in two prior cases in this court shell and cadillac the government was allocated one hundred percent of the cleanup costs and its contractors who actually operated the sites were allocated zero percent and that was because the cleanup was properly seen as part of a national war effort that society as a whole should bear the contractors complied with all industry standards and filled government contracts to specifications and the government was aware of the processes that led to that the government was a tension and certainly did i mind can play oriented when this thing was tested first but go ahead just keep your voice up ok the process is the government was aware of the processes that led to the contamination that was the third in the the list of things that i was talking about before and the district cour opposite allocation in this case can't be reconciled with shell and cadillac because the those same facts that drove the decisions and shell and cadillac are also present here but the count of the fact well there may be some distinctions every case is slightly different but on the core facts that led to the one hundred to one hundred percent allocation to the government in shell in canada lack those same core facts are present here and that is again this was war time production for essential military equipment the contractor was found to have complied with all industry standards and to be filling out the government's contracts as specified the government specifically required the particular chemicals to be used in the operations that now have to be cleaned up and the government was aware of the operation that led to the contamination now on those facts all of which were present and shell and all of which were present cadillac and are present here only as a similar allocation would be appropriate the district court got it wrong and led to an upside down allocation because the court made two fundamental errors and the first of which is that the court applied an improper presumption against allocating cost to the government out of concern for burdening the taxpayers with the cost of the cleanup and as a result of that presumption the court formed the scale in favor of the government and against t t y throughout the opinion but that presumption is improper because  specifically state requires that when the government is a responsible party it should be treated sort of what's the it was the second here just for you two for well the second error is that the district court held that even though the government was liable as an owner of facilities of the site the government shouldn't be allocated any of the cleanup costs because the government didn't operate any of the facilities that it don't that can't be squared with circles underlying policy that both owners and operators can be responsible parties and liable for response all the shell and cadillac cases tell us is that even though both parties have liability under one hundred one zero seven hundred one thirteen you can still have one hundred to zero allocation so i don't think that's that's very helpful actually i don't find either of the two errors you just identify supposed errors is very helpful at all to your case but so let me just put it in these terms i guess i'm i understand where you're coming from one hundred to zero does seem unfair in this situation but i guess what i struggled with this coming up with some kind of a legal principle that we could announce here that would do anything other than just i guess say to the district court hundred hundred to zero can't be the number go back and try again and that doesn't seem very satisfying either given the the broad discretion the district court has so what is the legal principle that you would have us articulate to explain to the district court i guess what needs to be done differently if we were to send it back well that's a good question and the legal principle and what's underlying this appeal is that shelling cadillac provide benchmarks district courts do have wide discretion but it's not limitless and this court teaches in cadillac and in shell that by the way p c fees weren't required at least according to the briefing by the government specifications i think the other two were but the government was dramatically more involved in those cases right after the last twenty years in this particular case a six government didn't own equipment but also for the last twenty years they're right that p c p s weren't required up you're correct the p c b is weren't required p c b s d were present however in the facility of the equipment that the government owned and supplied for use at the site i think it's different than what you said earlier so if we're talking about the circumstances and that really is your thesis in response to judge white for its questions at that these two cases provide a benchmark because the circumstances are so similar and my concern is i don't think they're similar so i'll get out of specifications requiring exactly how this a critical military equipment needed to be made and they had observers on site and auditors who were able to observe and this is undisputed that they observed all of the practices going on at the  facility while they were constructing the planes for the use in the military effort and also that the government could have controlled and did approve all of the manufacturing processes that went on at the site you're contesting the abuse of discretion standard by what we're not contesting that that's the standard and while there are differences right for example the one that you just mentioned right the main difference there is  that in canada i can in shell everybody was aware that the by products that were being produced were were hazardous the difference here is that actually nobody none of the government nor t d y the time they were released was aware that the products were hazardous but that's not a it's certainly it's it's it's notable and perhaps very surprising since frankly is that the government was surprised by the result it's not really what they argued for nevertheless here it is and and what's your mitigation or minor adjustments