US v. Shell Oil Co.

• Decision Date: 28 September 1993
• Docket Number: No. CV 91-0589-RJK.,CV 91-0589-RJK.
• Citation: 841 F. Supp. 962
• Parties: UNITED STATES of America, et al., Plaintiffs, v. SHELL OIL CO., et al., Defendants. And Related Claims.
• Court: U.S. District Court — Central District of California

841 F. Supp. 962

UNITED STATES of America, et al., Plaintiffs, v. SHELL OIL CO., et al., Defendants And Related Claims.

No. CV 91-0589-RJK.

United States District Court, C.D. California.

September 28, 1993.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

William A. Weinischke and Kathryn Schmidt, Trial Attys., U.S. Dept. of Justice, Environment and Natural Resources Div., Environmental Enforcement Section, Gregory A. Ritter, Asst. Regional Counsel, U.S. E.P.A., Region 9, Washington, DC, for plaintiff U.S.

Timothy R. Patterson, Deputy Atty. Gen., CA Dept. of Justice, San Diego, CA, for plaintiff State of CA.

Peter R. Taft, Munger, Tolles & Olson, Los Angeles, CA, Cynthia Burch, Patrick E. Breen, Allen, Matkins, Leck, Gamble & Mallory, Irvine, CA, for defendants Shell, Union, ARCO and Texaco.

Jeffrey Z.B. Springer, Demetriou, Del Guercio & Springer & Moyer, Los Angeles, CA, for defendant McCauley LCX Corp.

MEMORANDUM OF DECISION AND ORDER

KELLEHER, District Judge.

In this action, the governments of the United States and the State of California (collectively "the governments") seek to recover costs incurred, and declaratory relief as to liability for costs yet to be incurred, in responding to the presence of hazardous wastes at a site in Fullerton, California known as the McColl Site ("the Site"). Recovery of response costs is sought pursuant to section 107(a) 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(a). Declaratory relief is sought pursuant to CERCLA section 113(g)(2), codified at 42 U.S.C. § 9613(g)(2).

The governments seek recovery from: Shell Oil Company ("Shell"), Union Oil Company of California ("Union" or "Unocal"), Atlantic Richfield Company ("Arco" or "Richfield"), and Texaco, Inc. ("Texaco") (collectively "the oil companies") and McAuley LCX Corporation ("McAuley").¹ The oil companies are charged as successors in interest to the corporations that generated the hazardous wastes and arranged for their disposal at the McColl Site. McAuley is charged as an owner or operator of part of the McColl Site.

The governments move the Court for partial summary judgment as to Defendants' liability for response costs at the McColl Site under section 107 of CERCLA.² The parties also have filed opposing motions for bifurcation and trifurcation of various phases of this litigation. These relate to the order in which the governments' cost recovery phase and the Defendants' counterclaims and crossclaims are resolved. By this Memorandum of Decision and Order the Court disposes of all these pending matters.

BACKGROUND

The McColl Superfund Site comprises roughly twenty-two acres in Fullerton. It is bordered by housing developments, a country club golf course, a regional park, and an oil field. The Site is divided into two distinct areas: the Ramparts area and the Los Coyotes area. The Ramparts area occupies vacant land. It contains six large pits, or sumps. The Los Coyotes area is land that once was part of the Los Coyotes Country Club golf course. It contains six sumps which underlie what were portions of the golf course.

The hazardous waste located at the McColl Site consists of acid sludge byproducts of alkylation processes used by the oil companies during World War II to produce high octane aviation fuel. During the war, the oil companies produced this aviation fuel in extraordinary quantities at the demand of, and in fulfillment of supply contracts with, the federal government.

The oil companies have submitted many thousands of pages of deposition testimony and documentary evidence to illustrate the degree of oversight exercised by the federal government over the oil companies' production of this aviation fuel. A clear picture emerges from this evidence of the backdrop of federal governance over the oil companies during the war. In addition, the Court possesses considerable first-hand familiarity with the manner in which the government regulated industry during the war.

As part of the United States' war effort during World War II, the federal government implemented a regulatory regime under which all industries were required to cooperate with the government in providing the necessary armaments and supplies to support our fighting forces. Not unlike other industrial sectors, the petroleum industry was subject during the war to pervasive oversight by agencies of the federal government. Under the wartime regulatory regime, an oil company that refused to cooperate with the federal government would have been subject to government takeover. And individuals who interfered with the government's regulation of industry and acquisition of supplies would have been subject to criminal prosecution.

