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Nos. 07-1601 and 07-1607

 

In the Supreme Court of the United States

BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, ET AL., PETITIONERS

v.

UNITED STATES OF AMERICA, ET AL.

SHELL OIL COMPANY, PETITIONER

v.

UNITED STATES OF AMERICA, ET AL.

ON WRITS OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

 

GREGORY G. GARRE
Solicitor General
Counsel of Record
MICHAEL J. GUZMAN
Acting Assistant Attorney
General
MALCOLM L. STEWART
Deputy Solicitor General
PRATIK A. SHAH
Assistant to the Solicitor
General
LISA E. JONES
JAMES R. MACAYEAL
> AARON P. AVILA
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

PATRICIA K. HIRSCH
Acting General Counsel
Environmental Protection
Agency
Washington, D.C. 20460

QUESTIONS PRESENTED

1. Whether the court of appeals correctly affirmed the district court's determination that petitioner Shell Oil Company is liable under Section 107(a)(3), 42 U.S.C. 9607(a)(3), of the Comprehensive Environmental Re sponse, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. 9601 et seq., as an entity that "ar ranged for disposal" of hazardous substances.

2. Whether the court of appeals properly held peti tioners jointly and severally liable under CERCLA for the response costs of the United States and California governments, based on the court's conclusion that peti tioners did not satisfy their evidentiary burden of pro viding a reasonable basis to apportion liability.

In the Supreme Court of the United States

No. 07-1601

BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, ET AL., PETITIONERS

v.

UNITED STATES OF AMERICA, ET AL.

No. 07-1607

SHELL OIL COMPANY, PETITIONER

v.

UNITED STATES OF AMERICA, ET AL.

ON WRITS OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

STATEMENT

This case arises from actions taken by the United States and the State of California to address hazardous- substance contamination at a former agricultural chemi cal storage and distribution facility located in Arvin, California. The United States and the State brought a cost-recovery action against petitioners, two railroad companies (the Railroads) and a chemical manufacturer (Shell), under CERCLA Section 107(a), 42 U.S.C. 9607(a), which authorizes federal and state governments to recover their response costs from persons who have a statutorily specified nexus to the contamination. After a bench trial, the district court found the Railroads and Shell to be liable parties under CERCLA, and further found that the Railroads and Shell were liable for 9% and 6% of the response costs, respectively. Pet. App. 82a-262a. The court of appeals affirmed in part and re versed in part, holding that Shell was a liable party and that petitioners were jointly and severally liable for the full costs of the cleanup activities undertaken by the United States and California. Id. at 1a-57a.

1. Congress enacted CERCLA "in response to the serious environmental and health risks posed by indus trial pollution." United States v. Bestfoods, 524 U.S. 51, 55 (1998). CERCLA "both provides a mechanism for cleaning up hazardous-waste sites, and imposes the costs of the cleanup on those responsible for the contam ination." Pennsylvania v. Union Gas Co., 491 U.S. 1, 7 (1989) (citation omitted).

The Environmental Protection Agency (EPA) is au thorized to clean up a contaminated site, drawing from the federal government's Superfund, and then to sue to recover its cleanup costs. 42 U.S.C. 9604(a), 9607(a)(4)(A). To establish a prima facie case, the Uni ted States must show that a "release" or "threatened release" of a "hazardous substance" from a "facility" has caused the United States to incur cleanup costs. 42 U.S.C. 9607(a). The United States must further estab lish that the defendant falls within at least one of four classes of covered persons: (1) the owner and operator of the facility, (2) the owner or operator of the facility at the time that disposal of hazardous substances occurred, (3) persons who "arranged for disposal" or treatment of hazardous substances, and (4) certain transporters of hazardous substances. 42 U.S.C. 9607(a)(1)-(4).

Subject to limited defenses not implicated in these cases, any person within the categories described above is liable to the government for "all costs of removal or remedial action incurred" by the United States "not in consistent with the national contingency plan." 42 U.S.C. 9607(a)(4)(A) and (b); 40 C.F.R. Pt. 300. Under the ap portionment rules developed by lower federal courts pursuant to pre-existing common-law principles, a cov ered party is jointly and severally liable to the govern ment for the entire amount of response costs unless it proves that the harm from the release of hazardous sub stances is divisible.1 That rule furthers Congress's pur pose of ensuring that the costs of remediation are borne by those with a defined nexus to the contamination, rather than by the general public. See Bestfoods, 524 U.S. at 56 n.1 ("The remedy that Congress felt it needed in CERCLA is sweeping: everyone who is potentially responsible for hazardous-waste contamination may be forced to contribute to the costs of cleanup.") (quoting Union Gas Co., 491 U.S. at 21 (plurality opinion of Brennan, J.)); S. Rep. No. 848, 96th Cong., 2d Sess. 13 (1980) (stating Congress's "goal of assuring that those who caused chemical harm bear the cost of that harm").

In analyzing divisibility of harm in Section 107(a)(4)(A) actions, courts follow the Restatement (Sec ond) of Torts (1965) (Restatement). See, e.g., United States v. Hercules, Inc., 247 F.3d 706, 717 (8th Cir. 2001) (recognizing Restatement as the "universal starting point"), cert. denied, 534 U.S. 1065 (2001); United States v. Chem-Dyne Corp., 572 F. Supp. 802, 810 (S.D. Ohio 1983) (establishing framework). Restatement _ 433A provides that damages may be apportioned where there are distinct harms or where there is a "reasonable basis for determining the contribution of each cause to a sin gle harm." The party seeking apportionment has the burden of proof. See Restatement § 433B(2); see also, e.g., Chem-Dyne, 572 F. Supp. at 810. Where a liable party cannot meet its burden, it is jointly and severally liable "for the full amount of the harm." Chem-Nuclear Sys., Inc. v. Bush, 292 F.3d 254, 260 (D.C. Cir. 2002).

A party held jointly and severally liable may file a separate contribution action pursuant to CERCLA Sec tion 113(f)(1) against other liable or potentially liable parties. 42 U.S.C. 9613(f)(1). Section 113(f), added six years after CERCLA's enactment, reflects Congress's compromise response to the potentially disproportionate burden placed on certain covered parties by CERCLA's liability provisions. Section 113(f)(1) provides that "[i]n resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." Ibid.2

2. In 1960, Brown & Bryant, Inc. (B&B) began to operate an agricultural chemical distribution business on a 3.8-acre parcel of land (the B&B parcel). Pet. App. 12a. In 1975, B&B expanded its operations by leasing a 0.9-acre parcel owned by the Railroads (the Railroad parcel) that adjoined the B&B parcel to the west. Ibid. B&B used the Railroad parcel as an "integral part" of its agricultural chemical operations and treated the two parcels as a single facility. Id. at 86a. The Railroad par cel was graded toward a pond on the B&B parcel. Id. at 12a. B&B ceased operating the facility in 1989 and is now insolvent. Id. at 83a-84a.

Among the Shell-manufactured products stored and distributed at B&B's facility were two pesticides, D-D and Nemagon. Pet. App. 13a. B&B also stored dinoseb, a weed killer, supplied by another company. Ibid. Chemical constituents of all three products have been banned by EPA or withdrawn from use as pesticides due to threats to human health and the environment. Gov't C.A. E.R. 69-70. EPA has also listed the relevant con stituents to be hazardous substances for CERCLA pur poses. Pet. App. 174a.

During their transfer and storage, the chemicals rou tinely spilled and leaked onto both parcels. Pet. App. 13a-14a, 130a. Over the course of the facility's opera tion, hazardous substances entered the subsurface, cre ating areas of contaminated soil and, of particular con cern, a plume of contaminated groundwater that threat ens municipal drinking water supplies. Id. at 14a, 172a- 174a, 245a-246a. After investigations, the United States and the State began to clean up the contamination at the facility pursuant to their response authority under CERCLA. Id. at 14a-15a.

3. In 1996, the United States and the State filed suit under CERCLA Section 107(a) to recover their response costs, naming as defendants B&B, the Railroads, and Shell. In 2003, after a bench trial, the district court is sued its Amended Findings of Fact and Conclusions of Law. Pet. App. 82a-262a.

a. The district court held that the United States and the State had established a prima facie case of CERCLA liability. Pet. App. 163a-219a. The court determined that the entire site, encompassing both the B&B and Railroad parcels, constitutes a single "facility." Id. at 172a-173a. The court found that site operations released hazardous substances "from and located throughout the facility, particularly in the form of contaminated ground water," and that the plume "poses an indivisible threat of leaching and diffusing contaminants to lower ground water suitable for drinking." Id. at 172a. The court fur ther found that the soil and groundwater at the facility are contaminated with, among other hazardous sub stances, the constituents of the two Shell products as well as dinoseb. Id. at 88a, 174a.

The district court found that the Railroads were re sponsible parties under CERCLA Section 107(a)(1)-(2), 42 U.S.C. 9607(a)(1)-(2), as owners of the facility and as owners of the facility at the time of disposal. Pet. App. 176a-179a, 186a-187a. The court rejected the Railroads' proffered defense under CERCLA Section 107(b)(3), 42 U.S.C. 9607(b)(3), under which a defendant must show that "the release or threatened release was caused solely by an unrelated third party." Pet. App. 180; see id. at 184a-187a. The court explained that "[a] 'contrac tual relationship' between the Railroads and B&B ex isted," that the Railroads "periodically inspected B&B's plant and had actual knowledge" of B&B's operations, and that "B&B used the leased parcel to store chemicals where leaks would often occur." Id. at 184a-185a; see id. at 176a, 178a-179a. The court further determined that the Railroads had "submitted no evidence that they took any action to prevent or mitigate their lessee's conduct on the Site, which ignored the hazards of continuous spills, releases and reckless practices in the unloading, storage, formulating and loading of toxic ag-chemicals." Id. at 185a. The court found that the Railroads had "failed to show that they acted with due care" or "took any precautionary actions against the foreseeable re sults of B&B's activities in storing and handling hazard ous ag chemicals on the Railroad parcel." Ibid.

