# Opposition Brief — Atlantic Richfield Co. v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2003
- **Citation:** 537 U.S. 1147

## Text

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Nos. 02-500 and 02-506

Jn the Supreme Court of the Gnited States

ATLANTIC RICHFIELD COMPANY AND TEXACO, INC.,
PETITIONERS

Vv

UNITED STATES OF AMERICA, ET AL.

SHELL OIL COMPANY AND UNION OIL COMPANY,
t PETITIONERS

Os
UNITED STATES OF AMERICA, ET AL.

ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES CUURT OF APPEALS
FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

THEODORE B. OLSON

Solicitor General
Counsel of Record
— “THOMAS L. SANSONETTI

Assistant Attorney General

DAVID C. SHILTON

TODDS. KIM
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

QUESTION PRESENTED

Whether the United States “arranged for disposal” of
waste within the meaning of Section 107(a)(8) of the
Comprehensive Environmental Response, Compensa-
tion, and Liability Act of 1980, 42 U.S.C. 9607(a)(3), by
virtue of its World War II regulation of the manufac-
ture and purchase of a petroleum product when it did
not direct or control the actual disposal of waste from
that manufacture.

(I)

TABLE OF CONTENTS

Page
Opinions below ..........sscsssscsssersssessrecsereeseseenssnssesssesnsenensscensnssseeees 1
JUTISGICTION ........ccsscscesssseccesossnsssoevsensensonssnsonsensenssonsonsensssssesessosenseees 2.
Statement .........ccecssecsersserrececcsceecsoesseserecessscnsssssesersersssessssssnsssseceseoees ae
APZUMENL ..0....csseserccserssvsescosssesvosornenonsscsvoeressvencesonsesenserseesecsosnsoseseoee 15
IIIT Siciiicceassnnsninsevrcersincinvecssinnstigashsciainoneijnaierevicenbsineeinescosenes 27
TABLE OF AUTHORITIES
Cases:
Amcast Indus. Corp. v. Detrex Corp., 2 F.3d
746 (7th Cir. 1993), cert. denied, 510 U.S. 1044
CRIED: siscosncinuscncinusstesieimiessstshahnntessinntniainintenesenpenserenvemreyanecenveen 19
Cadillac Fairview/Cal., Inc. v. United States,
41 F.3d 562 (Oth Cir. 1994) .......c.c.ccsccccorerscssssssssssrsrssssssserees 16
Concrete Sales & Servs., Inc. v. Blue Bird Body
Co., 211 F.3d 1883 (11th Cir. 2000) ........cccsersseseseeeeeees 23
East Bay Mun. Util. Dist. v. United States Dep't
of Commerce, 142 F.3d 479 (D.C. Cir. 1998) ......---sser00e- 27
FMC Corp. v. United States Dep’t of Commerce,
29 F.8d 883 (Sd Cir. 1994) ........c.cecscsreovsescsrvsscsseresscersosssssees 24, 25
Florida Power & Light Co. v. Allis Chalmers
Corp., 893 F.2d 1313 (11th Cir. 1990) .........sssesseeseeseeseees 16
General Elec. Co. v. AAMCO Transmissions, Inc.,
962 F.2d 281 (2d Cir. 1992) ...........seccecserssssssesssesseseeees 20, 22, 23
Geraghty & Miller, Inc. v. Conoco, Inc., 234 F.3d 917
COs Ce ID) oacsesisnsvescenervvsovenninepiinnernosnentinnequttonenvstnivennserenetee 23
Maxus Energy Corp. v. United States, 898 F. Supp.
399 (N.D. Tex. 1995), aff'd, 95 F.3d 1148 (5th Cir.
RII iscsvisisnvseccrinarsenevsosnein iosesiasnionnenseseavtontesaégvevenesnnesessseenesoes 27
Pennsylvania v. Union Gas Co., 491 US. 1
REID vain sicovadesestanssinoabninbinsisesonisiiatiinnesomnshemenpanaannnyesastawvsaumneqnene 3
Redwing Carriers, Inc. v. Saraland Apartments,
94 F.3d 1489 (11th Cir. 1996) ...........sccsccsressssrsesesersesesoeees 19