Notwithstanding the government's intrusive regulatory power over the oil companies during the war, it is beyond dispute that the oil companies entered into their contracts to supply the federal government with aviation fuel volitionally. In what measure the oil companies' willingness to enter into these supply contracts was due to a sense of civic duty, as opposed to the evident profitability of the contracts, is impossible to determine and immaterial to the issues presently before the Court.

During the war the government's constantly growing demand for aviation fuel became so great the oil companies were hard pressed to meet that demand. As a byproduct of the enormous volume of fuel produced, the oil companies were confronted with quantities of acid sludge waste too great to be treated or disposed of in their existing facilities. The government urged the oil companies not to allow the accumulation of this waste to interfere with the production of aviation fuel. With at least tacit approval from the government, the oil companies disposed of their waste problem by contracting with Eli McColl to transport the acid sludge away from their refining facilities and dispose of it by dumping it in the unlined pits, or "sumps," on the plot of land in Fullerton now referred to as the McColl Site. Although the government was aware, and in some measure approved, of the oil companies' disposal of the acid sludge, the choice to arrange for waste disposal in the manner described was made by the oil companies.

The dumping of acid sludge at the McColl Site ceased shortly after the end of World War II. In the 1950s, the City of Fullerton requested that McColl fill in the acid sludge-filled sumps in preparation for residential development in the immediate vicinity of the Site. McColl requested and received assistance from the oil companies, who acknowledged their responsibility for the presence of the acid sludge in those sumps.

Some time after the sumps had been covered over, the Los Coyotes Country Club was built and part of the Site was developed into a portion of the club's golf course. McAuley subsequently purchased the club, which it has owned and operated for over a decade. Prior to purchasing the club, McAuley was made aware of the presence of the sumps beneath the golf course and commissioned an environmental assessment in late 1980, shortly before purchasing the club.

For over a decade, the acid sludge at the McColl Site has been oozing up through the surface of the ground. There are approximately 100,000 cubic yards of waste and contaminated soils at the Site. The waste at the Site includes benzene, toluene, xylene, arsenic, sulfur dioxide, hydrogen sulfide, and tetrahydrothiopene.

STANDARD OF REVIEW

In ruling on a motion for summary judgment, the Court must determine whether, viewing the evidence in the light most favorable to the nonmoving party, there are any genuine issues of material fact. Fed.R.Civ.P. 56(c); Federal Deposit Ins. Corp. v. O'Melveny & Myers, 969 F.2d 744, 747 (9th Cir.1992) (citing Gizoni v. Southwest Marine, Inc., 909 F.2d 385, 387 (9th Cir.1990), aff'd, ___ U.S. ___, 112 S.Ct. 486, 116 L.Ed.2d 405 (1991)). Summary judgment is appropriate whenever the pleadings and evidence establish that there are no genuine issues as to any material fact. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Manzanita Park v. Insurance Co. of North America, 857 F.2d 549 (9th Cir.1988). Thus, summary judgment should be granted so long as the evidence before the court demonstrates that after adequate time for discovery, there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-25, 106 S.Ct. 2548, 2552-54, 91 L.Ed.2d 265 (1986).

There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a "reasonable jury" to return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-51, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986). Evidence that is merely colorable or that is not "significantly probative" does not raise a genuine issue of material fact and the mere possibility that the nonmoving party may discredit the moving party's testimony at trial will not suffice to defeat a properly presented motion. United Steelworkers of America v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir.1989) (en banc) (citing Anderson, 477 U.S. at 249-50, 106 S.Ct. at 2510-11).

Courts have readily granted summary judgment as to various issues, including liability, in the context of potentially intractable CERCLA cases. E.g., Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 668 (5th Cir. 1989); United States v. Stringfellow, 661 F.Supp. 1053, 1058 (C.D.Cal.1987).

DISCUSSION

In order to establish liability for response costs pursuant to section 107 of CERCLA, the governments must establish four elements: (1) the McColl site is a "facility"; (2) a "release" or "threatened release" of a "hazardous substance" from the site has occurred; (3) the release or...