Plaintiffs alleged that hazardous radioactive and nonradioactive substances produced by defendants, Boeing North American, Inc. and Rockwell International Corp., caused their illnesses. The specific issue on review was whether plaintiffs’ claims were timely filed under California’s statute of limitations. The plaintiffs were fifty-two individuals residing in the San Fernando or Simi Valley of California, who suffered various cancers and illnesses including: cancers of the thyroid, brain, cervix, breast, lung, ovaries, bladder, prostate, pancreas, and stomach; leukemia; lymphoma; hypothyroidism; infertility; and multiple chemical sensitivity sensory neuropathy. Defendants owned and operated the Rocketdyne facility, located near plaintiffs’ residences. The Rocketdyne facility conducted testing of rocket and energy technologies involving various radioactive contaminants and nonradioactive hazardous chemicals.

In 1997, six plaintiffs filed a complaint alleging state tort claims and a claim under the Price-Anderson Act[1] alleging injuries from Rocketdyne’s nuclear accidents. In June 1997, a number of plaintiffs joined the complaint; in December 1997, more plaintiffs joined the complaint; and in March 1998, a final group of plaintiffs joined the complaint. The plaintiffs claimed that they discovered a link between the Rocketdyne facility and an increased risk of cancer in a University of California, Los Angeles study released on September 11, 1997. Therefore, the plaintiffs claimed that the statute of limitations began to run in September 1997.

The district court granted the defendants’ motion for summary judgment because it found that the California statute of limitations barred the plaintiffs’ state law tort claims. In California, “a plaintiff has one year from the date of injury to bring a personal injury or wrongful death claim.”[2] However, a court could apply the delayed discovery rule of California or of the Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA),[3] which does not impose a statute of limitations but imposes a standard for determining when the statute of limitations should toll.

The district court found that the federal CERCLA delayed-discovery rule and that of the state were the same. Thus, the district court held that the plaintiffs’ claims were untimely because the “[p]laintiffs suspected or should have suspected the cause of their illnesses more than one year before they filed their claims.”[4] In reversing the district court’s finding, the Ninth Circuit explained that the federal and state standards were not the same.

The Ninth Circuit reviewed the district court’s grant of defendants’ summary judgment motion de novo. The Ninth Circuit found that CERCLA’s discovery rule was not the same as the rule applied in California. The CERCLA rule required that for actual or constructive notice, a plaintiff must know “both the existence and the cause of his injury,”[5] while the California rule required that a “plaintiff suspects or should suspect that her injury was caused by wrongdoing.”[6] Thus, the court found that the federal rule was more generous and therefore preempted the state rule. In addition, the court explained that a plaintiff did not need a CERCLA claim for a court to apply the CERCLA rule. Thus, the Ninth Circuit held that the district court’s grant of defendants’ motion for summary judgment was improper. The court reasoned that the record did not support the district court’s ruling that the only inference to be made was that the “[p]laintiffs knew or suspected the cause of their injuries more than one year before filing their claims.”[7]

Instead, the Ninth Circuit applied a two-part test to determine when plaintiffs reasonably knew or should have known of their claim. The first part of the test inquired into when “a reasonable person in [p]laintiffs’ situation would have been expected to inquire about the cause of his or her injury.”[8] The second part of the test considered whether an inquiry (by a plaintiff on inquiry notice) “would have disclosed the nature and cause of plaintiff’s injury so as to put him on notice of his claim.”[9]

With respect to the first part of the test, the court considered whether there were a number of other potential causes of plaintiffs’ injuries. For example, the Ninth Circuit explained that “‘[t]here are many suspected causes of cancer, many of which are natural or non-negligent and would not give rise to a legal cause of action.’”[10] Thus, the court concluded that a determination that a reasonable person knew or should have known that their injuries were caused by the Rocketdyne facility depended on “whether a reasonable person would have inquired about the cause of his injury in light of public knowledge about the causes of cancer and other latent diseases, including publicity about the release of hazardous substance from the Rocketdyne facilities as well as other potential causes.”[11]

In reaching its conclusion that the district court’s grant of summary judgment was in error, the Ninth Circuit also considered what type of medical advice the plaintiffs were given with respect to the cause of their injuries. The court explained that plaintiffs’ doctors never suggested to them that their injuries might have been caused by the Rocketdyne facility. Furthermore, the court considered the extent of publicity regarding other possible causes of plaintiff’s injuries. The court reviewed articles submitted by plaintiffs detailing various warnings regarding potential causes of cancer.[12] Based on evidence submitted by the plaintiffs and the uncertainty surrounding the causes of cancer, the Ninth Circuit found that the district court erred in concluding that plaintiffs were on inquiry notice that the Rocketdyne facility caused their injuries.

