Exxon Mobil Corp. v. United States

• Decision Date: 04 June 2015
• Docket Number: H–11–1814.,Civil Action Nos. H–10–2386
• Citation: 108 F.Supp.3d 486
• Parties: EXXON MOBIL CORPORATION, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Southern District of Texas

108 F.Supp.3d 486

EXXON MOBIL CORPORATION, Plaintiff,

v.UNITED STATES of America, Defendant.

Civil Action Nos. H–10–2386

H–11–1814.

United States District Court, S.D. Texas, Houston Division.

Signed June 4, 2015.

Michael Patrick McGovern, Daniel M. Steinway, Baker Botts LLP, Washington, DC, Tynan Buthod, Baker Botts LLP, Houston, TX, for Plaintiff.

Michael D. Rowe, Amanda Shafer Berman, Brian H. Lynk, Erica M. Zilioli, Stephanie J. Talbert, T. Monique Peoples, U.S. Department of Justice, Washington, DC, for Defendant.

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

The nation's need for wartime supplies made during World War II and the Korean War left lasting environmental effects.More recent statutes require those involved to clean the pollution left in the refineries and plants where aviation fuel and other supplies our nation's military needed were produced.This case requires the court to decide who pays, and how much.The issue is whether the federal government or a private oil company it contracted with to produce fuel needed in the wars must pay for the environmental harm the production generated, under a statute enacted years later.

During World War II and the Korean War, the United States enlisted oil companies across the country to swiftly increase the nation's production of high-octane aviation gas ("avgas"), synthetic rubber, and toluene required for military operations in Europe and the Pacific.The companies contracted with the federal government to increase avgas production at their existing refineries and to construct and operate new plants to produce synthetic rubber, avgas components, and other necessary war materials.The swift increase in production capabilities also generated more hazardous waste.

This case involves two sites—one in Baytown, Texas and one in Baton Rouge, Louisiana—where ExxonMobil Corporation's predecessors¹ produced avgas and other materials under government contracts.The Baytown and Baton Rouge refineries and plants disposed of the resulting hazardous waste in nearby bodies of water, including the Houston Shipping Channel and the Mississippi River.Both feed into the Gulf of Mexico.Under these contracts, the government encouraged Exxon and other oil companies to produce as much as possible to meet the war effort's demands.Exxon, like other oil companies that entered similar contracts, retained day-to-day control, including over waste management.

Decades later, Exxon reached administrative agreements with the State of Texas to clean up the Baytown site and with the State of Louisiana for the Baton Rouge site.Exxon estimates that it has incurred roughly $41 million to clean up Baytown and $30 million for Baton Rouge.The United States refused to pay Exxon for any of these costs.Exxon sued the United States under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq., seeking to hold the government accountable as a "covered person" responsible for cleanup costs at both sites.

After several years of litigation and discovery, both Exxon and the United States moved for partial summary judgment as to certain issues important to deciding who was liable for the past and future clean up costs.(Docket EntryNos. 102, 103, in 4:10–cv–02386;Docket EntryNos. 51, 52 in 4:11–cv–01814).²Based on the pleadings; the motions, responses, replies, and supplemental briefing; the parties' arguments; the record; and the applicable law, the court grants the parties' motions in part and denies them in part.The following findings and conclusions are entered:

• Exxon operated the refineries at both sites.

• The United States government did not operate the refineries at either site.

• Both Exxon and the government operated the chemical plants at the sites.

• Joint and several liability does not apply.

• It is too early to decide whether to adopt Exxon's proposed method for apportioning fault or to grant declaratory relief awarding future costs under the proposed method.Exxon may request the court to adopt its proposed method to apportion liability for the costs in Phase II of this litigation.

The reasons for these rulings are explained in detail below.

I.Background

Because the number of government agencies, programs, and statutory and regulatory terms involved makes acronyms unavoidable, a glossary is attached to the end of this opinion.

