United States v. Shell Oil Co.
| Decision Date | 10 December 2020 |
| Docket Number | Case No.: CV 91-00589-CJC |
| Citation | 506 F.Supp.3d 1038 |
| Court | U.S. District Court — Central District of California |
| Parties | UNITED STATES of America and State of California Department of Health Services Hazardous Substances Cleanup Fund, Plaintiffs, v. SHELL OIL COMPANY, Union Oil Company of California, Atlantic Richfield Company, Texaco Inc., Los Coyotes Estates Ltd., Ramparts Research & Financial Corporation, and Mcauley LCX Corp., Defendants. |
William A. Weinischke, US Department of Justice, Washington, DC, Sparsh S. Khandeshi, CAAG - Office of the Attorney General California Department of Justice, San Diego, CA, for Plaintiff United States of America.
Sparsh S. Khandeshi, CAAG - Office of the Attorney General California Department of Justice, San Diego, CA, for Plaintiff State of California Department of Health Services Hazardous Substances Cleanup Fund.
Greg A. Christianson, Tina Vy Ngo, Alston and Bird LLP, San Francisco, CA, James J. Dragna, Denise G. Fellers, Morgan Lewis and Bockius LLP, Patrick E. Breen, Allen Matkins Leck Gamble Mallory and Natsis, Nathaniel P. Johnson, Alston & Bird LLP, Los Angeles, CA, Sang Min Lee, Rockville, MD, Ivan Resendiz Gutierrez, Pro Hac Vice, Miller Nash Graham and Dunn LLP, Portland, OR, Phillip Allan Trajan Perez, Tyler Daniel Bowlin, Miller Nash Graham and Dunn LLP, Long Beach, CA, for Defendants Shell Oil Co., Union Oil Company of California, Atlantic Richfield Company, Texaco Inc.
Jeffrey Z.B. Springer, Regina Liudzius Cobb, Demetriou Del Guercio Springer and Francis, Los Angeles, CA, Kermit David Marsh, Beam Brobeck & West, Newport Beach, CA, for Defendant McAuley LCX Corporation.
ORDER GRANTING THE UNITED STATES’ MOTION FOR SUMMARY JUDGMENT [Dkt. 674]
This 1991 case concerns who must pay to clean up contamination associated with World War II aviation fuel production on a 22-acre site in Fullerton, California called the McColl Superfund Site (the "McColl Site" or the "Site"). Liability between the parties—Plaintiff the United States government and Defendants Shell Oil Company, Union Oil Company of California, Atlantic Richfield Company, Texaco Inc., Los Coyotes Estates Ltd., Ramparts Research & Financial Corporation, and Mcauley LCX Corp. (the "Oil Companies")—has already been established. All that remains is to determine what costs of the cleanup the United States may recover. Now before the Court is the United States’ motion for summary judgment on that issue, in which it seeks $49,861,337.62 from the Oil Companies. (Dkt. 674 [Motion, hereinafter "Mot."].) The Court held a hearing on the motion on November 9, 2020. For the following reasons, the motion is GRANTED .
During World War II, the United States government asked oil companies to quickly produce large amounts of aviation fuel (colloquially referred to as "avgas") to support the war effort. United States v. Shell Oil Co. , 294 F.3d 1045, 1049 (9th Cir. 2002). The Oil Companies entered into contracts with the United States to do so. See id. The rapid production of such large amounts of fuel, however, meant that hazardous substances including acid sludge were "generated in much greater quantities than ever before." Id. at 1050. "[T]he Oil Companies dumped most of it." Id. As relevant to this case, from June 1942 until shortly after the end of the war, the Oil Companies dumped 72,600 cubic yards of petroleum refinery waste (mostly acid sludge) at the McColl Site. Id. ; Although the area around Site was sparsely populated at the time of the dumping, it is now located in the boundaries of the Los Coyotes Country Club, with a golf course and numerous residences. (Id. ¶¶ 6–7.) Residents living near the Site noticed bad odors and waste oozing from the surface of the land, and reported "eye irritation, nausea, headaches, and sore throats up to two times more often than did the residents of the more distant comparison neighborhoods." (Dkt. 676-11 []; Dkt. 676-16 [].)