The district court also held that Shell was liable pur suant to CERCLA Section 107(a)(3), 42 U.S.C. 9607(a)(3), as a party who had "arranged for disposal" of hazardous substances. Pet. App. 204a, 208a-213a. The court found that Shell had "determined and arranged for the means and methods of delivery of the D-D to the Arvin plant"; that Shell had "hired common carrier de livery trucks to haul D-D to B&B's Arvin plant"; that B&B was required to follow the Shell manual which pro vided "detailed loading and unloading procedures"; and that over one period Shell had "required B&B to store highly corrosive D-D in bulk tanks, at a time when the distributors did not have the equipment or capital to deal with the corrosive D-D." Id. at 208a-209a. The court further found that Shell "was an active participant in the D-D shipment, delivery and receiving process at Arvin with knowledge that spills and leaks of hazardous D-D were inherent and inevitable," and that such spills and leaks "occurred throughout the period Shell sold D-D to B&B." Id. at 204a.

b. The district court then addressed whether the Railroads and Shell should be held jointly and severally liable for the response costs incurred by the United States and the State.

The district court found that the harm at the site "is a single harm which consists of contaminated soil at var ious locations and depths around the Site and one mass (plume) of contaminated groundwater." Pet. App. 245a- 246a. The court also explained that the Railroads and Shell had presented no evidence or argument to demon strate a reasonable basis for apportioning that harm:

Apportionment in this case is exacerbated by defen dants' "scorched earth," all-or-nothing approach to liability. Neither acknowledged an iota of responsi bility, in the case of Shell, for causing "releases of hazardous substances,["] and in the case of the Rail roads, that any release of hazardous substance that required response occurred on [the] Railroad parcel throughout the 13 year lease terms.

Id. at 236a. The court further found that "no party has specifically documented the relative contributions of contamination from either parcel," id. at 248a, and that there is "no evidence to quantify the difference in vol ume of the releases" from the Railroad and B&B par cels, id. at 252a.

The district court summarized the situation before it by stating that "[a]ll parties" to the suits had "effec tively abdicated providing any helpful arguments to the court." Pet. App. 236a-237a. In the court's view, that dearth of assistance from the parties had "left the court to independently perform the equitable apportionment analysis demanded by the circumstances of the case." Id. at 237a. In determining the percentage of the total response costs for which the Railroads would be held liable, the district court calculated the surface area of the Railroad parcel to be 19.1% of the total site surface area and the 13-year duration of the B&B-Railroad lease to be 45% of the site's total 29 years of operation. Id. at 247a. The court assumed that none of the D-D contami nation originated from the Railroad parcel and that Nemagon and dinoseb "contributed to 2/3 of overall Site contamination." Id. at 251a. The court then multiplied the three percentages and arrived at 6%. Id. at 252a. The court adjusted the Railroads' liability, "[a]llowing for calculation errors up to 50%," to 9% of the total re sponse costs. Ibid.

The district court acknowledged that "Shell did not present evidence how its products' contribution to the contamination at the Arvin facility can be apportioned." Pet. App. 252a. The court nonetheless estimated the amount of D-D spilled during "Shell controlled" de liveries and then the amount of D-D spilled for all other activities. Id. at 256a. Dividing the estimated volume spilled during Shell-controlled deliveries by the total estimated volume of D-D spills, the court held Shell sev erally liable for 6% of the response costs. Id. at 256a-257a.

4. The court of appeals affirmed in part and re versed in part. Pet. App. 1a-81a.

a. The court of appeals affirmed the district court's ruling that Shell is a liable party under CERCLA as one who "arranged for disposal" of hazardous substances. Pet. App. 44a-55a. The court observed that "arranger" liability extends not only to direct arrangements for dis posal of hazardous substances, but also to arrangements in which such disposal is a foreseeable byproduct (though not the purpose) of the transaction. Id. at 48a-50a. The court noted that CERCLA's definition of "disposal" includes the unintentional processes of "spill ing" and "leaking." Id. at 50a-51a. The court inferred from that definition that "an entity can be an arranger even if it did not intend to dispose of the product. Ar ranging for a transaction in which there necessarily would be leakage or some other form of disposal of haz ardous substances is sufficient." Id. at 51a.

The court of appeals then recounted the evidence supporting "arranger" liability here:

(1) Spills occurred every time the deliveries were made; (2) Shell arranged for delivery and chose the common carrier that transported its product to the Arvin site; (3) Shell changed its delivery process so as to require the use of large storage tanks, thus ne cessitating the transfer of large quantities of chemi cals and causing leakage from corrosion of the large steel tanks; (4) Shell provided a rebate for improve ments in B & B's bulk handling and safety facilities and required an inspection by a qualified engineer; (5) Shell regularly would reduce the purchase price of the D-D, in an amount the district court concluded was linked to loss from leakage; and (6) Shell distrib uted a manual and created a checklist of the manual requirements, to ensure that D-D tanks were being operated in accordance with Shell's safety instruc tions.

Pet. App. 53a-54a. The court held that the district court's findings "demonstrate that Shell had sufficient control over, and knowledge of, the transfer process to be considered an 'arranger,' within the meaning of CERCLA, for the disposal of the chemicals that leaked." Id. at 55a.

b. The court of appeals reversed the district court's apportionment of harm and held petitioners jointly and severally liable for the full costs of the response actions, except for a "Dinoseb hot spot" for which Shell was not liable. Pet. App. 19a-47a, 56a-57a.

After agreeing that the harm in this case was theo retically capable of apportionment, the court of appeals reviewed the district court's actual apportionment for clear error, using Restatement _ 433A as its starting point. Pet. App. 22a, 36a-37a. With respect to the Rail roads, it held that the district court's apportionment calculation (based solely on percentage of land area, duration of ownership, and the Railroads' responsibility for two of the three distinct contaminants at the site) lacked a reasonable basis in the record. Id. at 37a-44a. The court concluded that the numbers the district court had used "bore insufficient logical connection to the per tinent question: What part of the contaminants found on the Arvin parcel were attributable to the presence of toxic substances or to activities on the Railroad parcel?" Id. at 43a.

With respect to Shell, the court of appeals held that the evidence produced at trial was insufficient to formu late even a rough approximation of Shell's proportional share of the site contamination. Pet. App. 44a-45a. The court found that the leakage evidence in the record did not provide a reasonable basis to sustain the district court's analysis because the site was contaminated with a number of chemicals, and because Shell had failed to introduce any evidence from which a court could identify the percentage of the soil contamination that was attrib utable to its leaked chemicals. Ibid. As the court ex plained, the record lacked that evidence "most likely because Shell put its eggs in the no-liability basket." Id. at 47a.

SUMMARY OF ARGUMENT

CERCLA's critical cost-recovery remedy is designed to place the costs of cleaning up contamination from haz ardous substances on parties who have a demonstrated nexus to the contamination, rather than on the general public. Because Shell knew that its contract to supply B&B with agricultural chemicals directly and routinely resulted in spills and leaks that expressly qualify as dis posals of hazardous substances covered by CERCLA, Shell is liable as an "arranger" of those disposals. And because neither Shell nor the Railroads established a reasonable evidentiary basis for apportioning the single harm at issue here, the court of appeals correctly held that those parties were jointly and severally liable for the response costs at issue.

I. A. Congress specified that a party may be liable under CERCLA if it "arrange[s] for" activities whose direct and anticipated consequence is the "disposal" of hazardous substances, even if that disposal is not the purpose of the transaction. Although CERCLA does not define the term "arrange for," it defines "disposal" to include the acts of spilling and leaking. That definition implies that arranger liability is not limited to transac tions involving intentional disposals. That interpreta tion is consistent both with the common law (under which a party may be held liable for arranging a trans action that it knows will create a nuisance, see Restate ment _ 427B), and with CERCLA's purpose of placing the costs of remediation on those responsible for the disposal of hazardous substances.

As the courts below found, the record in this case amply demonstrates that Shell arranged for and was an active participant in the delivery of its agricultural chemicals to B&B. Those deliveries directly and rou tinely resulted in disposals of hazardous substances (through spills and leaks) for more than 20 years, and Shell had actual knowledge of that fact. Under those circumstances, both the district court and court of ap peals correctly determined that Shell had "arranged for disposal" of hazardous substances, and relieving Shell of its obligation to pay for response costs would directly contravene CERCLA's objective of holding responsible parties-rather than the taxpaying public-acountable for their activities.

B. Shell's proffered bases for avoiding arranger lia bility lack merit. The fact that a transaction involves the delivery of a useful product does not preclude arranger liability where (as here) the arranger knows that dis posal of a hazardous substance-through spills and leaks, or otherwise-will occur during the course of the transaction. Moreover, contrary to Shell's contention, Section 107(a)(3) imposes liability if a person "arranged for disposal * * * of hazardous substances," not just haz ardous waste.

Shell is also wrong in arguing that Section 107(a)(3) limits arranger liability to circumstances in which the defendant retains ownership, possession, or actual con trol of its hazardous substances at the time of disposal. That provision broadly encompasses "any person who by contract, agreement, or otherwise" arranges for some "other party or entity" to dispose of its hazardous sub stances. Although Section 107(a)(3) refers to "hazard ous substances owned or possessed by" the arranger, that language refers to ownership or possession at the time the arrangement is made. Shell's contrary rule, under which an arranger could escape liability simply by transferring ownership and control of its hazardous sub stances to another party who agrees to carry out the actual disposal, would render Section 107(a)(3) ineffec tual in the paradigmatic arranger case.

II. A. Consistent with Restatement principles, the courts of appeals uniformly have held that Section 107(a)(4)(A) liability for a single harm is joint and sev eral unless the defendant establishes a reasonable basis for apportioning the harm. At the same time, however, lower courts have uniformly recognized that, after joint and several liability has been imposed, a defendant may invoke the separate CERCLA provision authorizing suits for contribution, under which the court may weigh equitable factors in allocating costs, to seek from other responsible parties the portion of costs paid beyond its fair share. See 42 U.S.C. 9613(f)(1). That settled frame work is consistent with the common law and permits courts fairly to divide response costs among responsible parties.

B. Rather than attempt to establish an evidentiary basis for apportioning costs in this case, the Railroads and Shell made a strategic choice to pursue a "'scorched earth,' all-or-nothing approach to liability." Pet. App. 236a. Nevertheless, despite acknowledging that neither the Railroads nor Shell had provided any eviden tiary basis for apportionment, the district court per formed what it called "the equitable apportionment anal ysis demanded by the circumstances of this case." Id. at 237a. That was error. The district court conflated its task of apportionment under Section 107(a) with the court's role in a separate contribution action under Sec tion 113(f)(1), which authorizes consideration of a broad range of equitable factors. As a result, the district court felt compelled to apportion the harm in this case-out of a sense of equity because the primary polluter was insolvent-notwithstanding the lack of a reasonable ba sis for apportionment. That approach was seriously flawed, both because it absolved petitioners of their bur den of establishing a sound evidentiary basis for appor tionment, and because under Restatement principles the insolvency of another responsible party weighs against rather than in favor of apportionment.