to the allocation that the court already found was proper in shell and cadillac fairview that's one hundred percent of the government so if there are particular facts to distinguish this case from cadillac and shell then each one of those facts would have to be considered and would have to be evaluated to determine whether there should be some kind of a downward adjustment of the government's allocation but that's not what the court did here instead the court went all the way to the other side of the scale and the court presumed because there was some you know underlying policy of  not burning taxpayers that the government should pay zero yes it's unfortunate you've repeated that that different because i just think that's flatly wrong that obviously the rationale for the district court ruling was that it thought the most significant factor to be thrown into this mix of you know hundred different considerations was that the actual direct cause of the contamination occurred basically on the watch of your client that that the realm of within the plant operations you know that actually led most directly to the can contamination were solely within your client's responsibility and not the government so that was me is the linchpin of the dish records analysis i could see how the court might have come out differently but i'm i'm having a hard time coming up with a legal principle that would allow us to tell the district court no one hundred to zero is absolutely forbidden in this situation well that's error first because it's completely inconsistent with shelling cadillac which speak to this directly the government argued in that case as well that the operators in that case had direct responsibility for actually performing the disposals in that case but that's nothing new well operators are assumed that that's what operators do is they are the ones who are actually on site performing the operations but just because that's the case doesn't absolve owners of responsibility under circle otherwise circle wouldn't include owners as a responsible party only operators would be liable and the court further erred by assuming that just  operator is actually the one who is on site actually fulfilling the contract and performing the operations that that amounts to fault and characterize the conduct in this case as compared to fault one when it's not in fact that the district court's findings of fact preclude any finding of fault by by t y in this case and there is no finding of fault possible because t d y complied with all industry standards as they changed over time not talking about fault negligen he was just talking about under whose responsibility did the activities that caused the contamination occur it looked at the full range of the government's conduct before range of your client's conduct and said as between the two of you the things that actually cause the contamination were within your client bailey were not the government's that's that's all the court was saying and again i just mean if you've got an answer i'd love to hear it as right legal matter that doesn't strike me as forbid and so why wouldn't we say you know we might have come out differently ourselves on this but the district or didn't abuse its discretion but because a legal matter that that's an arbitrary distinction if there's no fault on either side what's in that material distinction to say that one party was responsible for actually performing operations whereas the owner that contracted for those operations to be performed didn't actually do them right that's an arbitrary distinction the government because the equipment it doesn't that speak directly to the court factors she  contracts out and the government caused this contamination to the same extent because the government would have been contracting ford and constructing these these military equipment no matter what i did to you i was going to do it or some other contractor was going to do it or the government would do it itself it needed this for the war effort and because of the industry standard practices of the time were followed that means that whoever performed these operations the same kind of releases would have occurred because the same processes would have been  is making a finding after it was a twelve day trial that your client was infinitely more involved in the operation which i cooperate getting infinitely more involved in the operations and i'll grant you that i think two of these substances were required by the specifications one was not but nevertheless during the seventy's there were this was again it's a strict liability statute so it's not a question of fault but there was certainly a an awareness in the seventies that as these came on sequentially as has out i'll just say hazardous substances under various pieces of legislation that it was your client who was involved in how the stuff got drip leaked or contained or disposed of right well right and of course because when you say the government was just as responsible you're using a but for causation i think kind of kind of hearkening back to a tort theory that because they let the contract they're responsible is that your argument well yes i mean to the same extent as i understand it owners and operators are responsible for the prior judge found and there is no change that the government is an owner now i don't quite understand why you're going for a fifty fifty or whatever  as i understand you your argument is that it can't be one hundred percent well are you arguing that this is a is in irani as interpretation the law or that the findings made were clearly erroneous which basis are you making your argument i'm not arguing that the findings were clearly erroneous i am arguing that they're not doing that the findings were clearing of them and i'm arguing that the conclusions that the court drew from them are were  because the district court found that t y complied with all of the industry standards that it was not negligent but there were no willful discharges and that the government observed and was aware of all of the processes that led to the contamination the district court found that this