F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

TDY H O L D I

N G S , L L C; TDY I N D U S T R I E S , L L C, Plaintiffs-Appellants
,

v

.

U N I T E D S T A T E S O F A M E R I C A ; U N I T E D S T A T E S D E P A R T M E N T O F D E F E N S E ; A S H T O N B

. C A R T E R , in his official capacity

as Secretary

of Defense, Defendants-Appellees. N o. 15-56483

D.C. No. 3:07-cv-00787- CAB -B GS

OPI NI ON

Appeal from the United States District Court for the Southern District of California Cathy Ann B enciveng o, District J u dg e, Presiding

Arg ued and Submitted May 8, 2017 Pasadena, California

F iled October 4, 2017

B efore: J . Clifford W allace, Morg an Christen, and Paul J . W atford, Circuit J udg es.
Opinion by

J u d g e Christen; Concurrence by J udg e W atfordT DY H O L D I N G S V

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N I T E D S T A T E S 2

SUMMARY *

CERCLA

The panel reversed the district court’s judg ment in favor of the Uni t e d States in a n action broug ht by a p laintiff military contractor under the Comprehensive Environmental Re s p o nse Compensation and L iability Act (“CERCL A”), seeking c ontribution from the g overnment for its equitable share of the c leanup costs o f plaintiff’s aeronautical manufacturing

plant located in San Dieg o, California.

CERCL A imposes strict liability on potentially responsible parties (“PRP”) f o r t he c leanup costs of an

e n v ironmental haz ard. Plaintiff and the federal g overnmen t

were PRPs for the c leanup at issue, and plaintiff argued that the district c ourt abused its discretion when it allocated all o f the cleanup costs to plaintiff.

The p anel rejected plaintiff’s sug g estion t h a t the district
court err e d by misconstruing the concept of “fault,” o r

m i s u n d erstanding CERCL A’s strict l i a b i l i t y s t a t ut o r y s c h e m e

. The p anel further held th e district court did err, however, in its analy s i s a

nd application o f the two most on-point decisions – United States v. Shell Oil Co.
, 2 9 4 F .3d 1 045 (9th Cir. 2002), and Cadillac Fairview / C a l i fornia, I nc. v

. D o w Chem. Co.
, 299 F .3d 1019 (9th Cir. 2002)

– t h at considered how CERCL A cleanup costs should be allocated between military c ontra c t o r s and the federal g overnment. The panel held that the district court erred in concluding that

* T h is su m m ary co n stitu

tes n o p art o f th e o pin io n o f th e co urt. It h as b eenp rep ared b y

co urt staf

f f o r th e co n v en i en ce o f

th e read er.T DY H O L D I N G S V

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N I T E D S T A T E S 3

Shell Oil and Cadillac F

airview w ere not comparable, and in allocating z e r o p e rcent of clean-up c o sts to the g overnment, particularly in lig ht o f the parties’ prior course of d ealing s and the g overnment’s requirement that plaintiff u se tw o o f the haz a rdous chemicals at issue. The panel remanded for additional proceeding s.

J udg e W atford concurred. H e ag reed that the record did
not support allocating 100% of the clean-up costs to plaintiff, but in his view the r ecord did support something c lose to that.

COUNSEL

Randall M. L e vine (arg

ued), Doug las A. Hasting s, and B ry an M. Killian, Morg a

n L ewis & B ockius L L P, Washing ton, D .C.; J ames J

. Drag na, Morg an L e wis B ockius L L P, L o s Ang eles, California; for Plaintiffs-Appellants.

Rachel E

. H eron (arg

u ed), Dustin J

. Mag hamfar, Mark A

. Rig au, L ewis M. B arr, Ellen J

. D urkee, and A a r o n P. A vila, Environment and Natural Resources Division, United States De partment of J ustice, Washing ton, D.C., for DefendantsAppellees.

