U.S. v. Shell Oil Co., CV 91-0589-RJK.

• Decision Date: 11 August 1998
• Docket Number: No. CV 91-0589-RJK.,CV 91-0589-RJK.
• Citation: 13 F.Supp.2d 1018
• Parties: UNITED STATES of America, Plaintiff, v. SHELL OIL COMPANY, et al., Defendants.
• Court: U.S. District Court — Central District of California

13 F.Supp.2d 1018

UNITED STATES of America, Plaintiff, v. SHELL OIL COMPANY, et al., Defendants.

No. CV 91-0589-RJK.

United States District Court, C.D. California.

August 11, 1998.

Lois J. Schiffer, Assistant Attorney General, Environment & Natural Resources Division, Joshua M. Levin, Michael J. Zevenbergen, Washington, DC, Nora M. Manella, United States Attorney, Leon W. Weidman, Assistant United States Attorney, John Rubiner, Assistant United States Attorney, Los Angeles, CA, for plaintiff U.S.A.

Daniel E. Lungren, Attorney General of California, Roderick E. Walston, Chief Assistant Attorney General, Theodora Berger, Assistant Attorney General, Timothy R. Patterson, Deputy Attorney General, San Diego, CA, for plaintiff State of California.

Munger, Tolles & Olson L.L.P., Ronald L. Olson, Peter R. Taft, Cynthia L. Burch, Los Angeles, CA, for Defendants.

MEMORANDUM OF DECISION AND ORDER

KELLEHER, District Judge.

The Court has presented for adjudication the question of the allocation of liability for the cost of cleanup of the McColl Superfund Site, a significant and deleterious by-product of the World War II aviation gasoline program. The United States of America ("the Government") has incurred substantial response costs in its attempts to clean up the McColl Site and seeks by this action to recover those costs from Shell Oil Company, Union Oil Company, Atlantic Richfield Company, and Texaco, Inc. (herein referred to as "Shell," "Union," "ARCO," and "Texaco," respectively and "the Oil Companies," collectively). Recovery is sought pursuant to Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), Pub.L. No. 96-510, as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Pub.L. 99-499, codified at 42 U.S.C. § 9607.

This Court has previously granted summary judgment holding both the Government and the Oil Companies liable as "arrangers" as this term is used in 42 U.S.C. § 9607. See U.S. v. Shell Oil Co., 841 F.Supp. 962, 975 (C.D.Cal.1993) (holding Oil Companies liable); September 18; 1995, Order (holding Government liable).

Having found both the United States and the Oil Companies liable, all that remains is a determination, pursuant to 42 U.S.C. § 9613, of the proper allocation of response costs between the Government and the Oil Companies. The Court needs to determine only the percentage of liability allocable to the Government and the percentage of liability allocable to the Oil Companies.¹ The allocation issue was tried to the Court on February 17, 18, 19, 20, 23 and 23, 1998. Post-trial briefs were filed on April 2, 1998, and the matter stood submitted at that time.

There is presented the task of deciding and determining a factual issue in a manner different from any previously encountered by this Court. The difference arises from the unique and unusual discretion reposed in this Court by statute, which provides in relevant part:

In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate.

42 U.S.C. § 9613(f)(1).

Courts have consistently recognized the broad discretion afforded by this statute to the District Court both in the selection of equitable factors to be applied and in the application of those factors. In United States v. R.W. Meyer, Inc., 932 F.2d 568 (6th Cir.1991), the court noted:

Congress reemphasized that the trial court should invoke its moral as well as its legal sense by providing that the court use not just `equitable factors,' which phrase already implies a large degree of discretion, but `such equitable factors as the court determines are appropriate.' This language broadens the trial court's scope of discretion even further.

Id. at 572.

Thus, the Court finds itself in an unusual position — it is to act not only as a discretionary finder of fact but as a "finder of law" in a manner different from any usually required of a judicial officer acting in a non-jury proceeding insofar as the Court must choose which equitable factors are applicable to this case.