In addition, the Ninth Circuit found that the district court’s ruling was illogical because under the district court’s reasoning a plaintiff would have to file lawsuits “against all suspected sources of chronic illness to prevent the running of the statute of limitations.”[13] Furthermore, the court noted that the amount of publicity surrounding the Rocketdyne facility was not dispositive of the issue as to whether plaintiffs had inquiry notice of the Rocketdyne facility as to the cause of their injuries. Therefore, the Ninth Circuit found that the district court inappropriately made factual findings regarding the Rocketdyne publicity that should have been left to a jury.

Concerning part two of the test, “whether a reasonable inquiry would have put [the] [p]laintiffs on notice of their claim[,]“[14] the court considered that there was a wealth of complex and rapidly changing information surrounding the possible causes of cancer. Therefore, the Ninth Circuit explained that the plaintiffs were not in a position to discover what caused their cancer and that the plaintiffs had to rely on corporate or government research on the subject. Thus, the Ninth Circuit found that it was a question of fact to be decided by a jury whether plaintiffs could have discovered that the defendant’s Rocketdyne facility and operations caused their injury prior to the release of the UCLA study despite being on inquiry notice. Thus, the Ninth Circuit reversed the district court’s grant of summary judgment to the defendants with respect to the plaintiffs that joined the action after the release of the UCLA study.

With respect to the plaintiffs that joined the action before the release of the UCLA study, the Ninth Circuit affirmed the district court’s grant of defendants’ summary judgment motion. The court explained that the plaintiffs failed to provide evidence regarding how and when they had notice of their claims and therefore summary judgment was appropriate.

One of the judges of the Ninth Circuit panel concurred in part and dissented in part, concluding that there were no differences in the state standard and the federal standard with respect to application of the discovery rule. In addition, the dissent found that the available publicity regarding the Rocketdyne facility imputed knowledge to the plaintiffs. Therefore, the dissent would have affirmed the district court’s grant of defendants’ summary judgment motions against all plaintiffs.

[1] 42 U.S.C. § 2210 (2000).

[2] O’Connor v. Boeing N. Am., Inc., 311 F.3d 1139, 1143 (9th Cir. 2002).

[3] 42 U.S.C. § 9658 (2000).

In the case of any action brought under State law for personal injury . . . caused or contributed to by exposure to any hazardous substance, or pollutant or contaminant . . . if the applicable limitations period for such action . . . provides a commencement date which is earlier than the federally required commencement date, such period shall commence at the federally required commencement date in lieu of the date specified in such state statute.

Id. § 9638(a)(1).

[4] O’Connor, 311 F.3d at 1144.

[5] United States v. Kubrick, 444 U.S. 111, 113 (1979).

[6] Jolly v. Eli Lilly & Co., 751 P.2d 923, 927 (Cal. 1988).

[7] O’Connor, 311 F.3d at 1150.

[8] Id.

[9] Bibran v. Pac. Northwest Research Found., Inc., 188 F.3d 1105, 1109 (9th Cir. 1999), amended by 208 F.3d 831 (9th Cir. 2000).

[10] O’Connor,311 F.3d at 1150 (quoting Maughan v. Southwest Servicing, Inc., 758 F.2d 1381, 1385 (10th Cir. 1985)).

[11] Id. at 1151.

[12] “Plaintiffs introduced evidence of extensive publicity between 1989 and 1996 warning that a variety of products–from tobacco, pesticides and diesel fuel to peanut butter, nail polish, cellular telephones and radar guns–were potential causes of cancer.” Id.

[13] Id.

[14] Id. at 1155.

The State of California filed suit against landowners for contamination of groundwater with trichloroethylene (TCE). The landowners in turn sued Louisiana-Pacific Corp. (LP) for contribution. The district court granted summary judgment for LP, holding that the landowners failed to raise a genuine issue of material fact. The Ninth Circuit reversed and remanded to the district court.

The California Department of Toxic Substances Control traced a plume of TCE contamination in groundwater in Chico, California to the property of the landowners, determining that their land was the source of contamination. In an earlier appeal, the Ninth Circuit affirmed the liability of the landowners.[1] On further proceedings in district court to determine damages, the landowners argued that LP, whose property was located on the portion of the plume with the greatest concentration of TCE, was a contributing source of contamination and should contribute towards cleanup. LP argued in turn that the landowners failed to provide evidence sufficient to create liability for LP and filed a motion for summary judgment. The district court granted the motion.

On appeal, the landowners argued that summary judgment was inappropriate because they provided enough evidence to present a genuine issue of material fact concerning LP’s liability. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),[2] the landowner’s claim for contribution had to demonstrate that LP was a member of a class of proper defendants, their site was a facility, there was a release of TCE on the property, and that the release caused damages.[3] LP argued that the landowners failed to demonstrate any genuine issue over whether LP ever released TCE on their property. However, the landowners provided testimony from former LP employees about TCE dumping, and expert testimony about the probability of contamination by LP based on the concentration of the TCE plume and the presence of contaminants that result from TCE degradation. They also offered testimony that the testing on LP’s property was improperly conducted. While the district court dismissed this evidence as too speculative and contradicted by evidence provided by LP, the Ninth Circuit determined that the credibility or weight of the evidence was a matter for the jury, not the judge. Finding that the landowners had offered evidence from which a reasonable jury could find against LP, the Ninth Circuit reversed the grant of summary judgment and remanded to the district court for a determination on whether LP ever released TCE.