(IIT)

IV

Cases—Continued: Page

South Fla. Water Mgmt. Dist. v. Montalvo, 84 F.3d —

A GE Se, FH seitiienerintiniimninnninantnd 23
United States v. Aceto Agric. Chems. Corp., 872

FRR RE. GO CR SBI) vaseiecpresisnsnscensenreneniancinininensnsnny 16, 21
United States v. Bestfoods, 524 U.S. 51 (1998) ............ 25, 26
United States v. Cello-Foil Prods., Inc., 100 F.3d

1227 (6th Cir. 1996) ... ssdhicbinagielacasneitiasineinanionvante 18-19
United States v. Iron Mountain Mines, Inc., 881

F. Supp. 1432 (E.D. Cal. 1995) ... ‘ 14, 20, 27

United States v. Northeastern Pharm. & Chem. Co.,
810 F.2d 726 (8th Cir. 1986), cert. denied, 484 U.S.

848 (1987) 14 . On a related note, petitioners’
contention (02-500 Pet. 25-26; 02-506 Pet. 20, 27-28) that the court
of appeals improperly treated the United States differently from
private parties is also mistaken. The court of appeals applied
general principles under CERCLA to the unique facts presented
in this case.

17

tracts and initiated proposals before and during the war
to expand their refineries to meet demand. Stip. 147,
154-158, 268-278 (L36, L38, L64-L66). There is no
evidence that petitioners ever desired to stop produc-
ing as much avgas as the United States would buy.”
The United States did not coerce petitioners to produce
avgas.

Petitioners also err (02-500 Pet. 7 n.3 (quoting Pet.
App. 45a)) when they state that it was “undisputed”
that the United States “controlled the specifications,
quantities, delivery, and price of avgas”. The United
States controlled those terms only in the sense that
every party controls the terms on which it chooses to
contract; petitioners exercised similar control. The
avgas contracts were based on petitioners’ own propos-
als and included unique terms tailored to each com-
pany’s particular interests. Stip. 159-161, 166, 181-183
(L39-L40, L42-L48). Contrary to petitioners’ conten-
tions (02-500 Pet. 7 & n.3; 02-506 Pet. 6-13), the Planned
Blending Program did not provide the United States
with substantial control over avgas production. That
program did not involve the production of avgas com-
ponents, which was responsible for the waste at issue
here, see Stip. 9, 14-16 (L7-L8), but rather the blending
of those components after production. Stip. 212, 221-
225 (L49, L51-L52). Moreover, although the United
States could require a transfer when one refinery’s sur-
plus of an avgas component could offset a deficit of
another (in a fashion similar to refiners’ pre-war pro-

13 Former PAW official J. Howard Marshall, one of the wit-
nesses whose testimony petitioners emphasize, testified that the
United States “never really had to” invoke its wartime powers to
force refiners to produce avgas. L174. Indeed, the President of
Union Oil urged the United States to assume greater regulatory
authority over avgas production. Stip. 101 (L24).

18

duct exchanges), the government usually accepted
refiners’ blending recommendations without alteration.
Stip. 210, 225 (L48, L52). Accordingly, the parties
stipulated that “[tJhere is no direct evidence linking the
Planned Blending Program to waste dumping at the
McColl Site.” Stip. 610 (L163).

b. Petitioners also contend (02-500 Pet. 3, 7; 02-506
Pet. 16-18, 23) that the United States “arranged for dis-
posal” of the waste at the McColl site because it alleg-
edly denied them resources for waste disposal. Peti-
tioners, however, had alternatives to dumping at the
McColl Site. See pp. 10-11, supra. Petitioners contend,
for instance, that burning was an unpleasant option
(02- 500 Pet. 8-9 n.4; 02-506 Pet. 17), but it was one they
had used before the war and continued using during the
war despite their professions of distaste today. Stip.
327, 372, 489, 500, 507-509, 518, 519, 521 (L74, L83,
L125-L126, L130-L138). Contrary to petitioners’ con-
tention (02-500 Pet. 7; see id. at 8 n.4, 9), “(t]he undis-
puted facts indicate that [petitioners] had other dis-
posal options for their acid waste * * * and that they
were not compelled by the government to dump waste
in any particular manner.” Pet. App. 29a. Moreover,
dumping was an option that petitioners had used before
the war and continued using after the war, both at the
McColl site and elsewhere. Stip. 2, 327-328, 409-410,
428, 443-448 (L6, L74, L94, L98-L99, L114-L115).

