United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 25, 2002 Decided June 11, 2002
No. 01-5184
Chem-Nuclear Systems, Inc.,
Plaintiff
Chemical Waste Management, Inc.,
Appellant
v.
George W. Bush, In his official capacity
as President of the United States of America, et al.,
Appellees
Appeal from the United States District Court
for the District of Columbia
(No. 96cv01233)
James T. Banks argued the cause for the appellant. Pat-
rick D. Traylor was on brief.
John L. Smeltzer, Attorney, United States Department of
Justice, argued the cause for the appellees. Robert H. Oak-
ley, Attorney, United States Department of Justice, was on
brief.
Before: Sentelle, Henderson and Randolph, Circuit
Judges.
Opinion for the court filed by Circuit Judge Henderson.
Karen LeCraft Henderson, Circuit Judge: Chemical
Waste Management, Inc. (CWM) appeals the district court's
May 2, 2001 opinion and order (dated nunc pro tunc to March
26, 2001) denying its request for reimbursement from the
United States for costs incurred in cleaning up portions of a
polluted ravine (Basket Creek Site or Site) in Douglasville,
Georgia. See Chem-Nuclear Sys., Inc. v. Bush, 139 F. Supp.
2d 30 (D.D.C. 2001) (CNSI); Joint Appendix (JA) 363-78.
Pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), 42 U.S.C.
ss 9601 et seq., the Environmental Protection Agency (EPA
or government) in 1991 had ordered CWM and others to
clean up the Basket Creek Site, into which CWM (through
other parties) had dumped at least 80 drums of hazardous
chemical waste. Having expended nearly $8 million in clean-
up costs, CWM sought reimbursement for removing a certain
amount of waste for which, it alleges, it was not responsible.
CWM argued in the district court that (1) it was not required
to exhaust before the EPA--and therefore could present to
the court--its claim that the waste from the 80 drums was
"geographically divisible" from the rest of the waste such that
it was entitled to a partial reimbursement for costs not
associated with the 80 drums; (2) it had proven its geographic
divisibility theory by a preponderance of the evidence, as
required by CERCLA and the Restatement (Second) of
Torts; and (3) the government had not carried its ensuing
burden--placed upon it by the district court in a December
23, 1999 ruling--of producing evidence linking to the Site any
further waste from CWM beyond the 80 drums. Declining to
decide whether it (via a different district judge) had erred in
placing that burden on the government, see CNSI, 139 F.
Supp. 2d at 31, 39 n.17, the district court held that the
government had "in fact sustained [the] burden" in any event,
id. at 31, and entered judgment in its favor. We affirm the
court's decision but on a slightly different ground. We hold
that the burden of proving that only 80 CWM barrels were
dumped at the Site was always CWM's to bear and that it
has not proven, by a preponderance of the evidence on the
record before us, that it is not liable for any additional waste
at the Site.
I.
During the 1970s CWM collected and stored liquid chemical
waste materials in 55-gallon drums at its Barnwell, South
Carolina facility. In July 1973 CWM hired Continental Trad-
ing Company (Continental) to remove hundreds of the 55-
gallon drums from Barnwell. Based on its knowledge of each
of the chemicals to be removed, CWM recommended to
Continental that it sell, reprocess for sale, incinerate or
solidify and bury the drums to be removed. See JA 33, 54-55
(CWM inventory as of May 10, 1973, listing chemicals, num-
ber of drums containing each chemical and recommended
methods of drums' disposal).1 Continental subsequently ar-
ranged with Young Refining Corporation (Young)--owned
and operated by Dr. C.B.F. Young (Dr. Young)--to store
CWM's drums at Young's Douglasville, Georgia facility until
Continental could arrange for the waste to be sold, repro-
cessed for sale, incinerated or buried. Between July 1973
__________
1 CWM may or may not have recommended to Continental that it
solidify and bury only about 153 to 182 drums of the chemicals.
CWM states in its brief that it "recommended that only about
10,000 gallons of [chemicals] be solidified and disposed of in a
landfill" and that "that amount would fill about 182 55-gallon
drums." Br. of Appellant at 7 (citing Trial Ex. 4). Along the same
line, CWM's inventory of May 10, 1973 indicates that Henry
Schultz, an employee at the Barnwell facility, recommended to
CWM that 153 drums of waste be solidified and buried. See JA 33,
54-55. The record, however, is silent on whether Schultz's recom-
mendation was ever passed on to Continental.
and February 1974 Continental transported from Barnwell to
Douglasville approximately 1,649 drums of chemical waste.
