## Facts

- During World War II, the United States undertook an emergency synthetic rubber program after major natural rubber sources became unavailable.
- The United States, through a federal entity, built and owned a synthetic rubber facility in Torrance, California.
- Dow Chemical Company contracted with the United States to construct, equip, and operate the plant for wartime production.
- The operating arrangement gave the United States extensive control over operations, including approval of waste-handling and disposal methods.
- The operating contracts included broad provisions requiring the United States to assume risks and to indemnify and hold Dow harmless for damages arising from plant operations.
- Synthetic rubber production generated hazardous wastes; disposal practices included unlined pits authorized and approved during wartime conditions, later contributing to soil and groundwater contamination.
- After the war, the facility was shut down and later transferred into private ownership.
- Cadillac Fairview/California, Inc., a later owner, incurred cleanup costs and sued Dow and the United States under CERCLA; the United States and Dow asserted cross-claims and counterclaims concerning cost responsibility.
- The district court found CERCLA liability and, after an allocation trial, assigned 100% of the response costs (as between Dow and the United States) to the United States; the United States appealed.

## Issues

1. Whether the district court abused its discretion under CERCLA’s equitable allocation framework by assigning 100% of response costs (as between Dow and the United States) to the United States.
2. Whether the wartime “hold harmless” and indemnity provisions, coupled with federal ownership and operational control, supported shifting all cleanup costs from Dow to the United States in contribution/allocation.

## Decision

- The Ninth Circuit affirmed the district court’s judgment.
- The court upheld allocating 100% of the remediation costs (as between Dow and the United States) to the United States.
- The court held that the district court did not commit clear error in its factual findings and did not abuse its discretion in its equitable allocation.

## Legal Principles

- CERCLA contribution permits a court to allocate response costs among liable parties using equitable factors the court deems appropriate, and appellate review is deferential.
- Government ownership of a facility and pervasive direction over operations and waste-disposal choices may weigh strongly in equity toward allocating cleanup costs to the government rather than a contractor.
- Where the government knowingly authorized the conduct that caused contamination and prioritized wartime production over more protective measures, those facts can support assigning the financial burden to the government.
- Broad contractual indemnity and “hold harmless” commitments can be treated as significant equitable factors in CERCLA allocation between the contracting parties, especially when tied to government control and risk assumption.
- A contractor operating a government-owned wartime facility under close governmental direction may be treated, for allocation purposes, as acting as a government instrumentality, supporting allocation of costs to the government rather than the contractor.

## Conclusion

The Ninth Circuit held that the district court acted within CERCLA’s equitable allocation discretion in placing the entire cleanup-cost responsibility on the United States as against Dow, given federal ownership, pervasive wartime control over operations and waste disposal, government knowledge and authorization of the polluting practices, and broad indemnity obligations to hold Dow harmless.


Cadillac Fairview/Cal., Inc. v. Dow Chem. Co., 299 F.3d 1019 (9th Cir. 2002)