[1] California v. Campbell, 138 F.3d 772 (9th Cir. 1998).

[2] Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 (2000).

[3] See id. § 9613(f) (referring to § 9607(a) which lists the factors of liability).

Cadillac Fairview/California, Inc. (Cadillac) brought suit against Dow Chemical, Inc. (Dow), the United States, and several rubber manufacturers under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)[1] for expenses related to the cleanup of wartime rubber-manufacturing soil pollution. The district court held that the one hundred percent allocation of costs to the federal government was warranted, and the United States appealed. The Ninth Circuit affirmed that the district court acted within its discretion by allocating all of the cleanup costs to the United States.

During World War II, a critical shortage in rubber prompted the United States to create synthetic rubber manufacturing facilities. One of these facilities was operated as an agent plant by Dow, who agreed to operate the plant while the government retained ownership of the plant, the product, and the byproduct. The United States’s agreement with Dow included a “hold harmless” agreement which protected Dow from liability for personal injury and property damage.[2] Dow disposed of toxic waste resulting from the manufacturing process in evaporation ponds or pits approved by the government, knowingly polluting the soil and water. After the war, the plant was sold and eventually Cadillac became the owner. Cadillac brought suit against Dow, the United States, and other rubber companies under CERCLA, a statute enacted thirty-five years after the war ended. Under CERCLA, any responsible party can seek contribution for cleanup costs from anyone potentially liable for the pollution.[3] In response to Cadillac’s charge against the government, the United States made four arguments that at least part of the costs should be allocated to Dow.

First, the government argued that Dow created and transported waste to the ponds and pits and thus should be held responsible in part. The Ninth Circuit disagreed, finding that because the United States owned the entire facility and materials, retained complete control over the site, inspected and approved it, and considered Dow an agent, the United States had a relationship with Dow that required indemnity. Therefore, the district court properly allocated costs to the United States.

Second, the government argued that the district court failed to consider the benefits Dow received from operating the plant such as reimbursement of expenses, acquisition of knowledge, and expansion in the market. However, because the evidence offered by the government was speculative and the benefits to the government grossly outweighed the benefit to Dow, the Ninth Circuit determined that the district court did not abuse its discretion in disregarding the benefit to Dow.

Third, the government challenged the district court’s factual findings, arguing that it had only indirect control of the facility. On careful examination, the Ninth Circuit found no error in the district court’s factual findings about the United States’s knowledge and control.

Finally, the United States argued that its promise to hold Dow harmless should have been disregarded by the district court in determining the allocation of costs because, under the Tucker Act, it did not have jurisdiction to enforce that contract against the United States.[4] The Ninth Circuit held that although the district court did not have jurisdiction to enforce the contract, it could consider the clause as an equitable factor in allocating costs under section 113(f) of CERCLA.[5] Because the contract was not at issue, contract issues bore no weight in the case.

[1] 42 U.S.C. §§ 9601-9675 (2000).

[2] Cadillac Fairview/Cal., Inc. v. Dow Chem. Co., 299 F.3d 1019, 1023 (9th Cir. 2002).

[3] 42 U.S.C. § 9613(f)(1) (2000).

[4] See Tucker Act, 28 U.S.C. § 1346(a) (2000) (determining which claims district courts have concurrent jurisdiction over with the Court of Federal Claims).

[5] 42 U.S.C. § 9613(f).

In this case, the Ninth Circuit reversed a grant of summary judgment assessing civil penalties for alleged violations of the access and entry provisions of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).[1] The court held that because Omega Chemical Corporation (Omega) consistently allowed the Environmental Protection Agency (EPA) to enter its facility and conduct investigative activities during the period for which penalties were assessed, Omega’s refusal to sign a formal written consent giving EPA unconditional access to its facility did not constitute a violation of the statute.

Omega operated a spent solvent recycling facility in Whittier, California that became subject to an administrative investigation and response plan under CERCLA in January 1995. In April 1995, EPA requested that Omega sign a written consent form giving potentially responsible parties and EPA unconditional access to the site. EPA subsequently issued a compliance order in May 1995. Omega responded with a letter outlining its intent to comply with those portions of the order within its physical and financial ability but reserving the right to object to those portions of the order “beyond . . . the legal authority of [EPA].”[2] The letter specifically reserved the right to object to “un-consented to searches” and noted that Omega’s intended compliance with the order did not constitute a grant of consent to access or a waiver of any statutory or constitutional right.[3]

In a series of correspondence between EPA and Omega, EPA indicated that it interpreted Omega’s refusal to sign the consent form as a failure to consent to access for the removal action. In June 1995, EPA secured an administrative warrant and began removal activities at the site. EPA then initiated this action, claiming Omega’s failure to sign the consent form constituted a violation of CERCLA’s access and entry provisions. The district court granted summary judgment.[4]

The Ninth Circuit framed the question presented by this case as whether civil penalties were authorized under CERCLA for “a site owner’s failure to provide unconditional written consent to entry, where the facts indicate that the landowner consistently has provided physical access to the site.”[5] The court noted that Omega had in fact provided EPA with access to the site during the penalty period, pointing to evidence gathered by the agency itself that sufficiently demonstrated this fact. This evidence included a preliminary assessment of the site, investigation photographs, and daily and weekly site inspections, as well as soil, groundwater and drum samples. The court explained that Omega consistently allowed access to the property for EPA investigations and that there was no countervailing evidence that Omega had physically obstructed or otherwise barred EPA from entering the site.