Although Young incinerated some unknown portion of the
waste in the 1,649 barrels at the Douglasville facility, much of
it could not be burned because it lacked sufficient BTU value
or contained water. Moreover, the waste emitted a noxious
odor when burned and, as a result, the Georgia Environmen-
tal Protection Division (EPD) objected to its incineration.
Thereafter, Young halted incineration. According to the
parties' stipulations, "Continental's and Young's records indi-
cate that on or about September 26, 1974, Continental ad-
vanced Young $10,000 to move drums" containing waste that
could not be incinerated or reprocessed "at a rate of $12 per
drum to Young's Borden Springs, Alabama facility." JA 35.
Dr. Young's deposition testimony indicated, however, that few
if any of the drums (833 or so, if the arithmetic holds) made it
to Borden Springs. In early March 1976 Dr. Young arranged
with one Bartlett Hulsey to transfer chemical waste from the
Douglasville facility to what Hulsey claimed was a "licensed"
disposal site. According to Dr. Young's testimony, Hulsey
stated that he would be willing and able to dispose of CWM's
drums, all or most of which apparently remained at Young's
facility:
Q: [Y]ou reached an agreement on a specific figure?
A: Yes.
Q: And how many drums was he going to dispose of for
you?
A: I don't remember a specific number. He said, "I
can dispose of those drums for you." We had them off to
themselves sitting on the ground in the back of the
plant....
Q: How many drums were there?
A: Where? At our plant?
Q: Yes, there at the plant that you had gotten from
[CWM] and Continental that Mr. Hulsey was going to
move for you?
A: I would say that I've accounted for as many as, oh,
1200, 1400 drums, and maybe as high as maybe 1800
drums.
Q: And was it your understanding that Mr. Hulsey was
going to dispose of all of those drums?
A: To the best of my knowledge, that was the agree-
ment. He said, I can take care of these drums for you.
And we made a deal.
JA 244 (quoted in CNSI, 139 F. Supp. 2d at 40).
The Basket Creek Site--a ravine located along Basket
Creek Road in Douglas County, Georgia--was owned in the
1970s by Lee Wallace, who operated it as an unlicensed
landfill, permitting various entities on numerous occasions to
dump waste materials into the ravine. The ravine itself is
aligned in a north-south direction and slopes downward to-
ward the south. As it deepens toward the south, the ravine
widens; in the 1970s the south end of the ravine terminated
at a dam of tires and soil.
On March 17, 1976 two tractor-trailer rigs owned by Hul-
sey transported approximately 160 drums (about 80 in each
trailer) the twenty miles from Young's Douglasville facility to
the Basket Creek Site. At approximately 9:45 p.m. Douglas
Daniell--the Douglas County Supervisor of Environmental
Health--arrived at the Site in response to a nearby resident's
complaint. There Daniell saw Hulsey's two rigs--one of
which was already empty--along with four men, including
Hulsey. In addition, Daniell observed approximately 80
drums in the ravine, some of which had broken open and
others of which were being crushed and covered by a bulldoz-
er. Daniell told the men at the Site not to dump the
remaining drums and to wait there until he returned with the
sheriff. When Daniell returned, the empty tractor-trailer and
the second tractor were gone; the second trailer, still contain-
ing approximately 80 drums, remained at the Site. On March
18 Georgia EPD officials inspected the Site and confirmed
that approximately 80 partially covered drums were in the
bottom of the ravine. On March 21 Jack Hunnicutt of the
Alabama Department of Health reported to the Georgia
officials that Young's Borden Springs facility contained ap-
proximately 1,000 drums. By October 1976 the Site was
closed and all of the drums and tires at the Site had been
covered with dirt to prevent future dumping. For a number
of years following the Site's closure, Daniell inspected the
Site periodically and never detected any additional disposal of
55-gallon drums.
In 1990 the EPA began investigating the Basket Creek Site
in order to determine whether an environmental response
under CERCLA was necessary. On April 11, 1991 it issued
an administrative order pursuant to CERCLA section 106(a),
42 U.S.C. s 9606(a), stating that it had determined "condi-
tions at the Site may present an imminent and substantial
endangerment to the public health or welfare, or the environ-
ment due to the release or threat of release of hazardous
substances." JA 40. The order named CWM, Continental,
Young and Hulsey as respondents and directed them to, inter
alia, "excavate overlying soils and remove buried drums,
sample and analyze drum contents, arrange for the proper
disposal of drum contents, sample soils in the drum burial
area, properly treat and/or dispose of any contaminated soil,
and restore the Site to its original condition." Id. Continen-
tal, Young and Hulsey all denied liability and failed or refused
to assist in performing the cleanup the EPA had mandated.
