those who fell outside CERCLA’s broad liability

scheme, but who nevertheless undertake cleanup — rather

than the significantly larger universe of liable but work-

ing parties. Given a statutory scheme that enumerates

three exclusive defenses - two of which have never suc-

ceeded on the merits in a reported decision — that is a

quixotic assumption indeed.*

Similarly unfounded is the concern that allowing

PRPs to assert claims under Section 107(a) would permit

an “end-run” around the contribution protection (immu-

nity from civil claims) afforded by Section 113(f)(2).

4 Liability to the government for persons who fall under

CERCLA Section 107(a) generally is subject only to the

enumerated defenses of Section 107(b). See 42 U.S.C. § 9607(a)

(liability is “notwithstanding any . ther provision or rule of law,

and subject only to the defenses set forth in subsection (b)”);

Levin Metals, 799 F.2d at 1316-17. Neither the “act of God” nor

the “act of war” defense has succeeded on the merits.

16

Under Section 113(f)(2), contribution protection applies to |

“matters addressed” by a settlement agreement and is

unaffected by the label a plaintiff attaches to its claim

against a settling party. The States and Cities are confi-

dent in the ability of the courts to recognize and prevent

attempts to “end-run” CERCLA’s contribution protection

provisions. See, e.g., Cannons Eng’g, 899 F.2d at 92-93 (no

equitable indemnity claim may be asserted against a

party to a judicially approved CERCLA settlement);

United States v. Pretty Products, Inc., 780 F. Supp. 1488,

1495-97 (S.D. Ohio 1991) (indemnity claim prohibited as

disguised contribution claim).

II. The Ninth Circuit Decided an Important Federal

Question in Conflict with This Court’s Opinion in

Key Tronic v. United States.

Permitting Working PRPs to assert cost recovery

actions under Section 107(a) is also in keeping with and

further bolstered by this Court’s opinion in Key Tronic

Corporation v. United States, 511 U.S. 809 (1994). Key

Tronic Corporation was a PRP that incurred $1.2 million

in response costs (in the form of attorney’s fees) of its

own and also made a $4.2 million payment to the govern-

ment in settlement of an enforcement proceeding. Id. at

812. Thereafter, Key Tronic brought a Section 107 claim to

recover its $1.2 million out-of-pocket response costs and a

Section 113 claim for contribution. 42 U.S.C. §§ 9607 and

9613. While noting that Key Tronic was “responsible for

contaminating a landfill” and had entered into a prior

consent decree, id. at 811, this Court nevertheless

endorsed Key Tronic’s use of Section 107(a) to recover

certain of its out-of-pocket response costs incurred in

bite a icomsunere cin

17

searching for other liable parties. Id. at 820-21. (Some of

the fees were judged to be outside the scope of “neces-

sary” costs of response.) The Court also noted that Key

Tronic was limited to proceeding under Section 113 to the

extent it had sought contribution to recover part of its

monetary payment to the government. Id. at 812. In short,

Key Tronic proceeded, with this Court’s endorsement, as

follows: under Section 107 with respect to its out-of-

pocket “necessary costs of response,” and under Section

113 with respect to its payment to resolve liability for

others’ response costs. This dual approach by Key Tronic

is precisely what Congress intended should occur, what

the plain-language of CERCLA provides, and what the

District Court below decided.

In Key Tronic, this Court clearly decided that a PRP

plaintiff could recover its response costs under Ҥ 107,

which impliedly authorizes private parties to recover

cleanup costs from other PRP’s.” Id. at 818. The Court

also rejected the contention that SARA’s 1986 addition of

an express right of contribution preempted the right of

action under Section 107 created in 1980:

[T]he statute now expressly authorizes a cause

of action for contribution in § 113 and impliedly

authorizes a similar and somewhat overlapping

remedy in § 107.

Id. at 816 (emphasis added). The dissenting opinion in

Key Tronic also agreed that Section 107(a) authorized

recovery, taking issue only with the majority’s character-

ization of a PRP’s right as “implied” rather than express.

Id. at 822.

18

Unfortunately, the Ninth Circuit ignored the clear

implications of the Key Tronic decision and adopted an

interpretation of CERCLA that violates its plain language,

discourages voluntary cleanups by responsible parties,

and puts the public at risk of further environmental deg- .

radation. By prohibiting Working PRPs from asserting a

Section 107(a) cost recovery action against recalcitrant

PRPs, the Ninth Circuit has undermined the intent of

CERCLA, threatened the continued viability of the Super-

fund program, and jeopardized the public’s ability to

achieve a clean environment.

a

CONCLUSION

For the foregoing reasons, the Petition for a Writ of

Certiorari should be granted.

Respectfully submitted this 12th day of January, 1998.

Roverick G. McDouGAaLt

City Attorney

City of Phoenix, Arizona

Puiur M. Haccerty*

Chief Assistant City Attorney

Craic J. REECE

Assistant City Attorney

200 West Washington Street,

13th Floor

Phoenix, Arizona 85003

(602) 262-6761

*Counsel of Record for

Amici States and Cities

Other Counsel Listed

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id Wate