The court next addressed EPA’s claim that failure to provide written unconditional consent constituted a violation of the statute’s access and entry provisions.[6] EPA argued that an interpretation of the statute that did not require formal written consent would not provide EPA with the certainty of access necessary to accomplish a CERCLA cleanup: a mere pledge of intent to cooperate would not protect EPA from the possibility that an owner would subsequently withdraw consent at a critical juncture in the cleanup process, thus compromising EPA’s ability to safely and effectively remove hazardous substances. The court rejected this argument, holding that neither the statute nor its implementing regulations contain language requiring unconditional written consent. The statute authorizes penalties for failure to comply with the provisions authorizing EPA to access, enter, and inspect the site.[7] The court found the most logical reading of these provisions to be that noncompliance arises from failure to allow access, entry, or inspection, but does not arise from failure to provide written consent. Because Omega had not failed to allow access to the site, the imposition of civil penalties for noncompliance was improper. The court also noted that while EPA’s policy directive on entry and access suggested that inspectors seek written consent, in the absence of that consent EPA is authorized to issue an administrative order and secure a warrant. Such procedures adequately provide EPA with the desired certainty of access.

Moreover, the court noted, EPA’s insistence that Omega sign a written consent form was “paradoxical” given the language of that form. The consent form stated that permission to enter was “voluntary with knowledge of my right to refuse.” The court took the view that consent could not be voluntary if failure to sign was grounds for imposition of a penalty: “Either the form is genuinely voluntary, in which case civil penalties should not attach, or the form is mandatory, which is a requirement that cannot be found anywhere in CERCLA or its implementing regulations.”[8]

EPA finally argued that Omega had violated CERCLA’s access and entry provisions by qualifying its willingness to cooperate on the condition that information secured by EPA would “not [be] used in the prosecution of any action against [Omega].”[9] While CERCLA itself does not speak to the imposition of conditions, both CERCLA’s implementing regulations and EPA’s policy directive treat imposition of conditions as a denial of consent. However, the court distinguished the conditions Omega sought to impose as being conditions upon the future use of information obtained during the cleanup process, not as conditions upon entry. As a result, these conditions did not implicate CERCLA’s access and entry provisions, and did not provide a basis for imposition of penalties for noncompliance.

[1] Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 (1994 & Supp. III 1997).

[2] United States v. Omega Chem. Corp., 156 F.3d 994, 995 (9th Cir. 1998) (quoting Letter from Omega Chemical Corporation to the Environmental Protection Agency and potentially responsible parties) (May 24, 1995)).

[3] Id.

[4] Id. at 994.

[5] Id. at 998.

[6] Id. at 999.

[7] 42 U.S.C. § 9604(e) (1994).

[8] 156 F.3d at 1000.

[9] Id.

Harold B. Chapman, Jr. manufactured small metal collars and stored and sold military and commercial surplus chemicals on his land in Washoe County, Nevada. The United States Environmental Protection Agency (EPA) began an investigation of his facility in 1989 at the request of the county. The EPA conducted a preliminary assessment of the site to determine if a removal action pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)[1] was necessary. The site contained approximately two thousand five-gallon containers of paint, insulating oil, sulfuric acid, chloroform, alcohols, and other military surplus chemicals, plus more than one hundred fifty-five-gallon drums of unknown substances. Most of the drums were stored outside in an unprotected storage yard, and many of the drums were leaking into the soil, which was stained in several areas.

After the preliminary assessment, Washoe County issued orders directing Chapman to bring his property into compliance. In April 1990, the county issued a misdemeanor citation to Chapman for failure to comply with county orders, and in May 1990, the County Commissioner revoked Chapman’s business license. The county then called on EPA for assistance.

On May 24, 1990 EPA issued Order 90-10. In this order, EPA stated that the site posed an “imminent and substantial endangerment to the public health or welfare or the environment because of the release or threatened release of hazardous substances.”[2] The agency claimed that the site posed a substantial risk of fire and/or explosion, that many of the drums were leaking into the soil and could migrate into groundwater, that groundwater contamination could result in contamination of the domestic and agricultural aquifer (endangering residents and crops), and that the site was a danger to the Bureau of Land Management’s Wild Horse and Burro Adoption Center located nearby. The order required Chapman to take immediate action to secure the site, to submit a detailed site removal and stabilization plan, and to contain or prevent the release of hazardous substances. It also required him to remove hazardous substances from the site.