Eric B

. W olff, Alex ander M. F enner, and Mark W

. Schneider, Perkins Coie L L P
, Seattle, W ashing ton; Shane R. Swindle, Perkins Coie L L P, Phoenix
, Ariz ona; for Amicus Curiae National Defense I

n dustrial Association.T DY H O L D I N G S V

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N I T E D S T A T E S 4

OP INION

CHRI STEN, Circuit J udg e:

Plain t iffs-Appellants TDY Holding s, L L C, TDY I ndustries, L L C, and i t s p redecessor, the Ry an Aeronautical Company (collectively
, TDY), operated a forty

- four-acre aeronautical manufacturing p lant located in San Dieg o, California, from 1939 to 1999. TDY derived between 90 a nd 99 percent o f i t s business from military contracts with the U.S. g o vernment

. Over time, certain c hemical substances used in the course of manufacturing operations were released, contaminating the soi l a n d g roundwater in and around the plant and requiring TDY t o incur substantial remediation

ex p enses. I n 2007, TD Y f i led a complaint under the Comprehensive E nvironmental Response Compensation a nd L iability Act (CERCL A), seeking c ont r i b u tion f r om the
g overnment f

or its equitable share of the cleanup costs. After

a twelve-day bench trial, the district court g ranted j u d gment in favor of the United States, a llocating 100 p ercent of past and fut u r e CERCL A c osts to TDY and z ero percent to the
g overnment. TDY a

ppeals f rom the district court’s judg ment.

W e have jurisdiction under 2 8 U.S.C. § 1291. Be cause

we conclu d e the facts of this case do not justify the district court’s sharp deviation from our previous case law, we reverse and remand.

I. BACK G R OUND

A. F actual History

The Ry a n Aeronautical Company
, later k nown as TD Y
, opened a manufacturing

plant near the San Dieg o Airport inT DY H O L D I N G S V

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N I T E D S T A T E S 5

1939. During W orld War I I
, it manufactur ed aircraft a nd aircraf t p a rts f

or the war effort. More recently
, it

m anufactured aeronautical produ c t s i n c l u d i n g d r o n e s , A p a c h e helicopter components, and avionics sy stems for th e U

. S

. military

. T he site clos e d in 1999 after Northrop Grumman purchased TDY’s R y a n assets a nd moved the site’s operations elsewhere.

During the six ty y ears in w h i c h TDY operated the manufacturin g p l a nt, the United States was TDY’s primary customer; 99 percent o f the work c onducted at the site between 1942 and 1945, and 90 percent of the work in the follo w i n g y ears, was done under contract with the U.S. military

. F rom 1939 to 1979, the United Sta t es also owned

some of the equipment at th e s i t e pursuant to g overnment prog r ams intended to f

inance and oversee the c onstruction and outfitting of g o vernment-owne d i ndustrial facilities leased to p rivate companies. This e quipment included drilling machines, an electrical substation, vapor d eg reasers, and transformers.

Three haz ar d o us substances w ere released during the

course o f manufacturing operations, c o n taminating the soil and the g roundwater in and around the site. These substances

we r e : (1) chromium compounds used to impart corrosion

r e s istance on aluminum aircraft parts; (2) chlorinated solve n t s used to deg rease parts and tools; and (3) poly c h lorinated bipheny ls (PCB s) used to provide plasticity and durability to certain materials. I n some cases, military specifications in the
g overnment’s c o n t racts with TDY required the use o f chromium compounds and chlorinated solvents to e nsure a pro p e r q uality product. F ollowing the p assag e o f the Clean W a ter A ct and other environmental laws in the 1970s, these substances were listed a s “ haz ardous substances” requiringT DY H O L D I N G S V

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N I T E D S T A T E S 6

remediation under CERCL A. B e t w e e n the early 1 970s a nd 1999, T DY b illed the g overnment for the “indirect costs” o f environmental remediation a nd compliance w ith f

e deral a nd
state environmental laws, including costs incurred cleaning
up storm drains at the plant and PCB contamination o f nearby C onvair L ag oon. The g o vernment paid these costs. After

mor e string ent standards were instituted, the California Reg ional W ater Quality Control B oard issued a new cleanup order requiring T DY to assess a nd remediate waste discharg es at the site. To comply with the order and other
state directives issued after operat ions at the plant c eased in 1999, TDY incurred over $11 million in response costs.