CWM denied liability as well but notified the EPA that it
would cooperate by performing "reasonable removal actions
at the Site." JA 41.
Ultimately, CWM remediated the entire Site, incurring
expenses of $7,660,315. Pursuant to CERCLA section
106(b)(2)(A),2 CWM petitioned the EPA for reimbursement in
the amount of $2,557,989--cleanup costs it asserted were not
associated with the 80 drums. See CNSI, 139 F. Supp. 2d at
__________
2 Section 106(b)(2)(A) provides that a party that has complied
with an administrative order to clean up hazardous waste may
"petition the President for reimbursement from the [Superfund] for
the reasonable costs of such action, plus interest." 42 U.S.C.
s 9606(b)(2)(A). The EPA serves as the authorized delegate of the
President in CERCLA matters. See Exec. Order No. 12,580.
34. On April 29, 1996 the EPA's Environmental Appeals
Board (EAB) rejected CWM's petition for reimbursement,
concluding that CWM was jointly and severally liable for the
entire environmental harm to the Site and, consequently, for
the entire cleanup cost. Still seeking reimbursement, CWM
timely filed an action in the district court pursuant to CERC-
LA section 106(b)(2)(B).3
On January 9, 1998 the district judge to whom CWM's case
was initially assigned4 appointed a special master pursuant to
28 U.S.C. s 636(b)(2). In his report of September 2, 1999 the
special master concluded that CWM had failed to exhaust its
administrative remedies by neglecting to advance its geo-
graphic divisibility argument before the EAB and that, ac-
cordingly, it was precluded from raising the argument in
district court. In an effort to assist the trial court further,
however, the special master proceeded to address the merits
of CWM's geographic divisibility claim, i.e., its theory that it
could not be responsible for cleaning up areas north of where
the 80 barrels came to rest because "the contents of the
drums could not have migrated into [those] 'uphill' portion[s]
of the ravine." JA 279 (special master's first report). While
the special master found that CWM had established that the
harm from the 80 drums was geographically divisible from
the harm caused by other sources, he nonetheless recom-
mended entry of judgment in favor of the government. "Cru-
cial to [CWM's] successfully proving that it is entitled to
reimbursement," the special master pointed out, "is the pre-
cise location of all [CWM] waste at the Site." JA 302
(emphasis added). CWM's geographic divisibility claim ulti-
mately failed, he held, because CWM was unable to "prove by
__________
3 Section 106(b)(2)(B) provides that "[i]f the President refuses to
grant all or part of a petition made under this paragraph, the
petitioner may within 30 days of receipt of such refusal file an
action against the President in the appropriate United States
district court seeking reimbursement from the [Superfund]." 42
U.S.C. s 9606(b)(2)(B).
4 The original judge retired in 2000 and the case was reassigned.
See CNSI, 139 F. Supp. 2d at 34 n.9.
a preponderance of the evidence that other waste delivered by
[CWM], through Continental, to Young, did not find its way
into the Site." Id. (emphasis added).
On December 23, 1999 the district court issued a memoran-
dum opinion (1) rejecting the special master's recommenda-
tion that the case be dismissed for failure to exhaust adminis-
trative remedies; (2) holding that "[t]o the extent [CWM has]
proved the 'harm' it caused is geographically divisible from
the remaining contamination of the Site, [the] EPA must
submit proof that [CWM] contributed to other harm at the
Site before the burden shifts to [CWM] to prove that it is not
liable for those other harms," JA 340 (emphasis added); and
(3) remanding the case to the special master "for further
findings on [CWM's] claim for reimbursement," JA 341. On
remand, the special master concluded in a September 18, 2000
report that the government did not satisfy the specially
imposed burden of linking CWM "to the harm beyond the 80
drum area of the Site so as to shift the ... burden of proof
back to [CWM]." JA 343.
