Opinion ID: 3034999
Heading Depth: 2
Heading Rank: 3

Heading: indirect costs calculation

Text: Finally, Grace complains that the methodology used to calculate indirect costs of $11,322,226 overstated the EPA’s costs attributable to the Libby response action. See Grace II, 280 F. Supp. 2d at 1173, 1187 (calculating indirect costs). Grace disputes the use of total site-specific costs as the basis for calculating indirect costs, arguing that because the EPA delegated substantial authority to the U.S. Department of Transportation, the EPA’s overhead was substantially lower 15580 UNITED STATES v. W.R. GRACE & CO. than it would have been had the EPA administered the entire project directly. After review of the district court’s extensive findings on the indirect costs methodology and its application to this particular case, see id. at 1167-73, we conclude that the district court did not err in its award of indirect costs. See W. Props. Serv. Corp. v. Shell Oil Co., 358 F.3d 678, 685 (9th Cir. 2004) (“The district court’s findings of fact can be reversed only if clearly erroneous, and not merely because we might have found otherwise on the same evidence.”). [16] CERCLA authorizes the EPA to recover “all costs of removal or remedial action . . . [that are] not inconsistent with the national contingency plan.” 42 U.S.C. § 9607(a)(4)(A). “All costs” include indirect costs such as administrative and other overhead costs incurred in managing the greater Superfund program. See, e.g., United States v. Dico, 266 F.3d 864, 878 (8th Cir. 2001) (concluding that “oversight and indirect costs are recoverable in remedial actions under CERCLA”). In order to capture these costs from disparate CERCLA response actions, “Allocating indirect costs that cannot be directly accounted for as costs of a specific project is a wellestablished accounting practice.” Kennecott Utah Copper Corp. v. United States DOI, 88 F.3d 1191, 1224 (D.C. Cir. 1996). Grace maintains that the EPA should have used the “labor hour” approach that the EPA abandoned in 2000. Under the labor hour method, the indirect costs attributable to each site were calculated based on the number of hours that EPA personnel charged to a site during a fiscal year. Cf. United States v. R.W. Meyer, Inc., 889 F.2d 1497, 1503-04 (6th Cir. 1989) (calculating indirect costs using labor hours method). In contrast, the new “full cost” methodology allocates indirect costs based on the total site-specific expenditures incurred for a particular site. UNITED STATES v. W.R. GRACE & CO. 15581 The EPA explains that the labor hours method was rejected because it did not identify the full costs of Superfund site cleanups, and the revised methodology is a better process for estimating and allocating the total Superfund overhead costs. The revised methodology is also supported by reports from the General Accounting Office and the accounting firm KPMG, which found that the full cost approach complies with the federal government’s costs accounting standards. See Grace II, 280 F. Supp. 2d at 1171-72; see also Guidance on Exercising CERCLA Enforcement Discretion in Anticipation of Full Cost Accounting Consistent With the “Statement of Federal Financial Accounting Standards No. 4,” 65 Fed. Reg. 35, 339 (EPA June 2, 2000). [17] In awarding the EPA $11.32 million in indirect costs, the district court found that the “EPA’s revised methodology is an appropriate accounting measure of its indirect costs charged to Superfund sites, including the Libby Asbestos Site.” Grace II, 280 F. Supp. 2d at 1169. The district court reached this conclusion after a three-day trial and detailed findings. Grace characterizes this conclusion as a legal error meriting de novo review. We disagree. The district court’s approach comports with the statute; the court’s findings on the methodology and its application to this case are supported by the record, id. at 1167-73, and we will not overturn them except for clear error. See W. Props. Serv. Corp., 358 F.3d at 685. Besides, we do not think it is in anyone’s interest to have appellate courts step into the accountants’ shoes and determine the accuracy of accounting calculations de novo. Grace’s arguments do not rise to the level of demonstrating that the district court’s findings were clearly erroneous. We are particularly hesitant to second-guess the district court’s judgment on this issue where the court specifically found that Grace’s accounting expert was “not credible.” Grace II, 280 F. Supp. 2d at 1169, 1171 (“[Grace’s] accounting expert . . . does not know what methodology the EPA should use to recover its indirect costs.”). 15582 UNITED STATES v. W.R. GRACE & CO.