In addition, petitioners’ theory that the government
is liable as an “arranger” under CERCLA because it
limited their disposal options is legally unsound.
CERCLA requires proof of an “arrange[ment] for dis-
posal or treatment” of a hazardous substance. 42
U.S.C. 9607(a)(3). That language predicates arranger
liability on a party’s affirmative acts regarding disposal.
See United States v. Cello-Foil Prods., Inc., 100 F.3d

19

1227, 1232 (6th Cir. 1996); Redwing Carriers, Inc. v.
Saraland Apartments, 94 F.3d 1489, 1506 (11th Cir.
1996); Amcast Indus. Corp. v. Detrex Corp., 2 F.3d 746,
751 (7th Cir. 1993), cert. denied, 510 U.S. 1044 (1994). It
is inconsistent with petitioner’s theory that the United
States arranged for disposal of the waste simply by
taking unrelated actions that made it harder for peti-
tioners to dispose of that waste.

In sum, while petitioners independently decided to
manufacture avgas, controlled the day-to-day opera-
tions that produced waste, and arranged for that
waste’s disposal, the United States was two steps re-
moved from dumping: it had no significant presence at
or operational control over petitioners’ refineries, and it
had nothing to do with the site where Eli McColl even-
tually dumped petitioners’ waste from those refineries.
At root, petitioners’ argument is that the United States
is liable for the disposal of all waste produced by a
closely-regulated industry. There is no indication that
Congress meant ta ascribe such a broad scope to
arranger liability and so drastically burden government
regulation of industrial practices.

2. Petitioners argue (02-500 Pet. 16-27; 02-506 Pet.
23-26) that the decision of the court of appeals conflicts
with decisions of other courts addressing arranger li-
ability under CERCLA. Petitioners contend that what
they term “the Ninth Circuit’s narrow focus on actual
ownership or direct control over the disposal arrange-
ments” conflicts with the decisions of several other
courts of appeals, which in petitioners’ view hold “that a
causal nexus between a party’s conduct and the waste
disposal is sufficient to establish arranger liability.”
02-500 Pet. 24 (emphasis added). The decision of the
Ninth Circuit is consistent with the decisions of the
other courts petitioners cite (id. at 20-24), many of

20

which the Ninth Circuit itself cited approvingly in its
opinion.“

a. Initially, petitioners misread the Ninth Circuit’s
decision when they state (02-500 Pet. 16) that it “held
that arranger liability requires either: (1) ownership of
raw materials or intermediate products at another’s
facility or (2) direct controi of the disposal of hazardous
waste at a particular location.” The Ninth Circuit did
discuss the concepts of “ownership” and “direct control”
in the process of distinguishing this case from the
Eighth Circuit’s decision in NEPACCO. But, contrary
to petitioners’ contention, the court of appeals did not
hold that those are the exclusive factors on which
arranger liability may be based. See Pet. App. 20a-21a.
Instead, it explicitly and properly recognized that a
party might be liable if it bore a “duty to dispose” of the
hazardous materials, even if it did not directly arrange
for disposal. Id. at 22a (quoting United States v. Iron
Mountain Mines, Inc., 881 F. Supp. 1432, 1451 (E.D.
Cal. 1995)). Based on an analysis of the facts of this
case, the court simply disagreed with petitioners’ con-
tention that the government’s actions resulted in such a
“duty to dispose” here. :

Petitioners also misread the decisions of the other
courts they cite to hold that a “causal nexus” between a
party’s conduct and the disposal of waste is “sufficient”
to result in arranger liability under CERCLA. Al-
though a “causal nexus” is no doubt necessary for ar-
ranger liability, no court has held that it is sufficient. A

