ELR Citation: ELR 20877
No(s). CV 91-0589-RJK (C.D. Cal. Sep 28, 1993)

The court holds that several oil companies that are the successors in interest to companies that generated acid sludge byproducts while producing aviation fuel during World War II under contract with the United States, and the current owner of part of the sludge disposal site, are liable under §107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for past and future response costs the United States and California incur at the site. The companies that generated the sludge contracted to have it disposed of at the McColl site in Fullerton, California. The current owner purchased part of the site in 1980, after which the sludge began to seep up through the ground. The court first holds that the oil companies and the current owner are liable for the governments' response costs. First, the McColl site is a facility under CERCLA §101(9), as it contains hazardous substances, including benzene, toluene, xylene, arsenic, sulfur dioxide, hydrogen sulfide, and tetrahydrothiopene. Second, the dumping of the sludge at the site and the sludge's seeping from the ground into the environment constitute releases or threatened releases of hazardous substances. Third, the government has incurred response costs at the site. Fourth, the oil companies' predecessors generated the waste and arranged for its disposal, and the current site owner owns and operates the site. The court next holds that the oil companies are not entitled to CERCLA §107(b)(2)'s "act of war" defense. Relying on CERCLA's structure and purpose, its legislative history, court decisions, and international law, the court holds that since the government had the oil companies produce fuel pursuant to a contractual relationship, and did not seize their facilities, the waste generation was not an act of war. Further, the government's purpose in acquiring and regulating production of the fuel was to supply the military, not to directly injure or weaken the enemy. Nor were the U.S. government's activities a use of force against the enemy. The court holds that the oil companies are not entitled to the "third-party" defense because CERCLA §107(b)(3) expressly precludes that defense in the presence of a volitional contractual relationship. The court also holds that the owner is not an innocent landowner as defined by CERCLA §101(35), because the owner knew the substances were present. The court next holds that retroactive application of CERCLA in this case does not violate the Due Process Clause of the U.S. Constitution's Fifth Amendment, and that imposing liability on the defendants does not constitute an unconstitutional taking in light of the statutorily provided right of contribution. Finally, the court bifurcates the defendants' counterclaims and cross-claims from the remainder of the cost recovery phase and stays those claims pending completion of the cost recovery phase.

[A prior decision in this action is published at 22 ELR 20791.]

Counsel for Plaintiffs
William A. Weinischke, Kathryn Schmidt
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Peter R. Taft
Munger, Tolles & Olson
355 S. Grand Ave., 35th Fl., Los Angeles CA 90071
(213) 683-9100