And so the parties returned to the district court, this time
before the judge to whom the case had been reassigned on
February 28, 2000. See JA 6; supra note 4. The district
court rejected the special master's September 18, 2000 con-
clusion, see CNSI, 139 F. Supp. 2d at 39-40, finding that "the
evidence raises a reasonable inference that [CWM] caused
harm at the Site beyond the 80 drums, thereby shifting the
burden back to [CWM] to disprove this inference," id. at 39
(emphasis added). Because CWM was unable to meet the
burden, see id., the court held that the government was
entitled to judgment. In so holding, the district court noted
that it did not need to address whether CWM was required to
exhaust administrative remedies as to its geographic divisibil-
ity claim. See id. at 39 n.17. More importantly, as we have
mentioned, the court declined to "revisit the correctness of
[the original judge's] ruling[ ] that ... the government has
the burden to produce evidence linking [CWM] to waste
beyond the 80 drums at the Site," id., because it found that
burden satisfied.
II.
On appeal CWM makes the same three contentions it made
in district court, namely (1) that it was not required to
exhaust before the EPA--and therefore could present to the
courts--its claim that the waste from the 80 drums was
geographically divisible from the rest of the waste at the Site;
(2) that it proved geographic divisibility by a preponderance
of the evidence; and (3) that the government did not carry its
subsequent burden--placed upon it by the original district
judge--of linking to CWM waste beyond the 80 drums.
Assuming without deciding that CWM was not required to
exhaust its geographic divisibility claim before the EPA, we
find that CWM has not proven geographic divisibility in any
event.
CWM does not and cannot contend that it escapes liability
altogether for any environmental harm to the Site; CWM is
plainly liable, under CERCLA section 107(a), in its capacity
as a party "who by contract, agreement, or otherwise ar-
ranged for disposal or treatment, or arranged with a trans-
porter for transport for disposal or treatment, of hazardous
substances owned or possessed by such [party]." 42 U.S.C.
s 9607(a)(3). And CWM is jointly and severally liable for the
entire harm to the Site, irrespective of the fact that other
parties may have contributed thereto, see O'Neil v. Picillo,
883 F.2d 176, 179 (1st Cir. 1989) ("Congress intended for
those proven at least partially culpable to bear the cost of the
uncertainty"), unless it can affirmatively establish some basis
for dividing the harm, see United States v. Alcan Aluminum
Corp., 964 F.2d 252, 268 (3d Cir. 1992). Under section 433A
of the Restatement (Second) of Torts--"[t]he universal start-
ing point for divisiblity of harm analyses in CERCLA cases,"
United States v. Hercules, Inc., 247 F.3d 706, 717 (8th Cir.
2001)--CWM can avoid joint-and-several liability for the full
response cost of $7,660,315 if it demonstrates (a) that "there
are distinct harms" to the Site, for some of which it is not
liable; or (b) that "there is a reasonable basis for determining
[its] contribution ... to a single harm." Restatement (Sec-
ond) of Torts s 433A(1) (1965); see id. s 433A(2) ("Damages
for any other harm cannot be apportioned among two or more
causes."); 42 U.S.C. s 9606(b)(2)(C) ("[T]o obtain reimburse-
ment, the petitioner shall establish by a preponderance of the
evidence that it is not liable for response costs....").
CWM does not maintain that there were "distinct harms"
to the Basket Creek Site. As the government points out, the
harm at issue was "the release or threatened release of
hazardous substances into groundwater," Br. of Appellees at
36 (citing JA 128-29); that harm was indivisible because
"there was no evidence that the [Site] contained distinct
pockets of waste that caused or could cause separate and
distinct plumes of groundwater contamination." Id. at 37.
CWM resorts instead to section 433A(1)'s second prong,
arguing that there is a reasonable basis for determining its
contribution to the undivided harm. Specifically, CWM
claims that those portions of the Site uphill of the drums
"could not have been contaminated by Hulsey's dumping" for
the simple reason that "liquid runs downhill." Br. of Appel-
lant at 28. CWM might well be correct that uphill portions of
the Site were not contaminated by the 80 identified drums.
It does not necessarily follow, however, that CWM has proven
geographic divisibility.
Part and parcel of CWM's burden of proving that "there is
a reasonable basis for determining [its] contribution ... to
[the] single harm," Restatement (Second) of Torts
s 433A(1)(b), is a showing that only 80 drums were dumped
at the Site. As another circuit has held, the Restatement
permits a polluter to escape joint-and-several liability for the
entire harm only "if it can meet its burden of proving the
amount of the harm that it caused. If it is unable to do so, it
is liable for the full amount of the harm." Bell Petroleum
Servs., Inc. v. Sequa Corp., 3 F.3d 889, 896 (5th Cir. 1993)
(citing Restatement (Second) of Torts s 433B(2)) (emphasis
added). In other words, CWM can prove "the amount of the
harm that it caused" was less than $7,660,315 worth of
cleanup costs only by demonstrating that it dumped no more
than 80 barrels. Accordingly, although the district court
declined to "revisit the ... ruling[ ] that ... the government
has the burden to produce evidence linking [CWM] to waste
beyond the 80 drums at the Site," CNSI, 139 F. Supp. 2d at
39 n.17, we conclude that the ruling was in error. The special
master correctly held in his first report that the burden was
CWM's to bear, see JA 302; it should not have been shifted to
the government thereafter.
