Key Tronic Corporation v. United States – Oral Argument – March 29, 1994

Media for Key Tronic Corporation v. United States

Audio Transcription for Opinion Announcement – June 06, 1994 in Key Tronic Corporation v. United States

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William H. Rehnquist:

We’ll hear argument next in Number 93-376, Key Tronic Corporation v. United States.

Mr. Schneider.

Mark David Schneider:

Mr. Chief Justice and may it please the Court:

This case raises a question of statutory construction.

Key Tronic submits that the Federal Superfund statute, or CERCLA, authorizes the recovery of attorneys’ fees by private parties where they undertake cleanup and then take steps to compel others to participate in the cost of the cleanup.

CERCLA section 107(a)(4) provides for the recovery of response costs by parties.

The term 101(25) to include enforcement activities.

Where a party imposes the liabilities and obligations of CERCLA on others by undertaking cleanup and then compelling others to share in the cost of cleanups, those actions constitute enforcement activities within the meaning of the statute.

The term CERCLA includes attorneys’ fees because the primary enforcement activity in the context of section 101(25) and in the context of section 107 is a suit to impose the liabilities and obligations of CERCLA on parties that have caused environmental contamination.

David H. Souter:

Because that has already occurred, hasn’t it, prior to the stage that we’re dealing with here?

Mark David Schneider:

Yes, Justice Souter, in this case that has already occurred.

David H. Souter:

And it may have… indeed, have occurred because of action commenced by non-Government parties, but there’s sort of an obvious reference to them as enforcers in the citizens’ suit provision, so it’s not, on the face of it, obvious that a person in the position of your client is enforcing as opposed simply to spreading the burden of liability.

Mark David Schneider:

In the context of a Superfund, Justice Souter, the meaning of the word “enforcement activities” does include the activities of a private party.

As this Court recognized in the Union Gas decision, EPA does not have the resources to engage in activities at all of the sites across the country, and so Congress in CERCLA expressly provided for and encouraged private parties to engage in cleanup and then to bring cost recovery.

David H. Souter:

That’s the citizens’ suit provision.

Mark David Schneider:

No–

David H. Souter:

I’m sorry.

Mark David Schneider:

–No, Justice Souter.

The citizens’ suit provision is in section 9659, and a citizens’ suit can bring an action to compel the EPA to act if there’s a violation of a standard.

Section 107 provides for a right to recover response costs.

The definition of response costs is defined in section 101(25), and section 101(25) is a section of general application.

It’s a definitional section to define the word “response cost”.

A response cost is something that a private party may recover.

David H. Souter:

May I ask you one other question?

I should know the answer to this, but I don’t.

Is there a separate counsel fee provision for citizens’ suits?

Mark David Schneider:

Yes, Justice Souter.

Section 9659 provides that when a citizen brings a

“citizens’ suit under section 9659, it may recover its attorneys fees. “

but that is the only relief that a citizens’ suit plaintiff can recover.

Mark David Schneider:

In CERCLA section 1… a citizens’ suit plaintiff under section 9659 does not have the ability or the authority to bring an action to recover response costs.

That is limited–

David H. Souter:

Can they get investigators’ fees, and so on?

Mark David Schneider:

–No, Justice Souter, they cannot.

David H. Souter:

It’s strictly limited to counsel.

Mark David Schneider:

The only monetary reimbursement that a citizens’ suit plaintiff can recover under section 9659 are the attorneys’ fees enforcing the EPA to act, no other monetary reimbursement.

In contrast, section 107, which is an action for cost recovery, which applies both to the Government and to private parties, states that parties can recover their costs of response.

Section 101(25) specifically defines response to mean enforcement activities.

In the context of a Superfund site, the primary enforcement activity will be an action to compel other parties, pursuant to their statutory obligations, to pay their fair share of cleanup cost.

Typically, what happens is one party will undertake cleanup and pay for the entire cost of the cleanup.

That party will then bring an action to enforce the statute to compel other parties who are also liable under the statute to pay for their fair share of the cleanup costs.

Anthony M. Kennedy:

What happens if a party does not think it’s liable at all, but thinks that parties A, B, and C are?

Mark David Schneider:

That would be an enforcement activity if that nonliable party is able to establish that the other parties are liable under the statute to pay portions of the response costs.

Anthony M. Kennedy:

And does he bring a suit other than for money?

Mark David Schneider:

No, Justice Kennedy.

The only relief available for a cost recovery plaintiff is to recover costs that have been spent for cleanup.

By definition, a cost recovery case under section 107 requires the plaintiff, whether it’s the Government or a private party, to undertake cleanup, to spend response costs, and then bring an action to recover those costs.

William H. Rehnquist:

The Government’s right to recover attorneys’ fees comes from still a different section, doesn’t it, under the legal studies section?

Mark David Schneider:

Mr. Chief Justice, that’s correct.