EPA deemed subsequent compliance documentation prepared by Chapman inadequate and incomplete, and on January 8, 1991, EPA conducted another inspection and found containers of paint waste and flammable liquids remaining on the property. Some of the containers were open and leaking, and soil stains remained where other drums had been stored outside. Because Chapman had not complied with EPA’s order, the agency initiated a response action. Chapman began to comply with the order one month later by removing the containers from the site and submitting soil samples to EPA.

In April 1992, EPA requested $33,946.00 from Chapman for response costs it had incurred. Chapman refused to pay and the United States brought this action against Chapman to collect. The district court granted summary judgment in favor of the government and Chapman appealed.

To establish a prima facie case to recover response costs, the government must prove that 1) the site is a “facility,” 2) a “release” or “threatened release” of a hazardous substance has occurred, 3) the government incurred costs in responding to the release or threatened release, and 4) the defendant is a liable party.[3] Once these elements are established, the burden shifts to the defendant to prove that the government’s response action was inconsistent with the National Contingency Plan (NCP), which guides federal and state response actions.[4] Consistency with this plan is presumed, and the burden is on the defendant to prove that EPA’s response action was arbitrary and capricious.[5] Chapman first claimed that the EPA’s response action was arbitrary and capricious because it ordered removal of material without determining whether the material was hazardous. However, because 1) EPA inventoried and sampled the containers at the site and identified hundreds of drums and containers of chemicals and oils and 2) because the drums were stored outside in an unprotected storage yard, 3) soil samples showed the substances were hazardous, and 4) the drums had deteriorated, the court held that EPA did not act arbitrarily or capriciously in ordering removal of the material.

CERCLA allows for the recovery of “all costs” of a removal or remedial action, including attorney fees attributable to cost-recovery litigation.[6] The court held that because Chapman initially did not comply with EPA’s order, the agency had to begin recovery operations and litigation. Therefore, the court noted that EPA could recover legal costs associated with the removal action. EPA claimed attorney fees of over $400,000 and removal costs of $34,000. The Ninth Circuit remanded the case to the district court to consider the reasonableness of the government’s requested litigation expenses. The court stated that the district court should “provide a concise but clear explanation of its reasons for the fee award.”[7]

Second, Chapman claimed that there was a genuine issue of material fact as to whether he caused a release or threatened release of a hazardous substance on his property, and that the government failed to establish a prima facie case sufficient for the district court to grant summary judgment. The Ninth Circuit disagreed, citing the evidence in the administrative record as satisfying the government’s burden of proof. The record showed that there were visible soil stains and contamination and that some of the two thousand drums stored on the property were rusted and corroded, without tops, and in poor condition. Additionally, the record showed that hazardous substances were found on the premises.

In his defense, Chapman stated that he did not directly manage the facility. The appellant claimed that his environmental consultant assured him that all the containers on the property were properly packaged with no leakage. The Ninth Circuit rejected this claim, noting that the assertions were hearsay and inadequate to rebut the evidence in the record presented by EPA. As a result, the government’s evidence established a prima facie case under CERCLA.

Third, Chapman argued that because EPA did not maintain appropriate documentation of its response action and costs incurred, he should not have been held responsible for them. The appellate court disagreed, noting that the government gave detailed cost summaries to the district court showing costs incurred by the EPA. EPA staff, attorneys, accountants and supervisors had provided declarations regarding the work they performed and the time spent on the Chapman site, and documentation of costs in the form of timesheets and payroll documents were found in the record. The court held that this evidence showed that EPA had adequately documented its expenditures.

Fourth, Chapman claimed that EPA did not review the preliminary assessment and current site conditions before determining that a removal action was appropriate, thereby violating CERCLA.[8] The Ninth Circuit rejected this contention, pointing to the extensive evidence in the preliminary assessment and the record as a whole. It was therefore appropriate for EPA to determine a removal action was in order.

In a related issue, Chapman argued that EPA did not consider the following appropriate factors when it determined a removal action was in order: 1) actual or potential exposure to nearby human population, animals, or the food chain; 2) actual or potential contamination of the water supply; 3) hazardous substances in drums, barrels, or containers that may pose a threat of release; 4) hazardous substances in soils near the surface that may migrate; 5) weather conditions that may cause migration; 6) threat of fire or explosion; 7) the availability of other federal or state response mechanisms; and other factors that may pose threats to public health or welfare.[9] The court explained that Order 90-10 specifically considered all of these elements except the availability of other federal or state response mechanisms factor. Nevertheless, the court held that because EPA worked in conjunction with the county prior to issuing the order and acted consistently with the NCP, EPA had considered all the required factors.

Finally, Chapman alleged that EPA was required to issue a community relations plan according to the 1985 version of the NCP. That version required a formal community relations plan if on-site removal activities are expected to extend beyond forty-five days. The court held that the order to remove all hazardous substances was issued in May 1990, and that the 1990 version of the NCP–requiring a community relations plan if hazardous substances were not removed within 120 days–applied. Because EPA ordered the substances removed within 120 days, and because the 1990 version of the NCP applied, EPA’s actions were consistent with the NCP.

