U.S. v. Burlington Northern & Santa Fe Ry. Co.

• Decision Date: 16 March 2007
• Docket Number: No. 03-17169.,No. 03-17125.,No. 03-17153.,03-17125.,03-17153.,03-17169.
• Citation: 520 F.3d 918
• Parties: UNITED STATES of America, Plaintiff, and Department of Toxic Substances Control, State of California, Plaintiff-Appellant, v. BURLINGTON NORTHERN & SANTA FE RAILWAY COMPANY, as successor in interest to the Atchison, Topeka & Santa Fe Railway Company; Union Pacific Transportation Company, as successor in interest to the Southern Pacific Transportation Company; Shell Oil Company, Defendants-Appellees. United States of America, Plaintiff-Appellant, and Department of Toxic Substances Control, State of California, Plaintiff, Burlington Northern & Santa, Fe Railway Company, as successor in interest to the Atchison, Topeka & Santa Fe Railway Company; Union Pacific Transportation Company, as successor in interest to the Southern Pacific Transportation Company; Shell Oil Company, Defendants-Appellees. United States of America; Department of Toxic Substances Control, State of California, Plaintiffs-Appellees, v. Burlington Northern & Santa Fe Railway Company, as successor in interest to the Atchison, Topeka & Santa Fe Railway Company; Union Pacific Transportation Company, as successor in interest to the Southern Pacific Transportation Company, Defendants, and Shell Oil Company, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

520 F.3d 918

UNITED STATES of America, Plaintiff, and Department of Toxic Substances Control, State of California, Plaintiff-Appellant, v. BURLINGTON NORTHERN & SANTA FE RAILWAY COMPANY, as successor in interest to the Atchison, Topeka & Santa Fe Railway Company; Union Pacific Transportation Company, as successor in interest to the Southern Pacific Transportation Company; Shell Oil Company, Defendants-Appellees.

United States of America, Plaintiff-Appellant, and

Department of Toxic Substances Control, State of California, Plaintiff,

Burlington Northern & Santa, Fe Railway Company, as successor in interest to the Atchison, Topeka & Santa Fe Railway Company; Union Pacific Transportation Company, as successor in interest to the Southern Pacific Transportation Company; Shell Oil Company, Defendants-Appellees.

United States of America; Department of Toxic Substances Control, State of California, Plaintiffs-Appellees, v. Burlington Northern & Santa Fe Railway Company, as successor in interest to the Atchison, Topeka & Santa Fe Railway Company; Union Pacific Transportation Company, as successor in interest to the Southern Pacific Transportation Company, Defendants, and Shell Oil Company, Defendant-Appellant.

No. 03-17125.

No. 03-17153.

No. 03-17169.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 12, 2005.

Submission Withdrawn September 14, 2005.

Filed March 16, 2007.

Resubmitted March 16, 2007.

Amended September 4, 2007.

Second Amendment March 25, 2008.

Aaron P. Avila, Department of Justice, Washington, D.C., argued the case for appellant EPA; Kelly Johnson, Acting Assistant Attorney General, David C. Shilton, James R. MacAyeal, and John T. Stahr, Department of Justice, Environment and Natural Resources Division, Washington, D.C., Allyn Stern, Office of Regional Counsel, EPA, were on the briefs for appellant EPA.

Reed Sato, Deputy Attorney General of the State of California, Sacramento, CA, argued the case and was on the briefs for appellant California Department of Toxic Substances Control; Bill Lockyer, Attorney General of the State of California, Tom Greene, Chief Assistant Attorney General, Theodora P. Berger, Senior Assistant Attorney General, and Ann Rushton, Deputy Attorney General, Sacramento, CA, were on the briefs for appellant

California Department of Toxic Substances Control.

John F. Barg, San Francisco, CA, argued the case for appellees Burlington Northern & Santa Fe Railway Company and Union Pacific Transportation Company; Marc A. Zeppetello, San Francisco, CA, was on the briefs for the appellees.

Michael K. Johnson, San Francisco, CA, argued the case for appellee-cross-appellant Shell Oil Company; Randall J. Heldt, Shell Oil Company, Houston, TX, was on the briefs for appellee-cross-appellant Shell.

Appeal from the United States District Court for the Eastern District of California; Oliver W. Wanger, District Judge, Presiding. D.C. Nos. CV-92-05068-OWW, CV-96-06226-OWW, CV-96-06228-OWW.

Before: B. FLETCHER, JOHN R. GIBSON,^* and MARSHA S. BERZON, Circuit Judges.

ORDER

The full court has been advised of the petitions for rehearing en banc. A judge of the court requested a vote on en banc rehearing. The majority of the active judges have voted to deny rehearing the matter en banc. Fed. R.App. P. 35(f).

The panel has voted to amend its opinion and to deny appellees' petitions for rehearing with the following amendments.

The opinion filed March 16, 2007 and amended September 4, 2007, published at 502 F.3d 781 (9th Cir.2007), is hereby further amended as follows:

1. On page 790, add a new footnote 5 after reading:

Shell was deeply involved in the delivery process: The district court found that Shell determined and arranged for the means and methods of delivery of D-D to the Arvin plant and detailed loading and unloading procedures. It also found that the trucking companies with which Shell contracted for delivery did the transfers for most of the relevant period. It was only in the early 1980s that Shell dictated that B & B personnel should instead do the unloading.