C. The district court's equitable apportionment re lied on numerous unsubstantiated assumptions and gross approximations. First, there is no reasonable ba sis to assume that each petitioner's share of the ultimate harm is proportional to its volumetric contribution to the contamination. Each source of contamination may have been independently sufficient to have caused the harm requiring remediation, and the district court failed to account for the relative toxicities or costs of remediation of the different constituents-presumably because the record lacked that information. Second, there is no rea sonable basis to assume that the Railroads' contribution to the contamination was proportional to their land area and duration of ownership. Geographic divisibility does not mean that a landowner is liable only for the percent age of the facility it owned. And temporal divisibility for landowners is inherently problematic (indeed, it can have the extreme consequence of negating landowner liability under Section 107(a)(1) altogether), especially where (as here) there is no reason to believe that the degree of contamination remained constant over time. Third, there is no reasonable basis for the district court to have assumed that 2/3 of the total contamination was from dinoseb and Nemagon. Fourth, there is no reason able basis for using estimates from anecdotes and in complete records to determine the relative volume of Shell's spills, and the district court failed to account for various factors (e.g., water, porosity, solubility) neces sary to correlate those spill volumes with the actual con tamination. The upshot is that the district court's ap portionment analysis, on which petitioners rely, has no foundation in the record, or CERCLA.

ARGUMENT

I. SHELL IS LIABLE UNDER THE TERMS OF CERCLA BECAUSE IT "ARRANGED FOR DISPOSAL" OF A HAZ ARDOUS SUBSTANCE AND NOT MERELY FOR A SALE

CERCLA Section 107(a)(3) imposes liability on:

any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous sub stances.

42 U.S.C. 9607(a)(3). Shell agreed to supply agricultural chemicals to B&B, knowing that its chemicals were rou tinely spilled and leaked (i.e., disposed of) during the delivery process. The court of appeals properly con cluded that, by arranging that transaction, Shell "ar ranged for" the "disposal" (through the attendant spill ing and leakage) of its hazardous substances.3

A. Shell Was Properly Held Liable As An Arranger Under Section 107(a)(3), Based On Its Entry Into Transactions That It Knew Would Directly Result In Disposals Of Hazardous Substances

1. Arranger liability is not limited to transactions de signed primarily for disposal

CERCLA provides that individuals or entities that "arranged for" the disposal of hazardous substances may be held accountable for the costs of cleaning up those substances. 42 U.S.C. 107(a)(3). The dictionary defines "arrange" as "to prepare or plan." Random House Dictionary of the English Language 116 (2d ed. 1987); see Webster's Third New International Dictio nary 120 (1976) ("to make preparations"). The term "disposal" is defined specifically in CERCLA, and it in cludes the unintentional acts of spilling and leaking. 42 U.S.C. 6903(3) ("The term 'disposal' means the dis charge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water."); see 42 U.S.C. 9601(29) (adopting definition of "disposal" in Section 6903(3)). If a party enters into a transaction that it knows will directly re sult in disposal of its hazardous substances-including through spilling or leaking-then it is naturally said to "arrange for" the disposal itself. See United States v. Aceto Agric. Chems. Corp., 872 F.2d 1373, 1380 (8th Cir. 1989) (rejecting argument that defendants could be lia ble as arrangers "only if they intended to dispose of a waste") (emphasis added). Section 107(a)(3)'s use of the phrase "by contract, agreement, or otherwise arranged for," 42 U.S.C. 9607(a)(3) (emphasis added), reinforces that reading by making clear that the provision covers modes of "arrang[ing]" that do not involve an express contractual commitment.

That understanding of arranger liability also accords with the common-law background against which CERCLA was enacted, of which Congress was presum ably aware. See, e.g., United States v. Bestfoods, 524 U.S. 51, 63 (1998) (holding that common-law principles are to apply unless CERCLA "speak[s] directly to the question"); Aceto, 872 F.2d at 1382 (approving use of the common law to interpret CERCLA's arranger-liability provision). Restatement _ 427B, for example, provides: "One who employs an independent contractor to do work which the employer knows or has reason to know to be likely to * * * creat[e] * * * a private nuisance, is sub ject to liability for harm resulting * * * from such * * * nuisance." Cf. Restatement __ 413, 416, 427, 427A. Arranger liability rests on the same principles. In this case, Shell employed common carriers (and con tracted with B&B) to deliver hazardous substances that it knew would spill and leak during every delivery. See Pet. App. 259a; infra, pp. 20-23. Common-law under standings therefore support the imposition of liability on a party who arranges a transaction that it knows will directly result in the disposal of hazardous substances.4

That construction of Section 107(a)(3) is also consis tent with CERCLA's "sweeping" remedial purposes. Bestfoods, 524 U.S. at 56 n.1 (citation omitted); see, e.g., Morton Int'l, Inc. v. A.E. Staley Mfg. Co., 343 F.3d 669, 676 (3d Cir. 2003) ("Our view that 'arranged for' is to be broadly construed is consistent with Congress's overall purpose in enacting CERCLA."). When an entity ar ranges for activities that it knows will result in the dis posal of hazardous substances, the imposition of liability under Section 107(a)(3) ensures that the costs of reme diation can be placed on those who are responsible for, or who benefit from, the disposal of hazardous wastes. See p. 3, supra; South Fla. Water Mgmt. v. Montalvo, 84 F.3d 402, 407-409 (11th Cir. 1996) (noting importance for Section 107(a)(3) purposes of defendant's knowledge (or lack thereof) that hazardous substances would be spilled incident to pesticide spraying, because such knowledge would demonstrate that defendant "implicitly agreed to the disposal").5

2. Shell's knowledge and role in the disposal of its haz ardous substances during its arrangement with B&B creates arranger liability

In contesting its liability, Shell relies on a character ization of the arrangement that was rejected by both the district court and court of appeals. Shell asserts (Br. 2, 14-15) that it merely sold a useful product, transported that product to B&B (its customer) by common carrier, and transferred ownership of the product to the cus tomer when the common carrier arrived at the cus tomer's facility. But that is not all that Shell did. As the courts below found, Shell arranged for the delivery and transfer process-in which Shell was "deeply involved," Pet. App. 13a n.5-during which Shell knew disposals of its hazardous substances were a routine occurrence. E.g., id. at 259a (noting Shell's "actual knowledge" that spills and leaks of D-D were "inherent in the unloading process"). Accordingly, this was not a situation where disposal of Shell's product was an unanticipated acci dent; the disposal was a known and inevitable (albeit unwanted) consequence of the transaction that Shell arranged. Shell's conduct therefore falls within the four corners of CERCLA's "arranger liability" provision.

a. It is undisputed that Shell arranged for the deliv ery of its D-D to B&B's facility. The "Conditions of Sale" between Shell and B&B provided that the "Seller may deliver any Product in any delivery equipment, by any means of transportation and from any shipping point that Seller may select." J.A. 583. Shell thus con tractually reserved the exclusive authority to, and in fact did, arrange for the delivery of D-D by common carrier tanker trucks to B&B's facility. Pet. App. 124a. Shell owned the D-D at the time such arrangements were made. Id. at 124a-125a. The deliveries were made F.O.B. destination, but "Shell still controlled the process of deliveries, regardless." Id. at 124a.6

Shell also actively inserted itself into, and exercised significant control over, the transfer process when the tanker trucks it hired arrived at B&B's facility. At least until the early 1980s, the common carriers that Shell hired and paid participated in the D-D transfer process and used equipment required by Shell. See, e.g., Pet. App. 119a-120a (relying on testimony of tanker-truck drivers and others in the field that the drivers would unload D-D into B&B's tanks using the truck's equip ment); id. at 208a-209a ("Before the early 1980s, Shell required the tanker truck driver to have a 30 foot hose and certain couplings and other equipment," and "[b]y the early 1980s, Shell dictated that B&B personnel un load the tanker truck and purchase the 30 foot hose among other unloading equipment."). Shell documenta tion "referenced the fact that the drivers of the tanker trucks had to have certain equipment for transferring the D-D into the storage tank, evidencing direction and control by Shell." Id. at 124a. B&B was also required to follow Shell's manual on handling D-D, which provided detailed loading and unloading procedures, subject to an inspection program. Id. at 127a-128a.7

b. The record establishes that spills of D-D "were inherent in the common carrier deliveries that Shell ar ranged for and occurred in the course of every delivery." Pet. App. 252a; see id. at 119a-122a. The trial evidence also showed, and the district court found, that "Shell knew that spills and leaks were inherent in the unload ing process." Id. at 259a. For example, Robert Swain, a former Shell employee responsible for helping to im plement Shell's manual on handling D-D, testified that the delivery of Shell D-D to bulk storage "always" re sulted in spills. J.A. 64. Swain noted that, while spills during the truck-transfer process can be collected in a little bucket, "[m]ost often, though, back in those days, [the workers] just let it dump on the ground." Ibid.

Shell went so far as to account for the spilling and leakage of D-D in its contracts with B&B. Pet. App. 122a, 252a-253a. A Shell marketing agreement with B&B states, in a section entitled "Shrinkage," that "[s]ingle and multiple destination deliveries by common carrier will be allowed 0.5 percent on a weight basis for shrinkage that may occur at the time of unloading," and that the "shrinkage allowance will be deducted off the billing invoice." J.A. 498; see J.A. 209 (shrinkage allow ances in Shell's bulk-liquid contracts applied to D-D). Based on trial testimony, the district court construed such agreements as providing "a monetary allowance to B&B for product Shell expected to be lost in the process of delivery and storage." Pet. App. 122a; see id. at 252a- 253a (referring to "spillage allowance" in the Shell-B&B contract).8

In sum, based on the extensive trial record, the dis trict court correctly found that "[f]or over twenty years, Shell 'arranged for' the sale for profit of D-D with actual knowledge that D-D would spill and be released into the soil during the delivery and unloading process," Pet. App. 259a, in which "Shell was an active participant," id. at 204a. The court of appeals correctly affirmed the dis trict court's decision that Shell is liable under CERCLA because, in light of those circumstances, Shell "arranged for disposal" of hazardous substances.

B. Shell Identifies No Sound Basis For Limiting Arranger Liability Where A Manufacturer Engages In Transac tions That It Knows Will Directly Result In Disposals Of Its Hazardous Substances

In addition to contending that Section 107(a)(3) is limited to transactions whose purpose is to dispose of hazardous substances, Shell offers three further bases for avoiding arranger liability. Each lacks merit.