B. P rocedural History

The San Dieg o Unified Port District broug h t CERCL A claims ag a inst TDY in J une 2004. The United States was not

a party to that litig ation. I n March 2007, TDY and the Port District entered into a settlement a g re e m e nt p r oviding
, in part, that TDY w ould respond to the releas e of haz ardous

s u bstances at the site. On April 30, 2007, TDY file d a complaint ag ainst the United States, the United States Dep a rtment of Defense, and the Secretary o f Defense, seeking c ontribution under 42 U.S. C

. § 9613(f)(1) from the
g overnment for past and future response cost s i n c u rred b y TDY in remediating haz ardous waste released from the site. The complaint also soug ht declaratory relief e stablishing that the g overnment was wholly liable for remediation c osts. The
g overnment counterclaimed f or contribution from TDY. TDY f iled a motion for partial summary judg ment seeking a declaration that the United States was liable as a “past owner” of facilities, one of four categ ories of potentially responsible parties (PRPs) under CERC L A

. T h e district court g ranted TDY’s motion on J uly 15, 2011. TDY stipulated to its o wnT DY H O L D I N G S V

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N I T E D S T A T E S 7

liability as a PR P
, and the c ase was transferred and set for trial on TDY’s allocation claim.

The district court h eld a twelve -day bench trial on

e q u i t able allocation in April 2012. I t heard testimony f r o m twenty -seven witnesses and admitted over 1800 ex hibi ts. The district court held t h at : ( 1) TDY was liable as an owner o f facilities and t h e o p er ator of the site because it manag ed, directed, and conducted operations resulting in the release o r disposal of haz ardous waste, a nd implemented decisions
reg arding compliance with environmental regulations; a nd (2) t h e introduction of the three contaminants at issue was attributable n o t t o the g overnment b ut instead to TDY’s storag e, maintenance, a

nd re p a i r practices, as well as spills and drips that occurred in the manufacturing process.

After reviewing the totality of the circumstances, including the “ Gore F a ctors” that courts some t imes r e fer to when consid e r i ng equitable allocation o f costs, 1 the district
court concluded that the most important factors for equitable allocation in this case were “the contribution and involvement of each party i n t h e discharg e, release or disposal o f

1 T h e Go re Facto rs are: “ (1 ) th e ab ility o f th e p arties to d em o n strate th at th eir co nt

rib u tio n t o a d isch arg e, release or d isp o sa l o f a h azard o u s

w a s te can b e d istin g u ish ed ; (2 ) th e am o un t o f th e h azard ou s w as t e in v o lv ed ; (3 ) th e d eg ree o f to x icity o f t h e h a z a rd o u s w aste in v o lv ed ; (4 ) t h e d e g ree o f in v o lv em en t by th e parties i n th e g en eratio n , tran sp o rtatio n , treatm en t, sto rag e, o r d i s p osal o f th e h azard o u s w aste; (5 ) th e d eg ree o f care ex ercised b y th e p arties w ith resp ect to th e h azard ou s w aste co n cern ed
, tak in g in to acco unt th e ch aracteristics o f su ch h azard ou s w aste; an d (6 ) th e d eg ree o f co o p eratio n b y th e p arties w i th Fed eral, State, o r lo cal o f f icials to p rev en t an y h arm to th e p u b lic h ealth

o r th e env iro n m en t.” Kerr-McGee Ch em. Co rp

. v. Lefto n Iro n & Meta l Co

. , 1 4 F.3 d 3 2 1 , 3 2 6 n .4 (7 th Cir. 1 9 94 ).T DY H O L D I N G S V

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N I T E D S T A T E S 8

haz a rdous material and

. . . the care e x e rcised by the parties with r espect to the materials concerned.” The court “consider[ ed] the respective r oles of the parties as defined b y C ERCL A, and then how[ ,] in the contex t of these ro l e s [
, ] each party contributed to the c ontamination.” The court concluded that, “[ g ] iven the n ature of the contamination,