2. Renumber footnote 7 on page 792 as footnote 8 and replace its text with <0.9 acres 4.7 acres = 0.191 (19.1%).>.

3. In the last paragraph on page 792, replace "super-strict" liability statutes.> with

4. In the first paragraph on page 793, replace with.

5. In the first full paragraph on page 794, replace with .

6. Replace "super-strict" nature of> with in the second-to-last sentence of footnote 16 on page 795

7. Replace the paragraph beginning on page 795 and continuing to page 796 with:

The question, then, is what the uniform federal law should be. Once again, all the circuits that have addressed this question have followed Chem-Dyne, holding that the appropriate starting point for a common law rule of apportionment applicable to CERCLA cases is Section 433A of the Restatement of Torts. See Hercules, 247 F.3d at 716 & n. 9, 717 (noting that courts support the divisibility doctrine as borrowed from the Restatement); Bell Petroleum, 3 F.3d at 895 (relying on the Restatement); Chem Dyne, 572 F.Supp. at 810 (establishing this method). We agree that harm may be apportioned when "there exists a reasonable basis for divisibility" of a single harm or when several "distinct harms" are present. Hercules, 247 F.3d at 717.¹⁸

^18. We of course agree with our sister circuits that, if adequate information is available, divisibility may be established by "volumetric, chronological, or other types of evidence," Hercules, 247 F.3d at 719 (citing Bell Petroleum, 3 F.3d at 895-96), including appropriate geographic considerations, see United States v. Township of Brighton ("Brighton II"), 282 F.3d at 919-20 (6th Cir. 2002), Bell Petroleum 3 F.3d at 903-04. We hold only that, in this case, Shell and the Railroads failed to show that "expert testimony and other evidence establishes a factual basis for making a reasonable estimate that will fairly apportion liability." Bell Petroleum, 3 F.3d at 903. "[A]pproaches to divisibility will vary tremendously depending on the facts and circumstances of each case," Hercules, 247 F.3d at 717, and approaches that were inappropriate or inadequately supported in this case may be available in other circumstances.

Because CERCLA's statutory liability scheme differs from the common law in important respects, however, our sister circuits have recognized that its principles must be somewhat modified to fit the CERCLA context. See, e.g., Bell Petroleum, 3 F.3d at 902 ("Restatement principles must be adapted, where necessary, to implement congressional intent' with respect to liability under the unique statutory scheme of CERCLA."); Hercules, 247 F.3d at 717 (The Restatement is "the starting point .... [but] only to the extent that it is compatible with the provisions of CERCLA.").We concur in this general conclusion and acknowledge, in particular, that there are two areas where the Restatement approach is a somewhat poor fit and requires slight modifications to ensure that its approach comports with the liability and remediation scheme of CERCLA. First, as we describe infra, there are important distinctions between causation as conceived in the Restatement and causation in the context of CERCLA. Unlike the Restatement's common law causation, CERCLA affixes liability based upon its PRP provisions, which define classes of liable parties based upon a party's statutorily-defined nexus to the contaminated site. And second, the concept of "harm" in the Restatement as actual injury does not correspond easily to CERCLA's priorities. Contamination and the cost of remediation are both relevant for the "harm" analysis under CERCLA. Finally, we recognize that the Restatement's emphasis on objective considerations to determine whether apportionment is justified in a given case comports with CERCLA's strict liability scheme. Equitable considerations may play a role in a later contribution action amongst liable parties, but not in an action such as this where the only relevant issue is whether there is a reasonable basis, founded in record evidence, to apportion damages amongst defendants.

8. In the first full paragraph on page 796, replace <§ 433A(1)(b) and thereby incorporated a modified concept of causation.> with <§ 433A(1)(b).>.

9. Add before in the paragraph beginning on page 796 and continuing to page 797.

10. In the second full paragraph on page 797, replace <We therefore adjust .... time of the disposal> with:

The statute thus departs from Restatement principles by abjuring the traditional "causation" principles in favor of a nexus concept defined by its PRP provisions. Where, as here, the pertinent PRP status is as landowner, the landowner can establish divisibility by demonstrating a reasonable basis for concluding that a certain proportion of the contamination did not originate on the portion of the facility that the landowner owned at the time of the disposal.

11. Add the following text after the last full paragraph on page 798:

In so holding, we begin from the fundamental difference between apportionment and contribution. Apportionment, which is the relevant question in this case, looks to whether defendants may avoid joint and several liability by establishing a fixed amount of damage for which they are liable. Section 433A of the Restatement speaks to this issue. Contribution is a distinct concept. If there is insufficient evidence to support apportionment, jointly and severally liable PRPs may still seek to recover from each other in a later contribution action. See, e.g. RESTATEMENT (THIRD) OF TORTS § 23(a) (2000) ("When two or more persons are or may be liable for the same harm and one of them discharges the liability of another by settlement or discharge of judgment, the person discharging the liability is entitled to recover contribution from the other, unless the other previously had a valid settlement and release from the plaintiff."). As we explain below,...