14 Compare, e.g., 02-500 Pet. 21-22 and 02-506 Pet. 23-24 (relying
on General Elec. Co. v. AAMCO Transmissions, Inc., 962 F.2d
281, 286 (2d Cir. 1992) (per curiam)), with Pet. App. 22a (citing and
quoting the same case); 02-500 Pet. 21 (relying on United States v.
Vertac Chem. Corp., 46 F.3d 803, 811 (8th Cir.), cert. denied, 515
U.S. 1158 (1995)), with Pet. App. 23a-24a (relying on the same case).

21

manufacturer would not produce hazardous waste if not
for its customers, for instance, but Congress obviously
did not mean to impose arranger liability on every pur-
chaser of a product whose manufacture generated haz-
ardous waste. The question in cases like this one is not
whether the putative arranger shares any causal rela-
tionship with waste disposal, but whether the putative
arranger exercised sufficient control over the process of
waste generation and disposal.

b. There is no conflict between the decision of the
Ninth Circuit that the United States is not liable as an
arranger on the facts of this case and the decisions of
the other courts that petitioners cite holding that ar-
ranger liability under CERCLA was appropriate on the
facts of those cases.

The decision in this case does not conflict with the
Eighth Circuit’s decision in Aceto Agricultural Chemi-
cals Corp., supra (cited at 02-500 Pet. 16-17). As the
Ninth Circuit explained (Pet. App. 18a), Aceto involved
a far closer relationship between the arranger and the
waste, in which the arranger owned the raw materials,
contracted out a crucial waste-producing intermediate
step in the production process to another firm, and then
received back the resulting product. See Aceto, 872
F.2d at 1381. Although ownership of the raw materials
and finished products is not dispositive of arranger
liability in all cases, it is a relevant factor that, together
with the other differences between the cases, distin-
guishes this case from Aceto. ora

Similarly, the decision in this case does not conflict
with the Eighth Circuit’s decision in NEPACCO (cited
at 02-500 Pet. 17-20). In that case, the court held that
the president of a corporation could be held liable as an
arranger for the disposal of waste, where a subordinate
official exercised actual control over the disposal of the

22

waste at issue. As the court of appeals explained in
distinguishing NEPACCO, the United States would be
liable as an arranger in this case if “authority to control
* * * were sufficient without more” to establish
liability. Pet. App. 20a. The decision in NEPACCO
was based, however, not on an abstract “authority to
control,” but on the fact that “responsible officials in the
chain of command of a corporation may be held respon-
sible as arrangers when one of those officers has exer-
cised actual control over the disposition of waste on
behalf of the corporation, and the other officer has the
authority to control the first officer.” Jd. at 20a-21a.
See United States v. TIC Inv. Corp., 68 F.3d 1082, 1089
(8th Cir. 1995) (test is whether purported arranger
“exercise[d] actual or substantial control, directly or
indirectly, over the arrangement for disposal”) (em-
phasis added), cert. denied, 519 U.S. 808 (1996). The
mere fact that the United States had the (largely
unexercised) regulatory authority to order petitioners
to take various actions during World War II does not
put the United States in the same position with respect
to the disposal of petitioners’ waste that a president of
a corporation occupies with respect to other corporate
officers who directly arrange for the disposal of waste.
Petitioners’ other claims of conflict are similarly mis-
taken. In General Electric Co. v. AAMCO Transmis-
sions, Inc., 962 F.2d 281 (2d Cir. 1992) (per curiam)
(cited at 02-500 Pet. 22), the court held that certain oil
companies were not liable under CERCLA as “arrang-
ers” for the disposal of motor oil that was stored by
dealers at service stations leased from the companies.
That holding is entirely consistent with the court of
appeals’ decision that the government is not liable as an
arranger in this case. Indeed, the court of appeals here
relied in part on General Electric’s statement, cited by

23

petitioners (02-500 Pet. 22), that arranger liability turns
in part on whether there is “the obligation to exercise
control over hazardous waste disposal.” 962 F.2d at 286
(cited at Pet. App. 22a). The court of appeals’ decision
is also entirely consistent with petitioners’ position that
“whether such [an] obligation exists is based on the
party’s conduct as it relates to the disposal of hazardous
waste.” 02-500 Pet. 22 (citing General Electric). The
court of appeals simply concluded that, on the facts of
this case, as in General Electric, the government’s con-
duct did not lead to such an “obligation to exercise
control.”