. . . TDY’s r ole as the Site o perator, responsible for the handling
, storag e and disposal of the contaminants at issue in this c ase, is the most relevant f

actor in a llocating costs.” The district court allocated 100 percent of past and future response costs for the remediation of chromium, chlorinated so l v ents, a nd PCB s to TDY.

II. DISCUSSION

A. Standard of

Review

W e review for an abuse o f discretion the equitable f actors that a d istrict court considers in allo c ating CERCL A costs and review for clear error the allocat i o n a ccording to the selected factors. B oeing Co. v. Cascade Corp

. , 2 0 7 F .3d 1 1 7 7
, 1 1 8 7

– 8 8 ( 9 t h C i r

. 2 0 0 0 ) ; s e e C a d i l l a c Fairview/California, Inc. v. D ow Chem. Co.
, 299 F .3d 1019, 1025 (9th Ci r

. 2002) (“Under section 113 of CERCL A, the d i s t r i ct court ‘may allocate response costs among liable parties u sin g such equitable factors as the court determines

are appropriate.’” (quoting 42 U.S.C. § 9 613(f)(1))); see also NCR Corp. v

. George A. W hiting P a p e r C o

. , 768 F .3d 682, 702 ( 7th Cir. 2014) (“[ T] he district court must decide what is relevant based on the record as a whole; an allocati o n based

on otherwise permissible factors will not be rescued if it does

n ot ex p lain w hy the court has chosen to disreg ard ot h e r apparently

relevant information.”).T DY H O L D I N G S V

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N I T E D S T A T E S 9

B. CERCLA Cost Allocation Claim

“Cong ress enacted CERCL A in 1980, as amended by the Su perfund Amendments and Reauthoriz ation Act of 1986 (SARA), Pub. L

. No. 99-499, 100 Stat. 1 613, ‘in response to the serious environmental and health risks posed by industrial pollution.’” Chubb Custom Ins. Co. v. Space Sys./Loral, Inc.
, 710 F .3d 946, 956 (9th Cir. 2013) (quoting Burlington N. & Santa Fe R

y. Co. v. United States
, 556 U.S. 599, 6 0 2 (2009)). CERCL A “imposes strict liability on fo u r categ ories o f potentially responsible parties (PRPs), for the c leanup costs

o f an environmental h az ard, even if the person did n o t contribute to the contamination.” Id. at 956

– 5 7 (footnote omitted). T h e f

o ur categ ories of PRPs are: (1) a past owner

or operator of a facility ; (2) an o wner or operator of a f acility ; (3) an arrang er of w aste d isposal; o r (4) an entity that accepts

w a s te f or treatment or disposal. United States v. Shell O i l Co.
, 294 F .3d 1045, 1 053 (9th Cir. 20 0 2 ) ; see 42 U .S.C. § 9607(a). O nce a PRP is found liable, it may sue other PRPs for contri b ution to remediation c osts under 42 U .S.C. § 9613(f). Earlier proceeding s established that both TDY a nd the g overnment are PRPs, and those determinations are not on appeal. I nstead, T DY argues that the d istrict court abused its discretion when it allocated all of the cleanup costs to TDY. TDY’s principal argu ments are tha t : ( 1) the district court failed to appreciate that CERCL A is a strict liability statute and instead allocated liability according to relative “ fa ult”; (2 ) t h e g overnment’s role as an “owner” rather than an “operator” s h ould not have been a dispositive factor in the court’s cost a llocation; and (3) the g overnment should b ear a g reater share of response c osts because it specifically required that TDY use the haz a r dous substances that

n e cessitated remediation before the haz ardous nature of the substances was known.T DY H O L D I N G S V