1. Lack of intent to dispose of a hazardous substance during a transaction does not preclude arranger lia bility where the arranger has advance knowledge of the disposal

Shell contends (Br. 18-21) that it cannot be liable under Section 107(a)(3) because its objective was to sup ply a useful product rather than to dispose of a hazard ous substance. As discussed above (pp. _, supra), that argument ignores the fact that spills and leaks of haz ardous substances were a known and recurring conse quence of the deliveries for which Shell arranged. Al though the delivery of a useful product was the ultimate purpose of the arrangement, Shell's continued participa tion in the delivery, with knowledge that spills and leaks would result, was sufficient to establish Shell's intent to dispose of hazardous substances.

Shell's invocation (Br. 19) of circuit-court cases in volving the "mere sale of a useful product" is therefore misplaced. The question in those cases was whether sellers could be held liable as arrangers for the ultimate disposal of the product after the purchaser had incorpo rated it into another product or had put it to its intended use. In that context, some courts of appeals have held that the seller is not liable as an arranger for the ulti mate disposal absent evidence that the sale included an arrangement for that ultimate disposal. See Freeman v. Glaxo Wellcome, Inc., 189 F.3d 160, 164 (2d Cir. 1999); Pneumo Abex Corp. v. High Point, Thomasville & Denton R.R., 142 F.3d 769, 775 (4th Cir.), cert. denied, 525 U.S. 963 (1998); Florida Power & Light Co. v. Allis Chalmers Corp., 893 F.2d 1313, 1317 (11th Cir. 1990); but cf. Catellus Dev. Corp. v. United States, 34 F.3d 748, 750-752 (9th Cir. 1994) (arranger liability from sale of spent batteries for extraction of lead plates).

Here, by contrast, Shell was not held liable for con tamination resulting from the application of its pesti cides (the useful product) to a farmer's fields or the sub sequent disposal of the contaminated soil. Rather, its liability is for the portion of product that was never used for its intended purpose but was disposed of at the time of delivery through spilling or leaking. See Pet. App. 52a-53a. The decisions on which Shell relies simply rec ognize that the causal link between a transaction and a subsequent disposal of the relevant product may some times be too attenuated to support arranger liability. That potential limit on Section 107(a)(3) liability has no application here, where the disposal of hazardous sub stances occurred during deliveries that Shell closely monitored and superintended.9

2. Section 107(a)(3) encompasses the disposal of hazard ous substances through spills and leaks

Shell contends (Br. 21-25) that liability under Section 107(a)(3) requires disposal of hazardous waste, and that the term "waste" does not encompass "useful products sold new for consumer use." That argument lacks merit.

Section 107(a)(3) provides that a person is liable if he "arranged for disposal * * * of hazardous substances owned or possessed by such person." 42 U.S.C. 9607(a)(3). There is no dispute that Shell's products constituted "hazardous substances." In arguing that arranger liability may not be premised on disposal of the products at issue here, Shell relies not on Section 107(a)(3), but on definitional provisions under which the term "disposal" is defined to mean "the discharge, de posit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water." 42 U.S.C. 6903(3); see 42 U.S.C. 9601(29) (providing that the term "disposal" as used in CERCLA shall have the meaning provided in 42 U.S.C. 6903(3)).

To the extent that the term "hazardous waste" has a narrower reach than the term "hazardous substance," Congress's decision to use the latter term in Section 107(a)(3) must be treated as advertent. Because Section 107(a)(3) specifies the type of material ("hazardous sub stances") whose disposal is covered, the Court should not ascribe to Congress the self-defeating intent to nar row the range of covered materials through the defini tion of "disposal." See, e.g., Louisiana & Nashville R.R. v. Mottley, 219 U.S. 467, 475 (1911) ("We must have re gard to all the words used by Congress, and as far as possible give effect to them."). The most natural read ing of the various provisions taken together is that, for purposes of determining arranger liability under Section 107(a)(3), 42 U.S.C. 6903(3) identifies the actions that constitute "disposal," but Section 107(a)(3) identifies the object of those actions, i.e., the materials whose disposal is covered. See Pet. App. 216a-217a.10

3. Arranger liability does not require ownership or ac tual control of the hazardous substance at the time of disposal

Shell contends (Br. 26-27) that, in order to be liable as an arranger under Section 107(a)(3), a manufacturer must either own or have "actual control" of the hazard ous substance at the time of its disposal. That is incor rect.

Section 107(a)(3) imposes liability on a person who "by contract, agreement, or otherwise arranged for dis posal * * * of hazardous substances owned or pos sessed by such person." 42 U.S.C. 9607(a)(3). By its terms, that provision applies if the person upon whom liability is imposed owned or possessed the relevant sub stances when the arrangement for disposal was made. Liability under Section 107(a)(3) does not turn on whether the arranger retained ownership or possession at the time of disposal. The provision also clearly con templates that some "other party or entity" may dispose of the hazardous substance. Ibid. Accordingly, a person who arranges to have his hazardous substances disposed of by another is liable for the consequences of that dis posal arrangement, regardless of which entity (the source or disposer) has title or possession when disposal occurs.

Shell's further contention (Br. 26-27) that, at a mini mum, an arranger must exercise "actual control" of the hazardous substances at the time of disposal is also in consistent with the statutory text. Such a requirement would read the phrase "by contract, agreement, or oth erwise arranged for" out of Section 107(a)(3). In any event, as discussed above (pp. 20-23, supra), Shell did exercise substantial control over the hazardous sub stances at the time of disposal.

If ownership or actual control at the time of disposal were legally dispositive, an arranger could easily avoid liability under Section 107(a)(3). In the ordinary case when a waste hauler picks up a drum of hazardous sub stances from the arranger, the drum is no longer pos sessed or controlled by the arranger. And the parties could readily provide by contract for the immediate transfer of title to the hauler at the time of pickup. Con gress surely did not intend for arrangers to escape CERCLA liability in that prototypical arrangement for disposal of hazardous substances. See S. Rep. No. 848, supra, 31, 33-34 (CERCLA's liability regime "provides incentives to all involved with hazardous substances to assure that such substances are handled with the utmost care").11

II. THE DISTRICT COURT ERRED IN REFUSING TO HOLD PETITIONERS JOINTLY AND SEVERALLY LIABLE WHEN PETITIONERS FAILED TO ESTABLISH A REA SONABLE BASIS FOR APPORTIONMENT

The court of appeals correctly held that, although the single harm at B&B's facility was theoretically capable of apportionment under established common-law princi ples, petitioners-which elected to pursue a "'scorched earth,' all-or-nothing approach to liability," Pet. App. 236a-had failed to prove any reasonable basis for determining their respective contributions to that harm. The thrust of the court of appeals' analysis was not that a more precise and defensible apportionment could have been made based on the record before the district court. Rather, the court of appeals explained that, largely be cause petitioners had pursued a trial strategy of denying any liability for the costs of the governments' cleanup activities, the existing evidentiary record did not provide a reliable basis for apportionment. There is no basis for the Court to overturn that determination.

A. Consistent With Restatement Principles, CERCLA Lia bility For A Single Harm Is Joint And Several Unless The Liable Party Proves A Reasonable Basis For Appor tionment

1. When the government performs its own cleanup of a facility, Congress provided, subject to limited affir mative defenses not applicable here, that four classes of persons are liable for "all costs of removal or remedial action incurred by the United States Government * * * not inconsistent with the national contingency plan." 42 U.S.C. 9607(a)(4)(A) (emphasis added).12 That provision reflects Congress's considered judgment that, as be tween those with a specified connection to hazardous substances and those with none (i.e., the taxpaying pub lic), the former should be responsible for the costs of cleanup. See 126 Cong. Rec. 31,978 (1980) (statement of Rep. Jeffords) (CERCLA "places the costs of releases of hazardous waste on the sector most responsible for pollution and which benefits most from chemical produc tion rather than on the victim or taxpayers."); p. 3, su pra.13

CERCLA does not specifically address the proper allocation of cleanup costs in cases where multiple par ties share responsibility for contamination at a particu lar facility. The courts of appeals have uniformly held, however, and petitioners agree, that the decision whe ther to impose joint and several liability under those circumstances, or instead to apportion the costs of clean up among the various responsible parties, should be guided by common-law principles. See pp. 3-4, supra; Shell Br. 32; Railroads Br. 7. Petitioners also agree (Shell Br. 37; Railroads Br. 6), consistent with Con gress's apparent endorsement of the approach taken in the seminal case of Chem-Dyne (H.R. Rep. No. 253, 99th Cong., 1st Sess. Pt. I, at 74 (1985)), that Restatement principles provide the starting point for that inquiry.14

2. Under the Restatement, damages for a single harm can be apportioned among multiple causes only if "there is a reasonable basis for determining the contri bution of each cause to a single harm." Restatement § 433A(1)(b). When two or more liable parties bring about a single harm, and one or more of them seeks to limit its liability on the basis that the harm is capable of apportionment, the burden of proof as to the apportion ment is on such party. Restatement § 433B(2). That burden includes both the burden of production (i.e., of presenting evidence sufficient to establish its share of the harm) and the burden of persuasion (i.e., of demon strating by a preponderance of the evidence that appor tionment is warranted). Restatement _ 433B cmt d. That is because, "[a]s between the proved tortfeasor who has clearly caused some harm, and the entirely innocent plaintiff, any hardship due to lack of evidence as to the extent of the harm caused should fall upon the former." Ibid. Petitioners do not dispute that the burden of prov ing a reasonable basis for apportionment is on CERCLA defendants. See Shell Br. 37; Railroads Br. 30.

The Restatement recognizes that "[t]here are kinds of harm which, while not so clearly marked out as sever able into distinct parts, are still capable of division upon a reasonable and rational basis, and of fair apportion ment among the causes responsible." Restatement § 433A cmt. d. The Restatement also gives various ex amples of situations where "reasonable assumption[s]" may be made, explaining, inter alia, that if cattle of two or more owners trespass and destroy a crop, the harm may be apportioned among the owners on the basis of the number of cattle owned by each. Ibid. Similarly, if two factories pollute a stream and interfere with an other's use of the water, the harm may be apportioned "on the basis of evidence of the respective quantities of pollution discharged into the stream." Ibid.