Prior to the passage of the amendment of CERCLA in 1986, the United States relied on section 104(b) as well as section 107 to recover the costs of attorneys’ fees in bringing these types of actions.

Prior to the amendment of Superfund in 1986, all of the lower courts held that the Government was entitled to recover its fees under section 104(b) as well as under section 107.

Key Tronic submits that if… and the language used in section 104 was cost of legal study or investigation.

Key Tronic submits that if the term

“cost of legal study or investigation. “

is sufficiently explicit to authorize the award of attorneys’ fees, then certainly the word “enforcement activities”, which appears in the section of general application to both private parties and the Government, also is entitled to recover its attorneys’ fees.

The reason that an enforcement activity includes attorneys’ fees is because the primary enforcement activity within the meaning of section 101(25) and section 107, is an action to compel other parties to pay their share of cleanup costs.

Enforcement activities means the actions that are undertaken to enforce the statute.

In most cases, as a practical matter the word… the activities will be undertaken by attorneys, and so the most logical reading of the phrase “enforcement activities” includes attorneys’ fees.

But “enforcement activities” is broader, because there are some activities that will be undertaken not by attorneys.

For–

Ruth Bader Ginsburg:

Doesn’t the word “enforcement action”… “enforcement activities” usually refer to Government action, action by Government agencies?

Mark David Schneider:

–No, that is not correct, Justice Ginsburg.

As this Court noted in the Cargill case, where the Court was construing section 4 of the Clayton Act, the Court characterized a private action under section 4 of the Clayton Act as a private enforcement action.

In the Alyeska decision, this Court stated that Congress often encourages private parties to act by awarding attorneys’ fees, and that will allow for “private enforcement of the statute”.

Antonin Scalia:

Well, but that’s quite different.

I mean, the Sherman Act situation, you’re talking about a party who’s been injured going after the wrongdoer.

That’s quite a different situation from one wrongdoer who has been compelled to cough up the entire compensation for the wrong going after another wrongdoer to get back some of what he’s paid.

That seems to me not… I would not normally call that enforcement.

I would call it contribution.

Mark David Schneider:

With all due respect, Justice Scalia, under the Clayton Act, a party is taking steps to enforce the liabilities against those parties who have undertaken activities prohibited by the antitrust statute.

In CERCLA, the word “enforce” is used to enforce the liabilities and obligations of the statute.

For example, in CERCLA, a party is liable if it arranges for the disposal of hazardous substances.

To enforce this statute in the context of section 101(25) means to make sure that that party that arranged for the disposal of hazardous substances pays for the cost of cleanup.

In the… I would note that even both prior to the amendment of Superfund–

Ruth Bader Ginsburg:

Can you give another example of a Federal statute where enforcement action, or enforcement activity, is… the actor is someone who is himself liable for violating some prescriptions of the statute, who has a liability as distinguished from someone who is either a private attorney general or has been injured in fact and is bringing a claim against a wrongdoer?

Mark David Schneider:

–Off-hand, Justice Ginsburg, I cannot think of another example, but CERCLA is a unique statute which uses the word 101(25) which is a definitional section.

It says, for purposes of section 107, in defining the word “response”, that word “response” includes the words “enforcement activities”.

The reason that CERCLA is a unique statute is because in 1986, when Congress amended the Superfund statute, the legislative history was replete with references as to what an utter failure the Superfund program had been.

The legislative history contains many references explaining that EPA simply was unable to make the Superfund program work by itself.

The response, Congress decided to fix that problem by giving more incentives to private parties to act.

One of those incentives was in section 101(25), enabling private parties to recover their costs of enforcement activities which we submit includes attorneys’ fees.

The language of the statute is unlike virtually any other statute, and this Court has recognized in the Exxon decision that in fact it is an inartful statute, but what Congress decided to do in Superfund was to make sure that any party, whether it was a governmental party or a private party, whether it was a liable party or a nonliable party, any party that undertook cleanup could then bring an action to recover its cost, and it used the term “enforcement activity” in a section which expressly applies to any party, liable or nonliable, governmental party or private party.

David H. Souter:

You want us to construe the term under the policy of the amendments, which was to induce private parties to act.

As I understand it, no one has an inducement to act under the circumstances that your client acted unless that person has already been found liable and otherwise, as Justice Scalia said, would have to pay the whole tab, so that the public as a practical matter gets nothing from the recovery that you want.

The problem has been identified, someone has been made liable, and somebody’s got to pay the bill, and I don’t see why Congress had any reason to induce this action.

Mark David Schneider:

Justice Souter, with all due respect, in this particular case Key Tronic acted… well, Key Tronic has never been held liable.

It acted voluntarily, immediately after contamination was discovered, but what Congress noted–

David H. Souter:

It didn’t contest liability.

Mark David Schneider:

–No action had been brought.