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At the outset, we reject TDY’s sug g e stion that the district
court erred b y misconstruing the concept of “fault,” o r misunde r s t a

n d i n g C E R C L

A ’ s s t r i c t l i a b i l ity statutory scheme. The district court’s use of the word “fault” was in the c ontex t of its application of the Gore F actors, specifically f actors (3) and (5), which respectively c oncern the d eg ree of the parties’ involvement in the g eneration or disposal of haz ardous waste and the deg ree of care that the parties took with respect to the
waste. The d istrict court’s c o nsideration of these factors was appropriate, particularly in lig ht of its findi n g, supported b y the record, of the evolving a wareness o f the haz ardous nature of the chemicals at issue, and TDY’s adaptation to more string ent environmental standards over time. Nor did the district cou r t a b use its discretion by considering the sig nificance of the g overnment’s role as “owner” rather than “operator” in its analy sis of the Gore F ac t o r s

. The court

ex p ressly recog niz ed that an earlier proceeding e stablished the g overnment’s liability under CERCL A a s an owner o f equipment at the site, see TDY Holdings, LLC v. United States , 122 F

. Supp. 3d 998, 1015 (S.D. Cal. 2 0 15), but held the g overnment’s total absence from the site during the last twenty y ears o f i t s operation relevant to the parties’ differential c ontribution to t h e release of haz a rdous waste under the first Gore F a ctor

. W e h o l d there was no error in this.

The dis t r ict court did err, however, in its analy sis a nd application of the two most on-point decisions f rom our court: Shell Oil and Cadillac Fairvie w

. The g overnment characteriz es these cases as “outliers
, ” b u t they are binding circuit authority

. B oth cases consider e d how CERCL A cleanup costs should be allocate d between military
contractors and the U.S. g overnment. Shell Oil Co. and Dow Chemical Co. incurred liability while producing productsT DY H O L D I N G S V

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essential to the military ’s efforts in W orld W ar I I

. See Shell Oil Co.
, 294 F .3d at 1 049; Cadillac Fairview
, 299 F .3d at 1022. TDY also served the military d uring W orld W ar I I a

nd in subsequent conflicts. L ike Shell Oil Co. and Dow Chemical Co., TDY’s work involved the use or g eneration o f haz a rdous substances known by the g overnment—at least b y the 1970s—to be environmental contaminants. S ee Shell Oil Co.
, 294 F .3d at 1051; Cadillac Fairview
, 299 F .3d at 1022–23; see also 1972 Clean W ater Act, 3 3 U .S.C. §§ 1251–1387; 1 976 Tox ic Substances Control Act, 15 U.S.C. §§ 2601–2692. Sig nificantly
, in all three cases the
g overnment either required the use o f the haz ardous substances to ensure the final p roduct met quality standards,

or mandated that production proceed in a certain manner to increase output, resulting in the g eneration of haz ardous
waste. See Shell Oil Co.
, 294 F .3d at 1050; Cadillac Fairview
, 299 F .3d at 1022–23. I n S h e l l O i l and Cadillac Fairview
, we affirmed district court judg ments allocating 100 percent o f cleanup costs to the g overn m e n t and emphasiz ed that the contractors’ c osts were “ p r operly seen as part of the

war effort for w hich the American pub l i c a s a whole should
pay .” Shell Oil
, 294 F .3d a t 1 0 6 0 ; see also Cadillac Fairview , 299 F .3d at 1029.