It is appropriate to consider early on the meaning, significance and proper application of the Court's function in these circumstances. This function is something other, different and more than the mere application of the rules of contract law to uncontested facts (as is largely the case here). In one sense, this case requires this court to determine in an unusual manner the rights, duties and obligations inter se of parties to a contract. But the problem is not that simple. In the fullest sense the Court is here faced with an unusual contract entered into in unusual times for unusual purposes under drastically different circumstances. The Court must here decide the relative obligations between the parties to a contract which is silent on the question here presented. Indeed, the question presented arises because of liability imposed by a statute enacted long after the contract was entered into and more than a generation after the contract was fully performed.

This is a case in which the Court is required to take a long delayed hindsight view and make an appraisal of what was done to win a war. The Court is not to determine how well it was done, nor who deserves praise or criticism for what was done — it was done magnificently. We won the war, and what was here done was essential in that accomplishment. This is a case in which allocating "fault" as such is inappropriate. No one was at fault. Each party did what was necessary to achieve a common, paramount goal: victory in World War II. Nevertheless, this matter calls for the allocation per statute of responsibility for the cleanup of the McColl Site.

BACKGROUND

The McColl Superfund Site comprises roughly twenty-two acres in Fullerton, California. The hazardous waste located at the McColl Site consists primarily of acid sludge byproducts resulting from alkylation and other acid treating processes used in the manufacture of 100-octane aviation gasoline ("avgas") and other refinery products during World War II. During the war, the Oil Companies produced avgas, the most critically needed refinery product for the war effort, in extraordinary quantities at the demand of, and in fulfillment of contracts with, the Government. As noted above, these contracts were silent on the question of who should bear the burden of waste treatment.

The wartime economy

A survey of the relevant legislative enactments and Executive Orders of the time shows the degree of control exercised by the Government over the wartime economy generally and the petroleum industry specifically.

In May 1940, a National Defense Advisory Commission ("NDAC") was established to render non-binding advice on procurement policy. The NDAC was succeeded in 1941 by the Office of Production Management ("OPM"), which established an early priorities system to expedite delivery of essential materials to the Army and Navy. In August 1941, the Supply Priorities and Allocation Board ("SPAB") was established to coordinate scarce material deliveries among competing agencies of the United States.

Shortly after the December 7, 1941, bombing of Pearl Harbor by the Japanese, Congress enacted the First War Powers Act "to expedite the prosecution of the war effort," 55 Stat. 838, 839 (1941) (codified at 50 U.S.C.App. § 611 (repealed 1966)). This Act gave broad power to the President to issue Executive Orders concerning the war effort.

In January 1942, President Roosevelt issued Executive Order 9024, which established the War Production Board. Pursuant to Executive Order 9024, the Chairman of the WPB was empowered to issue directives to industry in connection with war procurement and production, including directives with respect to purchasing, contracting, specification, construction, requisitioning, plant expansion, conversion and financing. At this time, the OPM and SPAB were eliminated and their duties were consolidated within the WPB. A subsequent order, Executive Order 9040, conferred upon the WPB the powers previously delegated to the Office of Production Management ("OPM") which, under Executive Order 8629, included the authority to "[f]ormulate and execute in the public interest all measures needful and appropriate in order ... to increase, accelerate, and regulate the production and supply of materials, articles and equipment and the provision of emergency plant facilities and services required for the national defense"² and to "[f]ormulate plans for the mobilization for defense of the production facilities of the Nation, and to take all lawful action necessary to carry out such plans." The WPB's task was principally accomplished through use of intricate nationwide priority rankings system, under which the WPB reviewed requirements for goods appearing to be scarce, determined how much of each product or raw material was needed, and identified facilities to help meet this demand. Facilities were required to give priority to military contracts, and the President was authorized to regulate the flow of scarce raw materials where the use of such materials for national defense resulted in a supply shortage.

Under Executive Order 9040, the WPB was delegated the authority vested in the President of the United States by Section 120 of the National Defense Act of 1916, ch. 143, 39 Stat. 213 (1916), previously conferred upon OPM under Executive Order 8629, to seize the plants which did not comply with production orders and to enforce production orders under threat of criminal penalties.

The WPB's authority was again expanded by Executive Order 9125, which delegated to the WPB the powers vested in the President by Title III of the Second War Powers Act, ch. 199, 56 Stat. 176 (1942). This act, passed in March 1942, authorized the WPB to allocate not just "materials" deemed to be in scarce supply, but "facilities" as well. Additionally, the WPB could...