production was necessary for the warfare war effort that it yielded substantial benefit to the government and its were fighting capacity not just in world war two all certain although certainly then but in every major engagement sense and in all the court just report also found quite clearly that the contamination at issue for which he was seeking reimbursement is contamination that occurred starting in one thousand thirty nine and either ending completely or tailing off in the early seventy's with the passage of the clean water act as this court finds that there was contamination going on but the district court found that the government's hands were not on it that is they may have asked to have these  fluids used but they were the not the ones that drive the fluids on the floor so if you're trying to get ownership responsibility as i understand how do you argue that the district court was wrong in the found was that in the ordinary course of manufacturing operations sometimes there would be drips on the floor work that they got that your client well right but just as in cadillac and just as in shell of course the contractor actually performed those operations that's that's the contractors job if the government was going to do it itself it wouldn't contract with the contractor to do it but because of this kind of release that's just ordinary in the in the course of regular main factoring operations necessarily is going to occur then the government was aware of that the government of served it as it was occurring and so that as a company our common factor and it was one of the key factors in shell and in cadillac that warranted allocating a substantial did they with that has to go with with what percentage of fault but if an owner if a person is an owner what difference does it make who's the one who actually carried the contaminants to the wrong position well if i understand you correctly eventually correctly i think it shouldn't matter at all who actually was directly responsible to use the courts words for for the   that the government was known or it was found before the current district judge had it wasn't touched and so i just don't understand how we have to parse through the rest of this that the owners liability owners libel that i don't see anything in ownership that has to do with you you're the person who disposed of the contaminants well that's right your honor i mean once you're liable as a responsible party it generally is presumed that you'll be allocated some amount of the cleanup costs  but here it's not just some right here there were specific factors that the court had previously found warranted allocating a hundred percent of the cost of the government a percentage should be in this case it the right answer is the legally permissible outcome is one hundred zero the other way no no so what's the number you want us to tell or say or you don't want to say well below we are going for ninety percent because that is what the parties contracting history indicated they had previously determined was reasonable because the government had reimbursed up to ninety percent of the response cost up to that point we were to write an opinion in your client's favor what is it that you wanted to say exactly if the court should vacate the opinion  it please the court good morning your honor is my name is rachel hare and on behalf of the united states i'd like to start in if i may with a series of questions that judge wallace was asking towards the end of opposing counsel's presentation  with regard to why we're even interested in what the allocation here is given that the government was an owner and the government of course does not contest that it was found liable as an owner under section one of seven of circle in this case however it is well established that under section one thirteen of circle when you get to this next step of we know all the parties that are potentially responsible under one of seven and we have the district court decide as a matter of equity who should actually bear shares it is permissible and in fact has happened in numerous cases including in cadillac and shell your argument is the allocation is really issue the government is on the hook but is because it's an owner and that's that's a fact in the case and the only question is is the government have any responsibility for what happened so that the court was were compelled to file follow another case which was a district court case can you name one case with or in any of these cases that we've had now for by the turn can you name any one case where the government has ever go concern was who was approached that they would be very concerned and they were speaking for us the court would be very concerned if the government ever ever came in with zero percent now this is that case now why is that why is it that we were wrong in cadillac that it would be that it is inconceivable and we would be concerned if it came in was zero there must be something wrong or i don't think that the court was wrong in cadillac but i don't think that that's what the court actually held in cadillac what the court was doing in cadillac was deciding whether the district court had abused its discretion in the very fact specific context and what cadillac found was that on those facts it would have had a very hard time seeing how it would have been appropriate to allocate government zero percent however as has been discussed already this morning the facts of this case art frankly they are not comparable to the facts there is how do you make this a really surprising result council at least that's my view speaking for me and i don't think the government even really argued for zero percent here i think the government might read it record as the government was prized by this result because there are two of the three of these substances that that were required by contract so what about his argument that opposing counsel's argument that when the government lets this kind of contract especially for military war effort and requires the use of what turned out to be hazardous substances that the government should be on the hook as does wallace says