Despite the similarities between this case, Shell Oil
, a nd Cadillac F

airview
, the district court concluded that Shell Oil and Cadillac F

airview were not comparable and allocated

z ero percent o f clean-up costs to the g overnment. W e ag r ee that some d eviation f

rom the allocation affirmed in Shell Oil and Cadillac Fairview was warranted b y disting uishing facts. F irst, as the district c o urt recog niz e d, the g overnment e x erted

more control over day

- t o -d a y operations in Shell Oil a nd Cadillac Fairview than it did here, and in Cadillac Fairview the g overnment contr actually ag reed to indemnify itsT DY H O L D I N G S V

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N I T E D S T A T E S 12

contractor for its c l e a n u p costs. 299 F .3d at 1026. The district court’s f

inding s that the g overnmen t was n ot an “operator” of TDY ’ s site in San D ieg o ; that g overnmentowned equipment had been removed or sold to TDY twenty
y ears b efore TDY ceased o perations at the site; and t h at TDY’s own repair a

nd maintenance p ractices c aused the contamination, justify the district court’s ruling that TDY should bear some of the cleanup costs. No r d i d t h e district
court e rr by determining that industrial operations undertaken for the p urpose of national d efe n s e , s tanding a lone, did not justify allocating all costs to the g overnment.

Nevertheless, encumbering a military c ontractor with 100 perce n t of CERCL A cleanup costs that were larg ely incurred during war

- effort production was a 180 deg r ee departure from our prior case law, an d the o u t-of-circuit authority that the d istrict court relied upon does not warrant such a sharp deviation. This is particularly true because, a s TDY correctly argues, the g overnment’s contracts with TDY required the use of two of the three chemicals a t i ssue beg inning in the 1 940s, when the haz ardous na t u r e o f the substances and t h e n e e d to take p r ecautionary steps to

m inimiz e their release were unknown. The district co u r t found that TDY complied with prevailing enviro n m en tal standards at that time, and responded to new regulations in the 1970s by modify ing its operational practices to reduce environmental contamination. The c ourt’s acknowledg ment

o f t h e e v o l v i n g u n d e r s t a n d i n g o f e n v i r o n m e n t a l contamination caused b y these chemicals, and T DY’s prompt adoption of p ractices to reduce the r elease of haz ardous chemicals into the envi ro n m ent once the haz ards became known, further undercuts the decision to allocate 100 percent of the costs to TDY.T DY H O L D I N G S V

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I n addition, the district court did not consider adequately the parties’ leng thy course o f d e a l ing s in which the
g overnment repeatedly agr eed to share in TDY’s environmental cleanup costs from this site. I n contracts from the 1970s to 1999, the g overnment p a id between 90 a nd 100 p ercent of the CERCL A c leanup c o s t s that arose from TDY’s San Dieg o plant. D espite this history
, the d i s t rict
court r easoned that a shift away from our prior case law was warranted because “[ m] any industries incur ex penses as a

r esult of environmental compliance oblig ations and p a s s those costs on to their customers.

. . . [ but a] c o n s u m e r w ho
pa y s a b u s i ness’s recy

c ling fee as part of the invoice for his car’s oil c hang e is n o t a cknowledg ing responsibility for remediation ex penses if that company discharg es oil or other pollutants into the environment.” W e ag ree with the district
court that a customer’s willing ness to pay disposal costs incorporated as cost overhead can n o t be equated w ith a willing ness to foot the bill for a company ’s u n l awful discharg e of oil or o ther p ollutants. B ut the cleanup ex penses larg e ly paid b y the g overnment prior to 1999 cannot be fairly described a s ong o ing contract overhead, nor as costs incurred in implementing preventive measu r es to comply with heig htened environmental standards. Indeed, TDY may have

c o n t i nued to enter into contracts with the g overnment i n reliance o n its ex pectation, based on its decades-long course of d e a l ing s with the g o vernment, that its CERCL A cleanup
costs w o u l d be reimbursed, or at least shared. The parties’ prior cour s e of dealing s concerning CERCL A cleanup costs from the same site constitutes a rele v ant factor in the allocation analy s i s

. See NCR Corp. v. George A. W hiting Paper Co. , 768 F .3d 682, 702 (7th Cir. 2014).