The Restatement also recognizes, however, that "[c]ertain kinds of harm, by their very nature, are nor mally incapable of any logical, reasonable, or practical division." Restatement § 433A, cmt. i. As Congress was well aware, that will often be the case for the harms tar geted by CERCLA: "An indivisible harm is frequently the situation at hazardous waste sites where many par ties have contributed to the contamination or other en dangerment and there are no reliable records indicating who disposed of the hazardous wastes (or in what quanti ties)." 126 Cong. Rec. at 31,966 n.* (Letter from Assis tant Attorney General, Office of Legislative Affairs to Chairman, Subcomm. on Transportation and Commerce, House Comm. on Interstate and Foreign Commerce, 96th Cong., 2d Sess. (Dec. 1, 1980)). Thus, while the Restatement allows for the limited use of assumptions to determine the contribution of each cause to a single harm, those assumptions must be reasonable, based on the evidence, and grounded in principles of causation.

The Restatement makes clear that, where harms cannot be apportioned on a reasonable basis, the court should not make "an arbitrary apportionment for its own sake" or simply to mitigate the severity of joint and sev eral liability. Restatement § 433A cmt. i. Indeed, the Restatement contemplates that joint and several liabil ity may be imposed even when "some of the causes are innocent." Ibid. Accordingly, the courts of appeals have recognized that apportionment under the Restatement "is guided not by equity" but "by principles of causation alone." United States v. Hercules, Inc., 247 F.3d 706, 718 (8th Cir.), cert. denied, 534 U.S. 1065 (2001); see, e.g., United States v. Township of Brighton, 153 F.3d 307, 319 (6th Cir. 1998); United States v. Monsanto, 858 F.2d 160, 171 n.22 (4th Cir. 1988), cert. denied, 490 U.S. 1106 (1989); United States v. Rohm & Haas Co., 2 F.3d 1265, 1280 (3d Cir. 1993); cf. United States v. Atlantic Research Corp., 127 S. Ct. 2331, 2339 (2007) ("a defen dant PRP in such a _ 107(a) suit could blunt any inequi table distribution of costs by filing a _ 113(f) counter claim").

If a party found liable under Section 107(a)(4)(A) cannot establish a basis for apportionment with the reli ability that Restatement principles require, but never theless maintains that joint and several liability is unfair or disproportionate under the particular circumstances of the case, it may pursue a contribution action against other responsible parties under CERCLA Section 113(f)(1). Section 113(f)(1) provides that, "[i]n 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); see Restatement _ 886A(2) (right of contribu tion exists for tortfeasor "paying more than his equita ble share of the common liability"). That provision gives the court broad authority to devise a fair allocation of costs among the responsible parties without transfer ring those costs to taxpayers who have no particularized nexus to the relevant contamination. That provision would be largely superfluous if the court had similar equitable discretion in making the initial determination of liability under Section 107(a)(4)(A).

To be sure, the availability of a Section 113(f)(1) con tribution action may be of little practical benefit to peti tioners here in light of B&B's insolvency. The Restate ment does not suggest, however, that the standards for proving apportionment may be relaxed in such cases in order to compensate for the diminished likelihood of obtaining contribution. To the contrary, the Restate ment specifically identifies the insolvency of a co-defen dant as a factor weighing against apportionment. The Restatement provides that, even if a defendant carries its burden on apportionment, the defendant may still be held jointly and severally liable if the circumstances are exceptional, as when "one of two tortfeasors is so hope lessly insolvent that the plaintiff will never be able to collect from him the share of the damages allocated to him." Restatement § 433A cmt. h.15 That principle is consistent with CERCLA's purpose of protecting the public fisc.16

B. The District Court Erred As A Matter Of Law By De clining To Impose Joint And Several Liability After Pe titioners Failed To Establish Any Reasonable Basis To Apportion Liability

It is undisputed that this case involves a single harm, consisting primarily of a plume of contaminated ground water that threatens the drinking water supply. Pet. App. 245a-246a. At trial, both the Railroads and Shell contended that they did not cause any part of that harm. Neither the Railroads nor Shell attempted (even in the alternative) to present or prove a reasonable basis for determining the contribution of each to the contami nation.

Once the district court rejected petitioners' theory of the case and determined that petitioners were liable parties, the imposition of joint and several liability should have followed naturally from petitioners' failure even to attempt to identify and prove any reasonable basis for apportionment. Instead, the district court, believing that the imposition of joint and several liability would be inequitable under the circumstances of this case, scoured the record for evidence on which very rough approximations of petitioners' comparative re sponsibilities might be based. It may well be that no demonstrably better apportionment could have been made given the record before the court. The absence of evidence from which a sufficiently reliable apportion ment could be drawn, however, was the direct result of petitioners' own litigation strategy, and there is no basis for this Court to relieve petitioners of the consequences of that strategy now that it has failed to absolve them of all liability. In any event, under established Restate ment principles, the party seeking apportionment bears the burden of proof, and the court of appeals correctly held that petitioners failed to carry their burden here.

1. The Railroads' trial theory was that no activity on the Railroad parcel resulted in contamination at the facility. Although the Railroads provided expert testi mony purporting to estimate the total amount of con tamination in the facility's subsurface, that testimony assumed that none of the facility's contamination was caused by disposals on the Railroad parcel. J.A. 304- 305; Railroads C.A. E.R. 188-191. Accordingly, the Rail roads' only argument and evidence as to their contribu tion to the harm was that they contributed zero.

Shell took a similar tack. Shell's expert testified that it was "infinitely more likely than not" that D-D could not get from the delivery areas to the areas from which it posited that the contamination had originated. J.A. 283-284. Thus, Shell's trial theory was that Shell was not a cause of the harm at all.

The district court, however, rejected the Railroads' and Shell's theories and evidence. The court further found that Shell "did not present evidence how its prod ucts' contribution to the contamination at the Arvin fa cility can be apportioned." Pet. App. 252a. Rather, the court explained, the Railroads' and Shell's trial strategy was a "'scorched earth,' all-or-nothing approach to lia bility," in which "[n]either acknowledged an iota of re sponsibility." Id. at 236a.

That should have been the end of the matter. Liti gants must live with the consequences of their own stra tegic choices in the adversarial system. See, e.g., Hor mel v. Helvering, 312 U.S. 552, 556 (1941) ("[O]ur proce dural scheme contemplates that parties shall come to issue in the trial forum vested with authority to deter mine questions of fact. This is essential in order that parties may have the opportunity to offer all the evi dence they believe relevant to the issues which the trial tribunal is alone competent to decide."). This Court has so held in many contexts, including in capital cases. See, e.g., Williams v. Taylor, 529 U.S. 420, 437 (2000) (state prisoner "must be diligent in developing the record and presenting, if possible, all claims of constitutional error" and cannot pursue on habeas "facts and issues which a prisoner made insufficient effort to pursue" earlier). There is no reason for a different rule in this context, where (as here) sophisticated parties are represented by sophisticated counsel.17 When a CERCLA defendant categorically denies liability and the court rejects that position, the defendant faces the prospect of joint and several liability and cannot go back and claim an entitle ment to apportionment based on a record that does not support apportionment.18

2. Rather than hold petitioners to the consequence of their own litigation strategy, the district court "inde pendently" performed what it called "the equitable ap portionment analysis demanded by the circumstances of the case." Pet. App. 236a-237a. The district court's de cision to undertake that apportionment without the par ties' assistance rested on three interrelated legal errors.

First, the district court assumed that the "circum stances of this case"-primarily the insolvency of the party (B&B) most responsible for the contamination- "demanded" apportionment. Pet. App. 237a; see id. at 245a (deeming it "manifestly inequitable" to allocate B&B's orphan share to petitioners). That was incorrect. As explained above (pp. 34-35, supra), the Restatement specifically discusses the example of an insolvent co- defendant. Rather than identifying that circumstance as a ground for relaxing the standards governing appor tionment, the Restatement treats the insolvency of a co- defendant as a factor that may support joint and several liability even if apportionment would be otherwise justi fied. That approach furthers CERCLA's purpose of ensuring that governmental plaintiffs (and the taxpay ers they represent) are not required to bear cleanup costs when there exists a solvent party with a cognizable nexus to the contamination. See p. 3, supra.19 Although the Restatement does not preclude apportionment in cases involving insolvent co-defendants, it is flatly in consistent with the district court's treatment of such insolvency as a factor supporting apportionment.

Second, the district court treated petitioners and the United States and the State as equally responsible for the absence of evidence and argument directed at the question of apportionment. In explaining its decision "to independently perform the equitable apportionment analysis," the court stated that "[a]ll parties" had "ef fectively abdicated providing any helpful arguments to the court." Pet. App. 236a-237a. As the district court elsewhere recognized, however, "[o]nce [CERCLA] lia bility has been established, the burden shifts to the de fendant to demonstrate, by a preponderance of the evi dence, that there exists a reasonable basis for divis ibility." Id. at 235a. Because petitioners bore the bur den of proof on this issue, the governments' failure to provide evidence and argument supporting a different apportionment (or establishing that apportionment was infeasible) could not justify the court's use of estimates that would otherwise have been insufficiently precise.

Third, the district court conflated the present cost- recovery suit under Section 107(a)(4)(A) with the dis tinct, equitable contribution action available to petition ers under Section 113(f). The court stated that, "[w]hile § 113(f)(1) directs courts to allocate cleanup costs be tween responsible parties 'using such equitable factors as the court determines are appropriate,' it does not limit courts to any particular list of factors. The stat ute's expansive language instead affords a district court broad discretion to balance the equities in the interests of justice." Pet. App. 239a. The district court's evident premise-i.e., that the court possessed the same "broad discretion" in determining whether and how liability should be apportioned in the cost-recovery suit under Section 107(a)(4)(A)-is wholly incorrect. See pp. 33- 35, supra.20

The legal errors described above led the district court to undertake an intricate apportionment analysis despite the failure of the parties who bore the burden of proof to offer any pertinent evidence or argument. The court's mode of procedure also deprived the government of a fair opportunity to respond to the court's theories of apportionment and to rebut their factual underpin nings-an opportunity the governments would have had if those theories had been advanced by petitioners them selves. See, e.g., Burdett v. Miller, 957 F.2d 1375, 1380 (7th Cir. 1992) (reversing the trial court where it "changed the plaintiff's theory of the case after the time had passed for the defendant to present contrary evi dence").

Petitioners suggest that, despite the rough nature of the district court's approximations, the ultimate appor tionment should be sustained because the court chose to err on the side of overestimating petitioners' contribu tions to the harm at the relevant facility. See Railroads Br. 46-47. The Railroads emphasize (ibid.) that the dis trict court provided an adequate "safety margin," in creasing the Railroads' estimated share from 6% to 9% to allow for calculation errors. Because the correct number is likely lower than 9%, the Railroads argue (Br. 47), imposing joint and several liabilty is unjustifi able.