[1] Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 (1994 & Supp. III 1997).

[2] Id. § 9606(a) (1994).

[3] Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1152-53 (9th Cir. 1989).

[4] 42 U.S.C. § 9605 (1994).

[5] Id. § 9613(j)(2).

[6] Id. § 9607(a)(4)(A).

[7] Hensley v. Eckerhart, 461 U.S. 424, 437 (1933).

[8] 40 C.F.R. § 300.415(a)(1) (1998).

[9] Id. § 300.415(b)(2).

In this case, the Ninth Circuit revised a 1997 opinion[1] in which the court refused to assign successor-in-interest liability to the purchaser of interests of a liable party under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA).[2] The revised opinion substantially repeats the analysis and holding of the prior opinion, but does not hold that state law determines the scope of successor liability.

Plaintiff railroad companies, Atchison, Topeka & Santa Fe Railway Company and Southern Pacific Transportation Company (Railroads), brought this contribution action under CERCLA to recover cleanup costs for soil contamination on property leased to defendant Brown & Bryant (B & B). Railroads sought contribution from defendant PureGro, which had purchased many of B & B’s assets once B & B realized it could not afford to comply with cleanup orders issued by the Environmental Protection Agency (EPA) pursuant to CERCLA. The Ninth Circuit held that PureGro was not liable for contribution because it was not the successor-in-interest. First, the Ninth Circuit declined to apply CERCLA’s “mere continuation” exception[3] to the general rule that asset purchasers are not liable as successors-in-interest. Second, the court found that PureGro’s purchase of B & B’s assets did not qualify for the “fraudulently entered transaction” exception to the same rule.[4]

Aside from minor grammatical and citation amendments, the court altered its analysis in the revised opinion only in its discussion of the expanded “substantial continuation” exception.[5] The court in the prior opinion determined, on the basis of a series of United States Supreme Court cases, that state law dictates the parameters of successor liability. The court declined to assign liability because the governing law of California includes no substantial continuation exception.[6]

In the revised opinion, the court noted that its decision “not to extend the ‘mere continuation’ exception to include the broader notion of a ‘substantial continuation’” rendered the same result under either state or federal law. The court did not need to determine whether state law governed the scope of successor liability, because in this case both state and federal law reached the same result. The court also deleted a paragraph from the earlier opinion that rejected an argument for expanding the “mere continuation” rule on the basis that such expansion would increase the funds available to finance CERCLA cleanup operations.

[1] Atchison, Topeka & Santa Fe Ry. Co. v. Brown & Bryant, Inc., 132 F.3d 1295 (9th Cir. 1997), amended by 159 F.3d 358 (9th Cir. 1998); see also 27 Envtl. L. 577, 582-83 (1997).

[2] 42 U.S.C. §§ 9601-9675 (1994 & Supp. III 1997).

[3] 159 F.3d at 361 (citing Louisiana-Pacific Corp. v. Asarco, Inc., 909 F.2d 1260, 1263 (9th Cir. 1990)).

[4] Id.

[5] Id.

[6] 132 F.3d at 1301.

A & W Smelter (A & W) possessed an ore pile at its processing facility in the Mojave Desert. The ore included small amounts of silver and gold, some naturally occurring lead, and slag–a waste product of smelting. A & W decided to move the ore pile and contracted with Relief Mining Company to process the ore in Baja, Mexico. A & W packed the ore into drums and began shipping it. Several trucks were stopped at the Mexican border and their contents labeled “hazardous” because of the lead. Mexico returned these trucks several months later. The United States Environmental Protection Agency (EPA) ordered A & W to reclaim the ore within three days; when A & W failed to comply, EPA declared the ore abandoned and took it to a storage facility. EPA issued an order to A & W directing it to dispose of the ore in an approved landfill. Meanwhile, A & W had diverted six other truckloads of ore to Nevada. EPA directed A & W to ship this ore to a hazardous waste landfill, but A & W claimed that the Nevada site was a temporary storage site.

A & W eventually complied with both orders and filed a complaint seeking reimbursement of its compliance costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).[1] EPA moved for summary judgment, which the district court granted. A & W then appealed.

According to CERCLA, “when the President determines that there may be an imminent and substantial endangerment to the public health or welfare or the environment because of an actual or threatened release of a hazardous substance from a facility,” he may issue disposal orders.[2] Those who pay for cleanup but believe they should not have done so may petition for reimbursement of reasonably incurred costs.[3] If EPA refuses, violators may sue in district court.[4] Additionally, violators may be reimbursed if the order was arbitrary and capricious,[5] even if the violator was otherwise liable. A & W claimed reimbursement on both grounds.