Petitioners contend (02-500 Pet. 22-23) that the
decision in this case conflicts with decisions of the Fifth
and Eleventh Circuits that a determination of arranger
liability must “focus on all of the facts in a particular
case.” South Fla. Water Mgmt. Dist. v. Montalvo, 84
F.3d 402, 407 (11th Cir. 1996); see Geraghty & Miller,
Inc. v. Conoco, Inc., 234 F.3d 917, 929 (5th Cir. 2000)
(“totality of the circumstances”). The court of appeals
in this case similarly concluded that “[t]here is no
bright-line test, either in the statute or in the case law,
for a broad theory of arranger liability under
[CERCLA].” Pet. App. 17a. Indeed, the court in this
case undertook an exhaustive review of all of the rele-
vant facts in this case before concluding that arranger
liability should not be imposed. See ibid. (“[W]Je are
required to sort through the fact patterns of the de-
cided cases in order to find similarities and dissimilari-

15 For the same reason, the decision of the court_of appeals is
entirely consistent with the Eleventh Circuit’s recognition of “the
possibility that a party could so control and benefit from another
company’s production of hazardous waste that arranger liability
would arise.” 02-500 Pet. 23 (quoting Concrete Sales & Servs., Inc.
v. Blue Bird Body Co., 211 F.3d 1333, 1339 (11th Cir. 2000)).

24

ties to the fact pattern of [this] case.”). The reasoning
and result of the court of appeals in this case are con-
sistent with the Fifth and Eleventh Circuit cases cited.
3. a. Petitioners also assert (e.g., 02-506 Pet. 3) that
the court of appeals’ decision conflicts with the Third
Circuit’s en banc decision in FMC Corp. v. United
States Dep’t of Commerce, 29 F.3d 833 (1994). FMC
involved “operator” liability under Section 107(a)(2),
not, as in this case, “arranger” liability under Section
107(a)(8). Under Section 107(a)(2) of CERCLA, liabil-
ity attaches to any party who “operated” a facility at a
time when hazardous waste was disposed there. 42
U.S.C. 9607(a)(2). Petitioners contend (02-506 Pet. 26)
that the statutory distinction between “operator” liabil-
ity and “arranger” liability “has no bearing,” and that
the Ninth Circuit’s decision conflicts with FMC.
Petitioners are mistaken (02-506 Pet. 26-28) that the
distinction between “operator” liability and “arranger”
liability is of no significance. The two species of liability
are based on different statutory provisions and require
different elements of proof. Under Section 107(a)(2), a
party who “owned or operated” a facility at which “haz-
ardous substances were disposed of” is liable. 42
U.S.C. 9607(a)(2). By contrast, Section 107(a)(3)
imposes liability on a party that “arranged for disposal
or treatment * * * of hazardous substances.” 42
U.S.C. 9607(a)(3). Whereas the former inquiry focuses
on the question of ownership or operation of the facility,
the latter inquiry focuses on the question of arranging
for the disposal of the substances. See TIC Inv. Corp.,
68 F.3d at 1090 n.7 (“The language related to operator
liability * * * does not require any involvement in the
disposal activities themselves.”). Petitioners cannot
simply import analyses relating to “operator” liability

25

without accounting for the differences in the statutory
formulae.