That line of argument fails on two levels. First, giv en the significant gaps in the district court's apportion ment analysis as discussed in Pt. II(C), infra, it is spec ulative whether the court's apportionment actually over states petitioners' appropriate shares of the total liabil ity. Second, under applicable Restatement principles, the propriety of apportionment turns on whether the liable party has established through evidence the por tion of the harm that it caused. Petitioners cite no au thority for the proposition that a liable party can in ef fect stipulate to a percentage share that lacks such an evidentiary foundation simply because it appears likely that the share overstates its actual contribution to the overall harm.

C. The District Court's Unsubstantiated Assumptions And Gross Approximations Do Not Constitute A Reasonable Basis To Apportion The Harm In This Case

The district court's equitable apportionment analy sis, conducted on a sparse record without meaningful argument from petitioners, involved an array of unsub stantiated assumptions and gross approximations. Those include: (1) that each party's share of the ulti mate harm is proportional to each's party's volumetric contribution to the contamination (irrespective of the relative toxicities and costs of remediation of the differ ent chemicals); (2) that the Railroads' volumetric contri bution to the contamination is proportional to the per centage of its land area and duration of ownership; (3) that dinoseb and Nemagon comprised 2/3 of the con tamination, so that the Railroads' liability should be further reduced by 1/3 (because no D-D originated from their parcel); and (4) that Shell's volumetric contribu tion to the contamination can be estimated from anec dotal evidence and incomplete sales records. As dis cussed below, the district court's assumptions and ap proximations do not provide a reasonable basis for ap portioning the harm in this case.

1. There is no reasonable basis to assume that each peti tioner's share of the ultimate harm is proportional to its volumtric contribution to the contamination

As an initial matter, there is no reasonable basis to assume that the harm in this case is divisible. See Pet. App. 172a ("plume poses an indivisible threat"). Under the Restatement, joint and several liability is appropri ate "where either cause would have been sufficient in itself to bring about the result," as in the case of "merg ing fires which burn a building" or two companies pol luting a stream from which cattle drink and die. Re statement _ 433A cmt. i.

In this case, the threat to drinking water and need for remediation presumably would exist even if the plume contained only the hazardous substances traceable to Shell's spillage or only the hazardous sub stances from the Railroad parcel. Either source of con tamination therefore likely was "sufficient in itself to bring about the result" (i.e., contamination requiring CERCLA remediation) here. See Restatement _ 433A cmt. i.21 It is possible that, even if pollution from either Shell or the Railroads standing alone would have in duced EPA to undertake remediation, the presence of contaminants from multiple sources compounded the environmental harm or caused the remediation to be more costly. Petitioners made no effort, however, to prove at trial that this was so. EPA based its remedi ation decisions at the facility not on the total mass or volume of the contaminants, but rather on the fact that the level of contamination from each primary contami nant greatly exceeded the applicable maximum concen tration levels set by the EPA and State. Pet. App. 97a. Accordingly, absent a reasonable basis in the record to find otherwise (and petitioners failed to provide one), petitioners should be jointly and severally liable for the entire harm on that ground alone.

Even assuming that petitioners' respective contribu tions were not independently sufficient to have caused the harm, there is no reason to assume that the ultimate harm is directly proportional to the volume of hazardous substances in the plume attributable to each petitioner. The plume of contamination underlying the facility con tains multiple substances, including dinoseb and constit uents of D-D and Nemagon. Pet. App. 174a. The share of harm from a particular volume of waste therefore depends on a number of variables, including the respec tive levels of toxicity and cost of remediation for each constituent present. (For example, if dinoseb were much more toxic or much more expensive to extract than D-D or Nemagon, that might be a basis to conclude that the Railroads are responsible for more of the harm.) Consistent with their trial strategy of simply denying all liability, petitioners identify no record sup port for the district court's assumption that each party's contribution to the overall harm is proportional to the relative volume of hazardous substances attributable to it. As a result, the district court lacked a reasonable basis for apportioning the harm based on the volumes of contamination attributable to each petitioner.22

2. There is no reasonable basis to assume that the Rail roads' contribution to the contamination was propor tional to its land area and duration of ownership

Even assuming that the volume of the Railroads' contribution to the contamination is a sufficient basis on which to apportion harm, the district court's estimate for that contribution lacks a reasonable basis.

a. The Railroads assert (Br. 41-45) that the district court's analysis falls within the "long tradition" of ap portionment of harm based on geography and time. That is incorrect. With respect to geography, the court concluded that, because the Railroads owned only 19.1% of the facility, the Railroads' liability should be reduced proportionally. But that is not an appropriate use of geographic divisibility. Geographic divisibility is used to differentiate between two or more distinct harms, such as non-contiguous areas of contamination or dis tinct plumes of groundwater contamination, rather than to apportion responsibility for a single harm. See, e.g., Hercules, Inc., 247 F.3d at 717-718. For example, if two portions of a landfill are contaminated with hazardous substances and remediated, a liable party could demon strate that none of its hazardous substances contami nated one of those portions. Indeed, that principle ex plains why Shell was not liable for the geographically- isolated dinoseb hot spot, which did not contain Shell chemicals. Pet. App. 56a & n.35.

The Railroads identify no case where a court has divided a single harm based on the percentage of the facility that a liable party owned. The most analogous case of which the government is aware confirms that the fraction of the facility that the Railroads owned is not a reasonable basis to determine the harm attributable to it. See United States v. Rohm & Haas Co., 2 F.3d 1265 (3d Cir. 1993), overruled on other grounds by United States v. E.I. DuPont De Nemours & Co., 432 F.3d 161, 162-163 (3d Cir. 2005) (en banc). In Rohm & Haas Co., the Third Circuit held jointly and severally liable a party that owned only 10% of the land area of the facil ity at issue. 2 F.3d at 1280-1281. In doing so, the Third Circuit rejected the party's request for apportionment based on its percentage of ownership, explaining that "[t]he fact that [defendant] only owns a portion of the site says nothing about what portion of the harm may fairly be attributed to it." Id. at 1280. The same is true here.23

Even assuming that there was a reasonable basis to find that spills on the Railroad parcel were proportional to its size, the district court had no reasonable basis for assuming whether those spills were more or less likely to contaminate the subsurface. That would depend on a number of variables-e.g., the presence of water, properties of the particular contaminant, porosity of the surface and soil, wind and temperature-for which the district court failed to account. Without knowing more about those variables, in conjunction with the timing and location of the releases, the relative level of spills on each parcel says little about the relative level of ac tual contribution to the harm from each parcel. Where the Railroads' only trial evidence-that the activity on the Railroad parcel did not contribute at all to the harm at the facility-was rejected by the district court, there is no reasonable basis for determining the relative volu metric contribution from the Railroad parcel to the overall contamination. See Pet. App. 248a ("no party has specifically documented the relative contributions of contamination from either parcel"); id. at 252a ("no evi dence to quantify the difference in volume of the re leases" from the Railroad and B&B parcels).

b. Nor is this a situation where, as the Railroads as sert (Br. 44-45), the harm is divisible based on time (i.e., based on the fact that the Railroads were owners for 45% of the facility's lifespan). The Restatement's con ception of temporal divisibility is very different from that adopted by the district court and now endorsed by the Railroads. The Restatement provides that "if two defendants, independently operating the same plant, pollute a stream over successive periods, it is clear that each has caused a separate amount of harm, limited in time, and that neither has any responsibility for the harm caused by the other." Restatement _ 433A cmt. c. In that example, it is the same plant-presumably gen erating the same pollution at the same rate-such that the time each defendant operated the plant may be a reasonable approximation of the harm to the stream it caused.

The harm here, however, was not caused by succes sive operation of the same harm-causing activity. Rather, the addition of the Railroad parcel permitted B&B's facility to expand-presumably expanding its harm-causing activities. Thus, unlike in the Restate ment example, there is no reasonable basis to assume that the harm is proportional to the duration of opera tion. To the contrary, it is more reasonable to assume that the facility increased its contaminating activities after the Railroads became involved, such that temporal divisibility would underestimate their contribution.

The district court's approach also cannot be recon ciled with the fact that Section 107(a)(1) makes the cur rent owner and operator of a facility liable, even if all the contamination occurred before its ownership. Un der the district court's temporal approach, that owner's share of liability would always be zero. That could not have been what Congress had in mind. The prospect of that anomalous result shows not only that the district court's use of temporal divisibility was flawed, but also that landowner liability is not readily divisible in the same way as operator or arranger liability.

3. There is no reasonable basis for the district court to assume that 2/3 of the contamination was from dinoseb and Nemagon (and thus discount the Rail roads' liability by 1/3)

The district court discounted the Railroads' liability by 1/3 based on its assumptions that none of the D-D contamination requiring remediation originated on the Railroad parcel and that the other two chemicals (dino seb and Nemagon) contributed to 2/3 of the overall con tamination. Pet. App. 251a. The first premise is dubi ous at best,24 and the court identified no record sup- port for the proposition that dinoseb and Nemagon con stituted 2/3 of the total contamination. The supposition (even if true) that two of three contaminants came from the Railroad parcel does not support the district court's conclusion that those two chemicals caused two-thirds of the harm.

4. There is no reasonable basis for using spillage esti mates from anecdotes and incomplete records to de termine Shell's contribution to the contamination

The district court erred in two ways in its calculation of Shell's volumetric contribution to the contamination. First, the court piled one unsupported assumption onto another to craft its own estimate of the amount of D-D spilled during Shell-controlled deliveries as compared to the total amount of D-D spilled at the facility. Second, the district court's calculation depends on the assump tion that every spill of D-D caused the same amount of contamination-an assumption contradicted by the evi dence.

a. The district court's estimate of D-D spilled during Shell-controlled deliveries hinges on its assumption that three gallons were spilled during every delivery. See Pet. App. 254a ("It is further assumed that, on average, three gallons spilled during every delivery."). The court's assumption, based on sparse anecdotal evidence (e.g., J.A. 125), fails to account for the obvious possibil ity that such D-D spills could have been larger on a reg ular basis. The district court's further estimate that there were 27 Shell-controlled D-D deliveries per year lacks a reasonable basis as well. See Pet. App. 253a- 254a. To reach that figure, the court concluded that Shell D-D sales "average[d]" 122,390 gallons per year over the entire 23-year period for which Shell sold agri cultural chemicals to B&B at the Arvin Site. Ibid. (The court then divided that by an estimated tanker truck delivery capacity of 4,500 gallons to conclude that there were 27 deliveries per year.) Ibid. The court based its "average," however, on just a few years of sales data. Id. at 89a-90a, 253a. The court did not explain on what basis it assumed that those years were representative of the entire 23 years, and it failed to address potential variables such as market conditions or customer de mand. Ibid. The court's reliance on that potentially unrepresentative sample was particularly misplaced because Shell bore the burden of proof on apportion ment and was in the best position to produce the full complement of sales records.