for some part of the bill well your honor i have a couple of responses to that the first is  as a factual matter while two of these substances were required under military specifications the district court found at several points in its opinion expressly that the releases that occurred weren't inherent in the fact that the government had asked t d y and told t d y to use these particular materials it was the result of specific waste handling and maintenance practices that t chose and that the government didn't have any say in so it's not the case that that the government's specifications and that the government's needing these products were what caused  the contamination to occur here it's not a book for cause additional grant you that and i think i telegraphed that earlier in a in a question but what about his argument that in the course of the contract contractual relationship between these two parties the government was footing the bill for some of incidental costs he's made that argument as well in the briefs not so much here to be in the courtroom because we were peppering him with questions but it's certainly in his briefing yes absolutely and your honor i think the first of all the district court didn't ignore that fact as was the case in some of the cases that t d y cites in the brief with regard to this issue the district court recognized that for many years up to one thousand nine hundred nine in fact the united states did allow t v wide to charge some of its cleanup costs as indirect costs on its contract now but the reason that the government did that was not because there was any kind of an indemnification or hold harmless agreement here that the government offered t d y as was the case in cadillac you know in cadillac discourse on that good about go so what was the reason short it was because under the general federal accounting regulation contractors to the extent their expenses are allowable a local and reasonable are able to charge them as indirect costs isn't that a pretty good indication that as a matter of fairness even the government recognize that it should put some of the i think it's cuts against you to judge walker it's point if the government wasn't contractually obligated to do this but had a course of doing that over the over the course of this particular contractual relationship i think that's what we're both getting out why doesn't that hurt the government's position here you know and i don't think it does because it was well in the first place i think that the fact that the government did contribute for so many years actually shows  why the district court's allocation isn't unfair right i think for many years the government was already footing a large part of this bill here now under the far the federal accounting regulation there is no representation or understanding between the parties that the government would consider continue to do that at a time when the contractor in question was no longer working government contracts so they're well well maybe i'm misunderstanding the kinds of expenses the this understanding from getting this wrong the government itself has already recognized his prior dealings that you know we're not can we didn't contractually agree to indemnify you so we're not on the hook for this necessarily but as a matter of fairness we kind of recognise that you were helping us and this was critical of the way all those considerations that that's what caused the government to nonetheless pony up and then nowhere sure so i don't think that that's the i don't think that's a fair interpretation of what the government does when it allows contractors to reimburse contracts under the federal accounting regulations it's not in those situations that the government is saying you know you are doing things for us and we recognise we had a hand in that the question is simply right now you are a contractor on this current contract have some indirect expenses that you are pain and we will cover some of those indirect expenses and that is just the general practice there's no there right you've incurred these cleanup costs because you were doing work for us that we really needed you to do and we kind of recognize that yeah as between the two of us maybe we ought to contribute something his what other  would simply for i think it's just it's a contractor or relationship and my understanding your honor is that there's no sort of requirement when those alec when that payments are made or when these costs are able to be bil under the far that it has to have been that those paper that those expenses were incurred in the course of some past government work it almost writes me that the government's position now is that even though the government saw fit to pay maybe ninety percent of these cleanup costs as they were incurred as they sort of dribbled out that now now the government's position is really a function of when the final bill became due because this much larger liability from the very same activity sort of the shoe drops later and i don't is that what you're saying you know well how do we distinguish thanks i'm now i'm really struggling with this council sure sure so let me try to take a step back on on this particular issue and explain that under the federal accounting regulations there is an ability of contractors to have indirect expenses that arise in the course of whatever contract they're currently working on paid that's the part we understand forgive me that's the part winder stance so why isn't this final bill so to speak i'm paraphrasing but it's liability associated with with executing that contract that you're referring to why is that not fairly included because under the far the is it because the contract was done yes that provoke a so ok so then turn the page now we're talking about application of the gore factors why was it not because he's go in his one minute and he wants me to to he's going to want to address why it was not an abuse of discretion for the for the trial court to have consider that given that history that some percentage of actual liability should have been imposed upon the government because i think you have to take