In any event, even if the two types of liability had
identical prerequisites, petitioners’ claim of conflict
would be mistaken. As the court of appeals in this case
explained, the court in FMC found the United States
liable as an operator of a wartime plant where the
United States required the owner of that plant to con-
vert it to manufacture rayon; owned much of the manu-
facturing equipment; required the use of government-
supplied raw materials; participated in managing and
supervising the workers; and directly controlled the
manufacturing process. Pet. App. 22a-23a; see FMC, 29
F.3d at 836-837. In this case, the government did not
require petitioners to manufacture any product that
they sought to avoid; did not own any of the manu-
facturing equipment; did not supply the raw materials;
did not participate in managing and supervising the
workers at petitioners’ facilities; and did not directly
control the manufacturing process. The degree of
control in FMC was substantially greater than that
here. There is thus no conflict.”

b. Petitioners invoke (02-506 Pet. 3, 22, 26) this
Court’s decision regarding “operator” liability under
Section 107(a)(2) in United States v. Bestfoods, 524 US.
51 (1998), although they do not expressly assert that
the decision of the court of appeals conflicts with it. In

16 Moreover, as the court of appeals found, the FMC court
divided evenly on the question whether the United States bore ar-
ranger liability. Pet. App. 23a; FMC, 29 F.3d at 845-846. The
court of appeals thus recognized: “If it was a close question on the
facts of FMC * * * , it cannot possibly be a close question on the
facts in the case before us.” Pet. App. 23a. The result in FMC also
shows the error in petitioners’ attempt to eliminate the distinction
between operator liability and arranger liability.

26

Bestfoods, this Court considered whether and when a
parent corporation would share its subsidiary’s “opera-
tor” liability under Section 107(a)(2). 524 U.S. at 61-64.
Petitioners contend that their wartime relationship
with the United States was comparable to a parent-
subsidiary relationship. 02-506 Pet. 15-16, 21-23. That
comparison is weak. Unlike a parent corporation, the
United States held no interest in petitioners’ refineries,
made no profits from petitioners’ business, and did not
manage petitioners’ operations. Its relationship with.
petitioners’ plants was based on contract and regula-
tion, not ownership and management. Accordingly,
there is no basis in this case to apply to the United
States the “veil piercing” theory of “operator” liability
that the Court discussed in Bestfoods.

Absent piercing, the pertinent question under
Bestfoods is whether the parent’s actual actions regard-
ing hazardous waste (as opposed to the parent’s general
control over the subsidiary) make the parent directly
(as opposed to derivatively) liable. 524 U.S. at 64-67.
This Court explained:

[U]nder CERCLA, an operator is simply someone
who directs the workings of, manages, or conducts
the affairs of a facility. To sharpen the definition for
purposes of CERCLA’s concern with environmental
contamination, an operator must manage, direct, or
conduct operations specifically related to pollution,
that is, operations having to do with the leakage or
disposal of hazardous waste, or decisions about
compliance with environmental regulations.

Id. at 66-67. The United States did not “operate” peti-

tioners’ refineries within the meaning of CERCLA and

thus should not be held responsible for the arrange-
ments for disposal of the waste generated there. In-

27

deed, numerous courts have declined to impose “opera-
tor” liability on the United States on similar facts
dealing with wartime industrial regulation. See East
Bay Mun. Util. Dist. v. United States Dep’t of Com-
merce, 142 F.3d 479, 484-487 (D.C. Cir. 1998); United
States v. Vertac, 46 F.3d 803, 808 (8th Cir.), cert. denied,
515 U.S. 1158 (1995); Washington v. United States, 930
F. Supp. 474, 483-485 (W.D. Wash. 1996); Maxus En-
ergy Corp. v. United States, 898 F. Supp. 399, 408 (N.D.
Tex. 1995), aff'd, 95 F.3d 1148 (5th Cir. 1996) (Table);
Iron Mountain Mines, Inc., 881 F. Supp. at 1450-1451.
The decision of the court of appeals comports fully with
those decisions and with Bestfoods.

CONCLUSION
The petitions for a writ of certiorari should be denied.
Respectfully submitted.

THEODORE B. OLSON
Solicitor General

THOMAS L. SANSONETTI
Assistant Attorney General

DAVID C. SHILTON

TODDS. KIM
Attorneys

DECEMBER 2002

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0496%3A2. Public record. Not legal advice.