Whether CWM has carried its burden is a question of law
that we review de novo. See Bell, 3 F.3d at 896 ("The
question whether the harm ... is capable of apportionment
... is a question of law." (citing Restatement (Second) of
Torts s 434(1)(b))). On the record before us, see supra Part
I, we agree with the district court's conclusion that CWM
"cannot prove by a preponderance of the evidence that [it is]
not liable for any additional waste" beyond the 80 drums.
CNSI, 139 F. Supp. 2d at 39.
True, in attempting to account for all of the 1,649 drums it
arranged to have Continental ship, CWM cites several facts
which together bolster, at least theoretically, a conclusion that
it dumped no more than 80 drums: Continental's and Young's
records could support an inference that approximately 800 of
the 1,649 drums were to be shipped to Young's Borden
Springs, Alabama facility; CWM's May 10, 1973 inventory
could support an inference that CWM recommended only 153
to 182 drums be solidified and buried in a landfill, see supra
note 1 and accompanying text, and that the 153 to 182 drums
were the same drums in Hulsey's two rigs on the night of
March 17 and were the only drums to be dumped, see CNSI,
139 F. Supp. 2d at 32 (Hulsey "transported approximately
160 drums ... from Young Refining to the Basket Creek
Site" (emphasis added)); and, finally, the parties' stipulation
that Young incinerated at Douglasville some unknown portion
of CWM's waste could support an inference that it in fact
incinerated the approximately 700 drums of waste remaining.
The foregoing chain of possible inferences, however, is
insufficient to satisfy CWM's burden of proof under the
Restatement and under CERCLA. CWM's theory of the
evidence turns on one crucial but unproven assumption--
namely, most or all of the drums Hunnicutt counted on March
21, 1976 at the Borden Springs facility were CWM's. With-
out establishing this assumption as a fact, CWM cannot show
(and we cannot conclude) that its drums ever made it to
Borden Springs, whatever Continental's or Young's records
might indicate. Moreover, CWM's theory crumbles under
the weight of even a few countervailing facts: Dr. Young's
deposition testimony suggests that all of CWM's drums were
to be dumped at the Basket Creek Site; the fact that the
same types of hazardous substances that came from CWM's
drums were found all over the Site, not only in the southern
(downhill) portion, suggests that CWM drums--beyond the
acknowledged 80--were dumped into northern portions of the
Site; and the fact that Young halted incineration when the
Georgia EPD objected to the noxious fumes from CWM's
waste suggests that Young may not have incinerated all 700
of the "unaccounted for" drums.
In short, while CWM produces some circumstantial evi-
dence to support its theory of geographic divisibility, it has
not managed the "very difficult proposition" of proving its
theory by a preponderance of the evidence.5 Hercules, 247
F.3d at 717; see Restatement (Second) of Torts s 433A(2)
cmt. i (noting difficulty of apportioning certain kinds of harm
and cautioning against "arbitrary apportionment for its own
sake"). Accordingly, the district court's denial of CWM's
request for reimbursement is
Affirmed.
__________
5 Nor has CWM convinced us that relief is warranted based on
the alternative ground that the government's "delay in responding
to Hulsey's dumping denied CWM the ability to defend itself
against [the] EPA's accusations" and thereby denied it due process
of law in violation of the Fifth Amendment to the United States
Constitution. Br. of Appellant at 39 (capitalization altered). As the
government points out, CWM's due process claim "is premised on
the patently erroneous suggestion" that the EPA could have noti-
fied CWM of its potential CERCLA liability in March 1976, i.e.,
before CERCLA was even enacted. Br. of Appellees at 54. Fur-
thermore, only about one year elapsed between the EPA's 1990
investigation into Douglasville residents' complaints about drinking
water and its issuance of a cleanup order in April 1991; thus, CWM
cannot even show governmental delay, much less delay so extended
that it implicates due process.