that history in context and that history there was not an agreement from the government that said we are going to we think that we're responsible and we're going to pay this going forward it's said while you are doing contracts for us expenses that arise whether those are expenses that occurred in the past government contracts or just general operating expenses that you run into some of them can be charged to this contract there's no agreement going forward that the parties can infer in terms of any future course of conduct and i think you know not to belabor cadillac but i think that that's really what sets another area and i've still bothers me how the discord addressed the shellac cadillac cases outliners we don't have to pay attention to them we're going to look at the district court cases i would like to have you turn your attention to sheldon cadillac is i understand in reading especially cadillac that this is sort of a patriotic approach i mean everybody is at risk i mean you just can't take history away when ryan aeronautical was building these things we had already been invaded for the first time since the revolution the united states have been attacked and they wanted everything to move towards defending the people and both of the show that now we in in the district court's opinion that's sort of right a case but that the theory behind it is that the government is going to have to to come up and take a fair share because of what they are requiring people to do i don't see how you can just go zero percent without better facts in this consent if if they got one percent the government would show something but this is showing a complete disregard of showing cadillac i'm not sure that i'm not sure that's right  doing a better job i also don't think that it's at least as i read the district court's opinion that they were sort of simply saying that these are outliers and we're going to go with these district courts i think what it was saying was that i think what they were saying that the what the district court excuse me said was that the facts of cadillac and shell are are extremely far from the facts of this case and i take your point that there is language in both of those opinions about war effort and about you know there's a certain fairness that the court in those that the district courts in those cases thought militated in favor of the government having a substantial share in those cases but i want to point out your honor that it those cases weren't simply craftin broad rule about war effort they were finding how the particular facts of those cases how the war effort played out on those facts and here you know there's been discussion of the fact that that of the facts are different in this case in those cases but i want to specifically focus on ways that the kind of nature of the war effort at issue was different and please don't misunderstand i don't i don't understand your point rhiannon are not a cause involved in world war two i can guarantee you that absolutely no question your honor and we don't mean in any way to to downplay the importance of the products that t d y and ryan created throughout this contract is this process there was some contamination so the government doesn't even really responsible for one percent of that in light of shell and cadillac which were disregarded as out writers well because in cadillac and shell they've as you know the discussions in those facts make clear that the manner in which things were disposed was part of the war effort there was a huge amount of waste that was generated to meet the government's needs and because of the resource constraints of the war and because of the way the government was insisting that these plants be run it was inherent in those cases and what the government was requiring them as nearly half a century with with for international wars that we were involved in with this organization and it's a big deal and you know doesn't bother  district court talks about the taxpayers shouldn't have to pay well your honor i don't think that the the the district court really only invokes the taxpayer at one point and that's when they are rejecting an invitation from t d y to craft a default that go trillions of dollars in debt and isn't the bringing in the taxpayers as a reason for not giving anything to to the government to compile is not somewhat troubling well i don't think it is your honor because i don't think that the court put i think the court was simply explaining that it is a purpose of circlip to not burden the taxpayer views of the responsible parties now here the government was the response and there was in the district court off on that because there is no evidence the taxpayers are going to pay for this the government will but the government knows where to get the money they have the printing press your honor i'm i think that course interpretation of r k use of shell and cadillac shows very well by the taxpayer and the rest of that language that maybe it was a question of failure to follow the law your honor i don't think it was because i think the facts of this case are so different from cadillac and shell not only with regard to the role that the government had on the site but with respect to the findings that the court made that you know the particular and disposal and maintenance practices that caused the releases in this case weren't inherent in produce in fulfilling these contracts for the government they weren't even some things that the government particularly benefited from they were just decisions that were made by d y in the course of this dealing that themselves didn't have a particular effect on the war effort and i think that makes this case extremely different from cadillac and shell where the disposal was in fact part of what made production at the level in question and at the cost in question possible page forty six and forty seven the judge district court talked about this history the judge wofford and i called her attention to the government paying for some of these expenses and this is where she uses the analogy about the paying for the oil change a consumer who pays a business recycling