The district court applied the same kinds of assump tions to "calculate" that D-D spills from non-Shell con trolled activities totaled 29,349 gallons, despite acknowl edging that such spills "are not quantified." Pet. App. 254a ("it is assumed that a spill ranged from a cup to a quart" during transfer to bobtail from storage tanks); id. at 255a (assuming a 7.5 gallon spill where bobtail truck was washed out); id. at 256a (spills "of a quart or less occurred as a result of checking filters on D-D rigs"). The estimates as to non-Shell controlled spills of D-D are flawed in other ways as well. For example, for non-Shell controlled spills from bobtail washing, the district court "assumed that the bobtails were washed out 70% of the time." Pet. App. 255a. There is no re cord evidence for the 70% figure. To the contrary, the testimony of a B&B field serviceman (Merryman) sug gests that the figure is far lower-resulting in an over estimate of the amount of D-D spilled in non-Shell con trolled deliveries and thus underestimating Shell's lia bility. J.A. 130-133.

b. The court's simplistic calculation also assumes that every gallon of D-D spilled would lead to the same amount of contamination in the subsurface. But that ignores the reality that spill impacts could vary consid erably depending on various variables, such as the po rosity of the spill site and timing in relation to rainfall or other water events. See Pet. App. 248a (acknowledging that even a "small spill of 1,2-DCP [D-D] could cause substantial groundwater contamination"); see also pp. 47-48, supra. For example, the district court's analysis ignores the lining of the sump (one of the sources of con tamination) in 1979, where the bobtail trucks were washed out. See Pet. App. 95a ("the sump near the B&B wash rack was lined in 1979"). Rather than account for the much lesser likelihood of groundwater contamina tion from such non-Shell-controlled activities after 1979, the district court applied the same assumption that ev ery gallon of D-D spilled would result in the same amount of contamination-thereby underestimating the percentage of D-D contamination attributable to Shell- controlled deliveries.

In sum, the district court's decision to proceed with an "equitable apportionment" on the sparse record left by petitioners resulted in several critically flawed as sumptions. Those assumptions, taken together, do not comprise a reasonable basis for apportioning the harm in this case.

. CONCLUSION

The judgment of the court of appeals should be af firmed.

Respectfully submitted.

GREGORY G. GARRE
Solicitor General
MICHAEL J. GUZMAN
Acting Assistant Attorney
General
MALCOLM L. STEWART
Deputy Solicitor General
PRATIK A. SHAH
Assistant to the Solicitor
General
LISA E. JONES
JAMES R. MACAYEAL
> AARON P. AVILA
Attorneys

PATRICIA K. HIRSCH
Acting General Counsel
Environmental Protection
Agency

 

 

DECEMBER 2008

1 See, e.g., Centerior Serv. Co. v. Acme Scrap Iron & Metal Corp., 153 F.3d 344, 348 (6th Cir. 1998); United States v. Alcan Aluminum Corp., 990 F.2d 711, 721-722 (2d Cir. 1993); United States v. Alcan Aluminum Corp., 964 F.2d 252, 268-269 (3d Cir. 1992); United States v. Aceto Agric. Chems. Corp., 872 F.2d 1373, 1377 (8th Cir. 1989); Uni ted States v. Monsanto Co., 858 F.2d 160, 167, 171-172 (4th Cir. 1988), cert. denied, 490 U.S. 1106 (1989).

2 Congress has also amended CERCLA in other ways to limit the breadth of CERCLA liability. In January 2002, for example, Congress enacted an exemption from liability at National Priority List (NPL) sites for those persons who sent less than 110 gallons of liquid materials or less than 200 pounds of solid materials to the site (§ 107(o)); an ex emption for certain categories of persons from liability at NPL sites for disposing of municipal solid waste (§ 107(p)); a defense to liability for certain owners of property located contiguous to, and contaminated by, hazardous waste sites (§ 107(q)); and a defense to liability for bona fide prospective purchasers of contaminated property (§ 107(r)). 42 U.S.C. 9607(o)-(r) (Supp. V 2005). In addition, those who do not qualify for Section 107(o)'s exemption, but who sent a relatively small amount of hazardous substances to a site, may enter into a de minimis settlement, under which they make a limited cash payment to EPA in exchange for an immediate release from past and future liability at the site. 42 U.S.C. 9622(g) (2000 & Supp. V 2005).

3 The Railroads' brief in this Court does not address whether Shell's conduct gave rise to arranger liability under Section 107(a)(3). In the court of appeals, however, the Railroads argued that the district court had correctly held Shell liable as an arranger, for several of the reasons explained herein. See Railroads Second C.A. Br. 16-38.

4 As the quotation from Restatement § 427B in the text indicates, a person who employed an independent contractor was traditionally liable not only when the employer possessed actual knowledge that the work would create a nuisance, but also when he "ha[d] reason to know" that such a result was "likely." Similarly, under Section 107(a)(3), the owner of hazardous substances may be liable as an "arranger" if he enters into a transaction whose likely consequence is the disposal of hazardous sub stances, even if the owner lacks actual knowledge that a disposal will occur. Because Shell was shown to have actual knowledge that spills and leaks routinely occurred during the deliveries, the Court need not determine in what additional circumstances arranger liability would be proper.

5 Similarly, in Aceto, a pesticide manufacturer arranged to send its product to a formulator for processing (i.e., converting from technical- grade to commercial-grade pesticide). 872 F.2d at 1375. As an "inher ent" byproduct of the processing, the formulator generated hazardous substances, which the formulator disposed of contemporaneously (thereby creating the contaminated site). Id. at 1375-1376, 1381. Al though disposal of the byproduct was not the purpose of the transaction (like Shell, both parties to the transaction in Aceto presumably would have preferred no byproduct or disposal), the court of appeals held that the manufacturer was liable as an arranger under Section 107(a)(3). Id. at 1382. It explained that a contrary result "would allow defendants to simply 'close their eyes' to the method of disposal of their hazardous substances, a result contrary to the policies underlying CERCLA." Ibid.

6 "F.O.B. destination" generally means that "the seller must at his own expense and risk transport the goods to that place and there tender delivery of them." U.C.C. § 2-319(1)(b) (14th ed. 1995).

7 To the extent the courts below relied on Shell's imposition of various requirements, treatment of that fact as relevant to the Section 107(a)(3) analysis does not (as Shell suggests, Br. 31) create a disincen tive to the adoption of such safeguards. To the contrary, if shippers know that the process by which their products are delivered results in spills of hazardous substances, they will have greater incentive to prevent such disposals to limit the contamination if they are potentially subject to arranger liability. In any event, abundant evidence beyond Shell's imposition of safety precautions established Shell's awareness that spills and leaks occurred routinely during the deliveries at issue here.

8 Although Shell describes that allowance as "a price discount to meet competition" (Br. 30), that explanation is inherently unlikely, since an allowance for "shrinkage" at the time of unloading would be a highly unusual way of providing a discount to adjust for competitors' prices. The district court rejected essentially the same argument, explaining that Shell's "characterization of the spill allowance as a 'pricing' strategy to meet competition is not persuasive," Pet. App. 259a-260a, and Shell identifies no basis for this Court to reject the district court's reasonable interpretation of the documentary record.

9 Shell's reliance (Br. 20-21) on Amcast Industrial Corp. v. Detrex Corp., 2 F.3d 746 (1993), cert. denied, 510 U.S. 1044 (1994), is also misplaced. In Amcast, the Seventh Circuit held a manufacturer liable as an owner for spills of a hazardous substance that occurred during deliveries from its own trucks to a customer. See id. at 750. The court also held that the manufacturer was not liable as an arranger for spills that occurred during a common carrier's delivery of the same sub stance. See id. at 751. The court did not suggest, however, that the manufacturer had exercised any control over the latter deliveries other than hiring the carrier, let alone the extent of control found to have been exercised by Shell here. Nor did it suggest that the manufacturer, like Shell, was aware that disposals (in the form of spills and leakage) of hazardous substances ever occurred during those deliveries, let alone during every delivery. See ibid. (limiting arranger liability for "acci dents" by transporters hired "in good faith").

10 Shell's argument, if accepted, could not be limited to arranger lia bility under Section 107(a)(3). For example, Section 107(a)(2) imposes liability on "any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous sub stances were disposed of." 42 U.S.C. 9607(a)(2). Under Shell's reading, spills or leaks of a potentially useful product (e.g., cyanide) into the soil or water would not constitute "disposal" of that substance, and Section 107(a)(2) would not apply. That reading would undermine Congress's effort to cover inadvertent spills and leaks by including them within the definition of "disposal," and it would leave a substantial unintended gap in CERCLA's remedial scheme.

11 Neither the district court nor the court of appeals based its arrang er liability holding on a determination of which entity (Shell or B&B) held title to the D-D after its tender for delivery. The district court found that the point at which title to the D-D transferred from Shell to B&B was not as clear-cut as Shell suggests (Br. 5, 26). As the court ex plained, if a tanker truck arrived at B&B's facility and began unloading the D-D, but it subsequently became apparent that the bulk storage tank was inadequate for receiving and storing the D-D, Shell had the right to direct the tanker truck to return to Shell's facility. Pet. App. 212a. Thus, although B&B gained "stewardship" once Shell's tanker truck arrived at the facility, legal title did not necessarily pass to B&B at that time. Id. at 124a, 212a.

12 Petitioners do not contend that the United States' costs were "in consistent with the national contingency plan."

13 Contrary to Shell's suggestion (Br. 25 n.7, 43), the availability of the Superfund to finance cleanups does not demonstrate that Congress in tended the Superfund, rather than the parties liable under CERCLA, to bear the cost of cleanups when one responsible party is insolvent. Al though the United States may use the Superfund (when certain statu tory conditions are met) to finance cleanup efforts, Congress intended that the fund would be replenished through cost-recovery suits brought under CERCLA Section 107(a) so that the covered parties that CERCLA deems responsible for contamination bear the cost. See Best foods, 524 U.S. at 55-56; cf. S. Rep. No. 848, supra, 13. Congress sim ilarly did not intend the now-expired taxing regime for the Superfund to release from liability manufacturers who otherwise qualify as liable parties under CERCLA. See Letter from GAO to Hon. James M. Jeffords regarding the GAO-04-475R Superfund Program 1 (Feb. 18, 2004).