Cleaning up the damage from the Oil Companies’ dumping was no small task. (See Bishop Decl. ¶¶ 14–20.) Before the cleanup could begin, the government had to investigate and study the nature and extent of the release of hazardous substances, conduct feasibility studies, evaluate proposed cleanup alternatives, conduct health and treatability studies, and perform community relations work. (Mot. at 9–10.) Then, it took years of planning from numerous agencies and over a year of construction work from 29 contractors to perform the actual cleanup. (See Bishop Decl. ¶¶ 17–20.) The cleanup work addressed both soil contamination (to prevent residents from inhaling volatile organic compounds emitted from waste or ingesting contaminated garden vegetables) and groundwater contamination. (Id. ¶¶ 11–12.) To address soil contamination, the EPA created a "RCRA-equivalent closure system," which meant it constructed a multi-layer cap over the untreated sumps with a gas collection and treatment system to prevent water infiltration and hazardous air emissions, built subsurface walls around the sumps to prevent migration of water-soluble and gaseous contaminants, and stabilized steep slopes with retaining walls.1 (Id. ¶ 14.) To address groundwater contamination, the EPA redirected surface water off the site, graded areas adjacent to the containment system, and lined onsite drainage channels with low permeability materials. (Id. ¶ 15.)
Performing all of these tasks was, unsurprisingly, expensive. The enormous amounts of costs come in various forms. The different types of costs are best summarized by the below chart prepared by the EPA2 :
| Type | Overview |
| Direct costs | Expenses directly traced to a particular activity, such as a cleanup action. These costs can include the following expenses incurred by EPA and the cleanup contractor: time spent on a cleanuprelated activity, travel to and from the site, contractor costs at the site, and equipment used at the site, etc. |
| Indirect costs | Indirect costs are EPA's expenses for managing the Agency. These costs are not directly traceable to any particular cleanup activity and may include costs associated with: administrative matters, personnel issues, guidance development, and office, utility, and supply costs, etc. EPA developed a complex methodology for allocating these costs among all of the activities accomplished during a year. |
| Contractors’ annual allocation costs | Money spent by government contractors doing site-related work not traceable to a particular site. For example, training in handling hazardous materials. This training is essential to Superfund cleanup site work, but the training received may be used at several sites. On an annual basis, government contractors allocate these costs across the sites that they have worked on during the past year. The contractor provides EPA with a site-specific allocation of the cost and EPA treats them as direct costs. |
In 1991, the United States and California brought this case against the Oil Companies under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq. , alleging that the Oil Companies were responsible for the release of hazardous substances and should pay the cleanup costs.3 In an appeal from Judge Robert J. Kelleher's 1993 summary judgment order regarding liability, United States v. Shell Oil Co. , 841 F. Supp. 962, 975 (C.D. Cal. 1993), the Ninth Circuit held that the Oil Companies are liable for all cleanup costs at the Site, except that the Government is liable for cleanup costs relating to the disposal of benzol acid waste. Shell , 294 F.3d at 1060–62. After the Ninth Circuit's ruling, the parties stipulated that the United States’ fair share for benzol waste contamination at the Site is 6.25%. (Dkt. 507.) With liability established, the only question remaining before this Court is what amount of costs the United States may recover. By this motion, the United States seeks all of the costs the EPA and DOJ incurred from 1990 to 2019, plus prejudgment interest, less the United States’ stipulated 6.25% share.
The Court may grant summary judgment on "each claim or defense—or the part of each claim or defense—on which summary judgment is sought." Fed. R. Civ. P. 56(a). Summary judgment is proper where the pleadings, the discovery and disclosure materials on file, and any affidavits show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Id. ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. , 477 U.S. at 325, 106 S.Ct. 2548. A factual issue is "genuine" when there is sufficient evidence such that a reasonable trier of fact could resolve the issue in the nonmovant's favor. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" when its resolution might affect the outcome of the suit under the governing law, and is determined by looking to the substantive law. Id. "Factual disputes that are irrelevant or unnecessary will not be counted." Id. at 249, 106 S.Ct. 2505.
Where the movant will bear the burden of proof on an issue at trial, the movant "must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party." Soremekun v. Thrifty Payless, Inc. , 509 F.3d 978, 984 (9th Cir. 2007). Once this burden is met, the party resisting the motion must set forth, by affidavit, or as otherwise provided under Rule 56, "specific...
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Shell U.S.A. Inc. v. United States
...CERCLA litigation, and they started accruing once the government began incurring clean-up costs. See 42 U.S.C. § 9607(a); Shell, 506 F.Supp.3d at 1041, 1049. Interest ceased accruing when the California District entered judgment for the government in 2020. See id. These costs were according......