W e a re mi n d f u l that this appeal comes to us under an abuse of d i s c retion standard, a nd that the d istrict court hasT DY H O L D I N G S V

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broad discretion in allocating costs among PRPs. See Boeing Co.
, 2 0 7 F. 3 d at 1187. W e further acknowledg e that important distinctions ex ist between the present case a nd Shell Oil and Cadillac Fa i r v i e w , where the g overnment

ex e r cised more control over p roduction than it did here. See,
e.g. , 2 99 F

. 3d at 1026 (finding that the g overnment ex ercised “unfettered control” o ver the contracting company ’s operations). B ut the analog y relied upon by the district court cannot bear the weig ht of such an ex treme departure f r om our prior case law, particularly in lig h t of the parties’ prior course of dealing s and the g overnment’s requirement that TDY use
two of the haz ardous c h e micals a t issue. A ccording ly
, we

reverse the d istrict court’s judg ment and remand f o r additional proceeding s consistent with this decision.

REVERSED and REMANDED

W A TF ORD, Circuit J udg e, concurring :

I ag ree with my c olleag ues t h at the record does not support allocating 100% o f the clean-up costs to TDY. I n my view, thoug h, the record does support something close to that.

The district court found that T D Y was solely responsible for the acts that led to the envi ro n m e n t al contamination at issue h ere. Those acts consisted primarily of TDY’s employ e es’ failure to clean up drips and spills of chromium, chlorin a t e d solvents, and PCB s, along with the e mploy ees’ careless storag e a

nd disposal p ractices, all of which allowed the chemicals to s eep into the soil and g roundwater beneath the plant. Th e d istrict court found that these aspects of the plant’s day -to-day o perations were solely und e r T DY’sT DY H O L D I N G S V

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N I T E D S T A T E S 15

control; they were no t controlled o r d irected by the
g overnment.

TDY doesn’t challeng e these f actual finding s o n appeal. I ts sole contention is that, despite these finding s, t h e g overnment should still b e a r all o r most of the liability for cleaning up the site because the contamination occurred while TDY was performing g o vernment defense contracts. TDY is ri gh t t h a t the g overnment must be required to foot at least a portion of the bill. B ut I ag ree with TDY on that score only because, as the court notes, the g o vernment required TDY to

use two of the thr e e c hemicals (chromium and chlorinated solvents) at a time when n either T DY nor the g overnment h ad
any reason to know that these chemicals were haz ardous. Of
course, because the g overnment did not know of the haz ards posed by the chemicals, it can’t be faulted for failing to warn TDY. B ut equity

demands that the g overnment bear at least

some r esponsibility for having requir ed an unsuspecting
contractor to use chromium and chlorina t e d solvents in the first place. As far as the record discloses, those are chemicals TDY mig ht have chosen not to use if left to its own devices. (I see n o reason to disturb the dist r i c t c o u rt’s allocation o f clean-up costs with respect to contamination caused by PCB s, since the g overnment did not require TDY to use PCB s.)

That the g ov e r n ment must, a s a matter of equity
, be allocated some share of the clean-up costs does n o t mean that its share must be substantial

. T D Y sug g ested at oral
argument that the district c ourt would abuse its discretion on

r emand if it failed to allocate at least 5 0% of the c l e a n

- u p costs to the g o vernment. Idon’t think that’s rig h t, g iven the district court’s unchallen ged factual finding s. T h e court found that the g overnment was innocent in requiring use o f chromium and chlorinated s o l vents, and that the actions o fT DY H O L D I N G S V

. U

N I T E D S T A T E S 16

TDY’s employ ees c aus e d t he c ontamination as part of plant operations solely under TDY’s control. I n lig ht o f those finding s, the court remains free o n r emand to allocate the lion’s share of liability to TDY. I t just has to a llocate some portion of the c lean-up costs to the g overnment to reflect the
g overnment ’s role in mandating the u se of chromium a nd chlorinated solvents. As long as the court does that, it retains the discretion, within a fairly wide band, to arri v e a t an equitable cost allocation.