EPA argued that A & W was responsible for cleanup costs under section 9607(a) of CERCLA, which holds liable “any person who by contract, agreement, or otherwise arranged for disposal or treatment . . . of hazardous substances owned or possessed by such person . . . from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance.”[6] EPA labeled the ore pile hazardous because it contained lead. CERCLA defines “hazardous substance” pursuant to several other statutes or to EPA regulations promulgated under the Act.[7] EPA pointed to regulations promulgated under CERCLA[8] and to Clean Water Act regulations listing lead as a hazardous substance[9] to support the contention that A & W violated CERCLA. A & W countered by requesting that the court read a minimum hazard level requirement into the statutes and regulations.

First, the Ninth Circuit noted that neither section 9601(14) of CERCLA nor EPA regulations establish minimum levels for classifying substances as “hazardous.” Moreover, the Second, Third, and Fifth Circuits all agree that CERCLA’s definition of hazardous substance has no minimum level requirement. Consequently, the Ninth Circuit declined to read a limitation into the statute, reasoning that such a reading would intrude into Congress’s province.

Second, the Ninth Circuit addressed whether the shipment sent to the disposal facility constituted a release. “Release” is defined as “any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant or contaminant).”[10] Although the ore stayed within the drum, the government claimed that there was an abandonment because A & W did not move the shipment within EPA’s three-day time limit. While case law does not define “abandonment” under CERCLA, according to common law, property is “abandoned” when the owner intends to relinquish all interest in it. A & W claimed it intended to retrieve the ore but did not have the means to do so within the time limit. EPA did not present evidence of any regulation or well-established agency practice defining abandonment.

The court stated that although ad hoc agency action is entitled to deference, the degree of deference depends on how much deliberation went into reaching the decision and whether it fits within a policy the agency has consistently followed. Here, there was no indication that the agency considered objections to its conclusion that the ore was abandoned. Additionally, since there was no suggestion that there was another meaning of the term other than that intended by Congress, the court held that there was no reason to defer to EPA’s interpretation of the statute.

Third, the court discussed whether A & W was liable under CERCLA. A & W would be liable only if it arranged for “disposal or treatment” of hazardous substances.[11] Disposal is “the discharge of any solid waste or hazardous waste.”[12] Treatment is “a method, technique, or process . . . designed to change the . . . character or composition of any hazardous waste so as to neutralize such waste or so as to render such waste nonhazardous, safer for transport, amenable for recovery, amenable for storage, or reduced in volume.”[13] The court explained that A & W disposed or treated the ore only if it was waste, but that the ore was not waste and not subject to CERCLA if it was a useful product. In this case, the ore had not been processed, because smelting unprocessed ore was A & W’s business. Therefore, the ore was one of the producer’s principal business products. However, slag, a by-product of smelting, was also mixed with the ore. If the ore had been mixed with enough slag so that it was no longer usable for A & W, it would be considered waste. The court held that examining A & W’s actions and commercial practices would determine whether the ore mixture was a waste. Consequently, the court remanded this issue to the district court.

Finally, the Ninth Circuit discussed whether EPA’s order was arbitrary and capricious. It noted that EPA may issue an order if the agency determines there is “an imminent and substantial endangerment to the public health or welfare or the environment.”[14] A & W claimed that the guidelines issued by EPA defining its use of this power were void for vagueness. Therefore, it claimed that EPA’s actions were arbitrary and capricious and that A & W should be reimbursed. The Ninth Circuit rejected this argument, noting that only a “minimal rationality” is needed to withstand arbitrary and capricious review. Because the meaning of “imminent and substantial” was not absolutely clear, the court defined “substantial” here as a release that does more than present a minimal threat to health, welfare, or the environment. The court then noted that A & W did not argue that its release was not a substantial endangerment to health or the environment. Due to the obscurity on this issue, the court stated that this question could be raised on remand to the district court.

[1] Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 (1994 & Supp. III 1997).

[2] Id. § 9606(a) (1994).

[3] Id. § 9606(b)(2)(A).

[4] Id. § 9606(b)(2)(B).

[5] Id. § 9606(b)(2)(D).

[6] Id. § 9607(a)(3)-(4).

[7] Id. § 9601(14).

[8] 40 C.F.R. § 302.4 (1998).

[9] Id. § 401.15 (established pursuant to the Federal Water Pollution Control Act, 33 U.S.C. § 1321(b)(4) (1994).

[10] 42 U.S.C. § 9601(22) (1994).

[11] Id. § 9607(a)(3).

[12] Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6903 (1994) (amending Solid Waste Disposal Act, Pub. L. No. 89-272, 79 Stat. 992 (1965)).

[13] Id. § 6903(34) (1994).

[14] 42 U.S.C. § 9606(a) (1994).