A. CERCLA

Congress enacted CERCLA in 1980"in response to the serious environmental and health risks posed by industrial pollution."Burlington N. & Santa Fe Ry. Co. v. United States,556 U.S. 599, 602, 129 S.Ct. 1870, 173 L.Ed.2d 812(2009);see alsoCTS Corp. v. Waldburger,––– U.S. ––––, 134 S.Ct. 2175, 2180, 189 L.Ed.2d 62(2014);United States v. Bestfoods,524 U.S. 51, 55, 118 S.Ct. 1876, 141 L.Ed.2d 43(1998)."The Act was designed to promote the timely cleanup of hazardous waste sites and to ensure that the costs of such cleanup efforts were borne by those responsible for the contamination."Burlington N.,556 U.S. at 602, 129 S.Ct. 1870(quotations omitted).As amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Pub.L. No. 99–499,100 Stat. 1613, CERCLA provides several alternative means for cleaning up contaminated property.Sections 104and106 provide for federal abatement and enforcement actions to compel cleanup of contaminated sites.See42 U.S.C. §§ 9604,9606(a).Section 107(a)(4) states that "covered persons"(also known as "potentially responsible parties" or "PRPs") may be liable for costs the federal or state government incur in responding to the contamination and for response costs incurred by "any other person."See42 U.S.C. § 9607(a)(4)(A)-(B).Section 107(a)(4) is part of the original statute enacted in 1980.Two contribution provisions, §§ 113(f)(1)and113(f)(3)(B), were added later as part of SARA.

Section 107(a) identifies four categories of PRPs who may be liable for costs to clean up hazardous substances.See42 U.S.C. § 9607(a).The categories are: (1) owners and operators of facilities at which hazardous substances are located; (2) past owners and operators of these facilities when the disposal of hazardous substances occurred; (3) persons who arranged to dispose of or treat hazardous substances; and (4) certain transporters of hazardous substances.See42 U.S.C. § 9607(a)(1)-(4).Unless a statutory defense or exclusion applies, covered persons are liable for "all costs of removal or remedial action incurred by the United States government or a State ... not inconsistent with the national contingency plan," and "any other necessary costs of response incurred by any other person consistent with the national contingency plan,"42 U.S.C. § 9607(a).³The statute defines "person,""facility,""disposal,""release," and "environment."⁴CERCLA also provides a narrow set of defenses to liability that may arise under § 107(a), none of which applies here.

Section 113, added in1986 as part of SARA, contains a subsection entitled "Contribution."This subsection states:

Any person may seek contribution from any other person who is liable or potentially liable under [§ 107(a) ], during or following any civil action under [§§ 106 or 107(a) ]....In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate.Nothing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under [§§ 106 or 107].

42 U.S.C. § 9613(f)(1).

Under § 113, a PRP that "has resolved its liability to the United States or a State in an administrative or judicially approved settlement" is immune from contribution claims made by other PRPs "regarding matters addressed in the settlement."Id. at § 9613(f)(2).A settling PRP may seek contribution under § 113(f)(3) from other, nonsettling PRPs.Id. at § 9613(f)(3)(B).Section 107(a) allows a plaintiff to recover 100% of its response costs from all liable parties, including those who have settled their CERCLA liability with the government.Id. at §§ 9613(g)(2),9607(a).Section 113's right to contribution is more restricted than that afforded by § 107.Section 107 has a six-year statute of limitations;§ 113 has a three-year statute of limitations in certain scenarios.Under § 107, plaintiffs may recover only costs in excess of their equitable share and may not recover from previously settling parties.Id. at § 9613(f)(1), (f)(2), (g)(3).Federal and state governments may sue PRPs for response costs and may also be liable as PRPs for response costs others incur.See42 U.S.C. § 9607(a)(4)(A) and (B).⁵

B.Factual Background⁶

1.Avgas and Synthetic–Rubber Production in World War II and the Korean War

"In the early 1930s, petroleum refiners in the United States developed new technologies for producing high-octane gasoline fuel."Shell Oil Co.,294 F.3d at 1049."Until that time, the highest octane gasoline available had octane ratings in the 70s, but by 1935 refiners possessed the ability to produce mass quantities of 100–octane fuel."Id."The primary consumer of this fuel was the United States military, which used it in airplane engines, leading to its colloquial name ‘avgas.’The high octane and low volatility of avgas allowed the design and use of high-compression internal combustion engines for military airplanes."Id.For the Allied forces, avgas was the "super-fuel that meant more speed, more power, quicker take-off, longer range, [and] greater maneuverability—all of the things that meant the victory margin in combat."(Docket EntryNo. 118–1 ¶ 25).According to Geoffrey Lloyd, the British Minister of Fuel and Power during the War, "without 100–octane we should not have won the Battle of Britain.But we had 100–octane."(Docket EntryNo. 118–1 ¶ 27).

The Shell opinion described the avgas production process:

Avgas was a blend of petroleum distillates and chemical additives.Its base

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