14 As noted above, all references to the Restatement refer to the Re statement (Second). In May 1999, the American Law Institute adopted the Restatement (Third) Torts: Apportionment of Liability (Third Re statement), primarily in response to the increased use of comparative responsibility. See id. § 1, cmt. a. The Third Restatement employs the same basic approach to apportionment as the Restatement. Compare Third Restatement § 26 with Restatement § 433A. In any event, the Restatement was in effect both when CERCLA was originally enacted and when it was amended in 1986, and it is therefore the relevant source of common-law norms. In addition, many States still retain full joint and several liability, and most of the recent departures from that tra ditional rule have come through legislative enactments, not judicial de cisions developing common-law principles. See Norfolk & W. Ry. v. Ayers, 538 U.S. 135, 164-165 (2003).

15 Because the court of appeals concluded that petitioners had failed to establish a sufficient basis for apportionment under general Restate ment principles, it declined to determine what effect Restatement § 433, comment h, might otherwise have on the apportionment analysis. See Pet. App. 32a n.27. This Court likewise need not consider comment h if it agrees that the district court's apportionment lacked a reasonable evidentiary basis. If this Court disagrees, however, and concludes that the district court's apportionment was otherwise sound, comment h provides an alternative basis for affirming the judgment below.

16 Some courts have suggested that, in light of that purpose and CERCLA's strict-liability regime, the burden of proving divisibility in CERCLA cases should be more demanding than under general Re statement principles. See, e.g., United States v. Capital Tax Corp., 545 F.3d 525, 535 & nn.8-9 (7th Cir. 2008); Hercules, Inc., 247 F.3d at 715- 717. The Court need not decide whether that view is correct because petitioners failed (indeed, made no meaningful effort) to establish bases for apportionment that would satisfy Restatement standards.

17 In United States v. Alcan Aluminum Corp., 315 F.3d 179, 186-187 (2d Cir. 2003), cert. denied, 540 U.S. 1103 (2004), the CERCLA defen dant (like petitioners) argued that its liability was zero. The Second Circuit rejected that argument, determined that the defendant had in troduced no evidence on the limited nature of its liability, and therefore held it jointly and severally liable. Ibid.

18 Largely for the reasons stated in the text, the Railroads are wrong in suggesting (Br. 57-59) that the imposition of joint and several liability in this case raises serious constitutional concerns. Contrary to the Railroads' assertion (Br. 58), the court of appeals did not "interpret[] CERCLA to impose joint and several liability in all but extraordinary cases," and any constitutional issues that such a scheme might implicate are not presented here. Rather, petitioners pursued a deliberate stra tegy of disclaiming all liability and forgoing any effort to establish the share of the harm for which they could properly be held responsible. See Pet. App. 47a (noting that Shell likely could have provided evidence supporting apportionment but declined to do so, "most likely because Shell put its eggs in the no-liability basket"). Holding petitioners to the consequences of that choice creates no meaningful constitutional diffi culties.

19 See 126 Cong. Rec. at 26,788 (statement of Rep. Jeffords) ("The imposition of mandatory apportionment could result in attempts by the parties liable for a release of hazardous waste to allocate a large portion of the liability to insolvent defendants. * * * We should not allow the responsible parties to evade the costs of cleanup at the expense of the taxpayers.").

20 The district court repeatedly confirmed throughout the post-trial proceedings that its entire apportionment analysis-including but not limited to the decision to undertake it-was driven by its view that the imposition of joint and several liability would be inequitable under the circumstances of this case. At the hearing on the parties' motions to amend the court's findings of fact and conclusions of law, for example, the court stated that it "did what [it] thought was right in accordance with the law and equity because we still have an allocation and equitable proceeding." J.A. 612. But to the extent the court perceived an over riding equitable imperative to proceed with apportionment notwith standing the sparseness of the record before it, those evidentiary gaps were the result of petitioners' own litigation choices.

21 As the Seventh Circuit has explained for cases in which contamina tion may be attributable to multiple sources:

It is easy to imagine a case in which, had X not polluted a site, no clean-up costs would have been incurred; X's pollution would be a necessary condition to those costs and it would be natural to think that he should pay at least a part of them. But suppose that even if X had not polluted the site, it would have to be cleaned up-and at the same cost-because of the amount of pollution by Y. * * * [T]hat should not necessarily let X off the hook. * * * In that case, the conduct of X and the conduct of Y would each be a sufficient but not a necessary condition of the clean up, and it would be entirely arbi trary to let either (or, even worse, both) off the hook on this basis.

Browning-Ferris Indus. of Ill., Inc. v. Ter Maat, 195 F.3d 953, 958 (7th Cir. 1999), cert. denied, 529 U.S. 1098 (2000).

22 The district court's reliance on In re Bell Petroleum Services, Inc. to support such an assumption is misplaced, because that case involved a single hazardous substance (such that potential variations among the toxicities and costs of remediation of various constituents were not at issue). See Pet. App. 248a (citing 3 F.3d 889, 903-904 (5th Cir. 1993)). The Restatement's illustrations (see p. 32, supra) of trespassing cattle damaging crops, or two factories polluting a stream and interfering with another's use of the water, are similarly inapt. The presumption underlying those examples-that each cause of the harm has roughly the same effect-does not apply here. As noted above, the plume con tains various hazardous substances, but there is no evidence as to relative toxicities of those substances or the relative costs of remedi ating them.

23 The Railroads' contention (Br. 48-51) that divisibility based on geography is particularly appropriate given EPA's latitude in defining a CERCLA "facility" misses the mark. First, the text of Section 107(a)(1)-(2) makes clear that Congress chose to assign liability for con tamination based on ownership of a facility rather than on ownership of a particular tract of land. The Railroads do not dispute that ownership of part of the facility brings them within the statute's coverage. Second, while landowners are free to argue that EPA's designation of a partic ular "facility" is overly broad, the Railroads here failed to challenge EPA's inclusion of their parcel in its initial designation of the facility (despite actual knowledge of that designation), and they did not appeal the district court's conclusion that the Railroad and B&B parcels are a single facility. Pet. App. 113a, 172a-173a. Third, the Railroads did not attempt at trial to show that they caused contamination in one isolated part of the facility but not another. Fourth, the Railroads' characteriza tion (Br. 4) of themselves as innocent landowners ignores the fact that the Railroads profited from their lease with B&B and stood by while B&B released hazardous wastes into the environment. As the district court noted, "[a]s the lessor-land owner, the Railroads had a responsi bility to ensure that all activities affecting their leased parcel complied with all applicable environmental laws." Id. at 258a-259a. It is also sig nificant in that regard that, although CERCLA provides a form of "in nocent owner" defense in certain cases where contamination is caused by "an act or omission of a third party," the defense is unavailable if the relevant "act or omission occurs in connection with a contractual rela tionship" with the landowner. 42 U.S.C. 9607(b)(3).

24 The district court's premise that no D-D originated from the Rail road parcel conflicts with its other findings. For example, the court cal culated that the checking of filters on D-D rigs resulted in D-D spills totaling 20,470 or more gallons, by far the single largest component of the court's total estimated D-D spills of 31,212 gallons. Pet. App. 256a. In turn, the court found that "D-D rigs were parked on the Railroad parcel" (id. at 91a); that "[b]efore taking D-D rigs to the field, B&B servicemen put on rubber gloves, opened the strainer caps and checked the filters;" and that such filter checks "resulted in spills of D-D onto the ground" (ibid.). The court's own findings therefore indicate that significant D-D spills occurred on the Railroad parcel.

 

 

APPENDIX

 

1. 42 U.S.C. 9601(29) provides:

The terms "disposal", "hazardous waste", and "treat ment" shall have the meaning provided in section 1004 of the Solid Waste Disposal Act [42 U.S.C. 6903].

 

2. 42 U.S.C. 6903(3) provides:

The term "disposal" means the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, in cluding ground waters.

 

3. 42 U.S.C. 9607 provides in pertinent part:

Liability

(a) Covered persons; scope; recoverable costs and dam ages; interest rate; "comparable maturity" date

Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section-

(1) the owner and operator of a vessel or a facil ity,

(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,

 

(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or ar ranged with a transporter for transport for disposal or treatment, of hazardous substances owned or pos sessed by such person, by any other party or entity, at any facility or incineration vessel owned or oper ated by another party or entity and containing such hazardous substances, and

(4) any person who accepts or accepted any haz ardous substances for transport to disposal or treat ment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable for-

(A) all costs of removal or remedial action in curred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan;

(B) any other necessary costs of response in curred by any other person consistent with the national contingency plan;

(C) damages for injury to, destruction of, or loss of natural resources, including the reason able costs of assessing such injury, destruction, or loss resulting from such a release; and

(D) the costs of any health assessment or health effects study carried out under section 9604(i) of this title.

The amounts recoverable in an action under this section shall include interest on the amounts recoverable under subparagraphs (A) through (D). Such interest shall ac crue from the later of (i) the date payment of a specified amount is demanded in writing, or (ii) the date of the expenditure concerned. The rate of interest on the out standing unpaid balance of the amounts recoverable un der this section shall be the same rate as is specified for interest on investments of the Hazardous Substance Superfund established under subchapter A of chapter 98 of Title 26. For purposes of applying such amendments to interest under this subsection, the term "comparable maturity" shall be determined with reference to the date on which interest accruing under this subsection com mences.

(b) Defenses

There shall be no liability under subsection (a) of this section for a person otherwise liable who can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the dam ages resulting therefrom were caused solely by-

(1) an act of God;

(2) an act of war;

(3) an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indi rectly, with the defendant (except where the sole contractual arrangement arises from a published tariff and acceptance for carriage by a common car rier by rail), if the defendant establishes by a pre ponderance of the evidence that (a) he exercised due care with respect to the hazardous substance con cerned, taking into consideration the characteristics of such hazardous substance, in light of all relevant facts and circumstances, and (b) he took precautions against foreseeable acts or omissions of any such third party and the consequences that could foresee ably result from such acts or omissions; or

(4) any combination of the foregoing paragraphs.

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4. 42 U.S.C. 9613(f)(1) provides:

Contribution

(1) Contribution

Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil ac tion under section 9606 of this title or under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by Federal law. 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 dimin ish the right of any person to bring an action for con tribution in the absence of a civil action under section 9606 of this title or section 9607 of this title.

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