fee as part of an invoice of his car's oil changes not acknowledging responsibility for the read mediation expenses so if i can get you to go back again i want to make sure that i'm understanding the the nature of the charges what it was paying for and that that ninety percent as as the contracts were being executed were those the cost incurred to clean up the site or with those costs incurred to dispose of these substances as they as the as the contract was being executed i believe they were the cleanup costs i can see from your expression that your that that you're troubled by that but you know i'm really troubled by that because i think because i think well is this the only place that district court cop talked about why that was not a one of the most important factor here she seems to be treating that ninety percent as costs of of disposing of substances as the contracts are being executed as opposed to a cleanup cost i think that what's important there your honor is that it's not is that it's costs of cleanup that occur as the contracts are ongoing i don't think that the district court was drawing a distinction there between or was confusing these with sort of the costs that it would take to to dispose of the stuff in the first instance it's simply a question of when there are costs incurred but right here what she's talking about in this analogy that i called your attention to is and you know this well because you probably read it one hundred times but it's that it's quite qualitatively different in my mind to talk about the cost of disposing the oil from a car's you know loop change because that's the cost of of executing the contract i think that she talks about a recycling expense right that's quite different than a cleanup cost and my understanding from what you're telling right now is that the ninety percent again i'm sort of using that estimate that the government paid on an ongoing basis was a clean up cost not ate something that could be analogized fairly to a recycling cost of doing business it was a cleanup cost your honor but it was a cleanup cost of doing business it was a bit it was right the t t y was under these orders from the state in order to continue to be able to go forward and use the site it needed to pay these expenses that go along so the government paying those expensive really just allowed production it was a it's a manner of the government allowing production to continue at the site and i see that i'm out of time your honor but if i could just say one other thing about that analogy and that is that i think that while you're right that the recycling fee is not exactly on point here i think that it's important to keep in mind that the analogy to the government the customer isn't wrong here because the government's primary role at this site was the customer and customers are not liable under circle the only huck for the government's liability in this case is the ownership of some pieces of equipment prior to nine hundred seventy nine yes but it's just well it says that's what's not on appeal the government's a potential responsible party so we've got that absolutely no one was just question of where you sit out just on the point you just raise so when a district court is doing a one thirteen hour cation analysis is it limited to facts that relate directly to the basis the underlying basis of that party's liability or can it take into account other considerations and i'll just i'll tell you i'll telegraph exactly what my concern is i guess i could see how the zero one hundred allocation of the discord may here might make sense if the government hadn't required the use of any of the chemicals that eventually cause contamination right if the government is the basis for the government even being in the one thirteen pool was simply that you know we owned a tank that's out there and that's all we did on these facts if that's all they got if that was the full extent of the government's involvement i could see giving one hundred percent a liability to the contractor but so what i'm wondering is given that the thing that in my mind makes the government have some culpability here is that the government required the use of some of the harmful chemicals that of course doesn't relate in any way to the one of seven why the only determination nonetheless does the district court sort of have to take into account non one zero seven tied why the only consideration then i would say that the district court certainly can it has discretion to take into account those considerations but at the same time i think it certainly wouldn't be an abuse of discretion for the court for the court to weigh more heavily and to keep in mind that some of those facts are far afield from what creates the liability in this case thank you counsel your way over time could you please to put two thank you just a few points below t v why are you for a ninety percent allocation to the government because that was what the government had been paying up to the point under the parties contracts and that shows that that is a fair allocation and that's what the government expected to pay specifically for circle of cleanup costs that is what was being passed along cleanup costs under circle ordered by the state of california relating to this specific contamination p c b is the chlorinated solvent and chromium contamination ninety percent is also consistent with shell and cadillac which even if not the same even a slightly different they're not a hundred percent different from this case which means that aid zero percent allocation to the government from a one hundred percent is not an acceptable allocation it's not something that we should be within the district court's broad discretion that discretion must be constrained in some way including by precedents at the very least a fifty fifty allocation would be acceptable based upon the fact that the all you need is an abuse of discretion ruling o misapplied or missed the factors showing the government's knowledge and benefit from these operations and discounting the contracting history between the parties and not figuring that into the allocation whatsoever