The United States appealed the district court’s partial grant of summary judgment to defendants, who are various mine operators and mineral processing facilities. The district court held that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)[1] statute of limitations had run for part of the property for which the United States sought natural resources damage compensation.[2] The Ninth Circuit vacated this judgment, determining the ruling was based upon review of the designation of the site on the National Priorities List (NPL), and CERCLA places this review solely within the jurisdiction of the D.C. Circuit.[3]

Under CERCLA, the Environmental Protection Agency (EPA) places the most contaminated sites in the nation on the NPL.[4] In 1983, EPA designated the Bunker Hill Mining Site as an NPL facility.[5] The listing did not set any boundaries for the site, but in various other documents EPA referred to the Bunker Hill facility as consisting of a twenty-one square mile box (the “Box”). In March 1996, the United States filed a CERCLA action against several owners and operators of mining and mineral processing facilities, to recover for natural resource damages at the Bunker Hill facility. The complaint included the 1500 square mile Coeur d’Alene Basin within the boundaries of the Bunker Hill facility.

The defendant mining companies asserted CERCLA’s statute of limitations as a defense. Generally, CERCLA requires an action for natural resource damages to be filed within three years of discovery of the damage and its connection with the release.[6] However, with respect to NPL facilities, CERCLA extends the statute of limitations to three years “after the completion of the remedial action.”[7] The defendants argued that the NPL listing only applied to the Box and that the area outside those boundaries was covered by the shorter statute of limitations. The district court held that EPA, after listing the Bunker Hill facility, had chosen to consider the Box the NPL facility. Although EPA could expand the boundaries of Bunker Hill, the district court suggested that the agency must do so through notice and comment rulemaking. Thus, the area outside of the Box was subject to the shorter statute of limitations, which had expired. Accordingly, the district court granted partial summary judgment to the defendants.[8] The United States obtained interlocutory appeal of that judgment.

The Ninth Circuit determined that resolution of the issue lies solely within the jurisdiction of the United States Court of Appeals for the District of Columbia. EPA’s policy is that it may revise the boundaries of an NPL site at any time.[9] In Washington State Department of Transportation v. EPA,[10] the D.C. Circuit held that EPA may revise NPL site boundaries as long as the agency takes some action to provide notice of the revision to affected parties.[11] In this case, reasoned the Ninth Circuit, the statement in the federal government’s complaint that the Bunker Hill site included the Coeur d’Alene Basin appeared to have provided sufficient notice. Despite this, the defendants argued that the revision of the boundaries of the Bunker Hill facility violated CERCLA. However, CERCLA provides that review of its regulations may be obtained only in the D.C. Circuit.[12] Furthermore, designation of an NPL site is a rulemaking subject to this jurisdictional limitation, and a challenge to the boundaries of an NPL site is considered a challenge to the validity of NPL site designation.[13] Therefore, the Ninth Circuit held that only the D.C. Circuit could review the defendants’ challenge to the inclusion of the Coeur d’Alene Basin in the Bunker Hill NPL site. The Ninth Circuit vacated the judgment of the district court and remanded, instructing the district court to stay the proceedings to provide a reasonable period for the defendants to file a petition for review in the D.C. Circuit.[14]

[1] Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 (1994 & Supp. III 1997).

[2] United States v. ASARCO, Inc., 28 F. Supp. 2d 1170, 1180-81 (D. Idaho 1998).

[3] United States v. ASARCO, Inc., 214 F.3d 1104, 1108 (9th Cir. 2000).

[4] 42 U.S.C. § 9605(a)(8) (1994) (listing criteria to be considered for the purpose of prioritizing contaminated sites and directing the President to list the most contaminated sites on the NPL for remedial clean-up action).

[5] Amendment to National Oil and Hazardous Substance Contingency Plan; National Priorities List, 48 Fed. Reg. 40,658, 40,658 (Sept. 8, 1983).

[6] 42 U.S.C. § 9613(g)(1)(A) (1994).

[7] Id. § 9613(g)(1).

[8] United States v. ASARCO, Inc., 28 F. Supp. 2d 1170, 1180-81 (D. Idaho 1998).

[9] National Priorities List for Uncontrolled Waste Sites, 55 Fed. Reg. 9,688, 9,689 (Mar. 14, 1990) (explaining that the boundaries of an NPL facility are not defined when it is listed and that EPA may shift the boundaries of the facility without amending the NPL listing based on research regarding the extent of the release).

[10] 917 F.2d 1309 (D.C. Cir. 1990).

[11] Id. at 1311.

[12] 42 U.S.C. § 9613(a) (1994).

[13] United States v. ASARCO, Inc., 214 F.3d 1104, 1108 (9th Cir. 2000).

[14] Id. In a footnote, the Ninth Circuit addressed the United States’s argument that, even if the Basin is not included as part of the NPL site, the longer statute of limitations still applies. The United States argued that property need only be sufficiently related to the NPL site, rather than located within its boundaries. Id. at 1108 n.6. The United States based its argument on the language in section 9613(g)(1) of CERCLA. 42 U.S.C. § 9613(g)(1) (1994) (“With respect to any facility listed on the [NPL] . . . an action . . . must be commenced within 3 years after the completion of the remedial action.”). The Ninth Circuit rejected this argument, concluding that the language “with respect to” only introduces the type of property to which the provision applies, which is the property listed on the NPL, not any related property. 214 F.3d at 1108 n.6.