It started its actions in 1980, 3 years before the EPA was involved, 10 years before–

David H. Souter:

I’ll grant you that, but isn’t it fair to say that basically what your client was doing was essentially what might be called a preemptive strike?

I mean, ultimately, what it wanted to ensure was that it would not end up paying the whole bill.

Mark David Schneider:

–Justice Souter, there’s nothing in the record which would support that statement, but regardless of what happened in this particular–

David H. Souter:

Well, why else was it doing it?

I mean, it has not contested liability.

You don’t argue here that it would have been free of liability, and what else was it doing?

Mark David Schneider:

–We don’t argue that it would have been free of liability, but a case was never brought.

What Congress did, though, in 1986, was it recognized there were not enough Key Tronics in the world to make the Superfund process work.

Congress in 1986 noted that EPA had not done its job.

It was simply too enormous a task to be undertaken by EPA alone, and this Court recognized that in the Union Gas decision.

Congress did not think it enough to give the tools only to EPA.

As a result, it also encouraged private parties to act.

The question, Justice Souter, you raised as to what does the public get as a result of this cleanup, what the public gets is a clean site that might otherwise not occur.

Congress had two goals when it passed the Superfund statute.

One of the goals was prompt… making sure that hazardous waste sites were prompoly cleaned up, and the other goal was to make sure that those parties that caused the contamination would pay for the contamination costs that they had caused.

As a practical matter, Congress chose as its mechanism to get to cleanup… it chose to arm private parties and the Government with extraordinary abilities to enforce the Superfund statutes.

David H. Souter:

You’re implicitly arguing, I guess, that two pockets are better than one, and that’s what the public gets.

Mark David Schneider:

Justice Souter, I am arguing that in the context of–

David H. Souter:

Which I don’t think is a bad argument, having just made it myself.

[Laughter]

I mean, but isn’t that sort of what… the point that you’re making?

Mark David Schneider:

–Well, it is–

David H. Souter:

The public does get something, because it gets another pocket to go after if the first one is not full enough.

Mark David Schneider:

–Absolutely, and the reason Congress used the word enforcement activities “and not” attorneys’ fees

“is because the enforcement activities could include the actions in this case, for example, where a private investigator was hired to do the gumshoe work to find out who disposed of hazardous substances at the corporate landfill. “

“The cost– “

Antonin Scalia:

Mr. Schneider, is the term 107(4)?

Mark David Schneider:

–Yes, Justice Scalia, it’s used in a number of other places within the statute.

Antonin Scalia:

Well, I think your argument would be a lot stronger if the only place in which the term occurred was in this provision, because then that specification that it includes enforcement activities would have to be referring to this section, but if it appears elsewhere, there might well be what Justice Souter and I would call genuine enforcement activities, in other sections that are involved.

Mark David Schneider:

The… Justice Scalia, the problem with that argument is that if Congress had wanted only to give the right of attorneys’ fees to EPA, it could have done so by using the terms EPA… for example, in section 104(b)… but it didn’t do that.

Mark David Schneider:

It could have put the right to recover attorneys’ fees or enforcement activity costs in section 107(a)(4)(A), which applies only to the Government, but it didn’t do that.

In defining the term 101(25), and section 101(25) defines the term 107(a)(4)(B) of CERCLA.

The enforcement activity under CERCLA is to make sure that those parties that have caused contamination will pay for a portion of the cleanup costs.

That’s consistent with the common, every-day understanding of the word “enforce”.

In our brief, we have set forth the position that a party wants to enforce its rights… that doesn’t require governmental action… or that there’s an enforceable contract.

That doesn’t require enforceable action.

This Court’s decision in the Alyeska case and in the Union Gas case, both refer to the word “enforcement” without any consideration of governmental involvement.

As a practical matter, the use of the word “enforcement” in the Superfund statute has to include attorneys’ fees.

Now, the United States… well, maybe I should take a step back.

Key Tronic’s argument is supported by the fact that the phrase, 101(25).

Prior to 1986, the word “response” meant environmental investigation, technical services, cleanup activities.

Prior to the amendment in 1986, all of the lower courts had held that the EPA was already entitled to recover its attorneys’ fees.

In 1986, Congress put the word 101(25), which is a definitional section of general application.

Since prior to the amendments, the phrase had… since prior to the amendments, the EPA was already entitled to recover its attorneys’ fees, and since Congress put it in a section of general application–

William H. Rehnquist:

You’re talking about subsection (25) now?

Mark David Schneider:

–Yes.

That’s section 101(25) of the Superfund statute.

William H. Rehnquist:

Well, certainly the way the section… that (25) starts out, the term “respond” or “response” means “remove”, “removal”, “remedy”, and “remedial action”.

Mark David Schneider:

That’s–

William H. Rehnquist:

Certainly you wouldn’t think lawyers were much good for cleaning up waste, or cleaning up a mess.

Mark David Schneider:

–That’s correct, and we expressly rely on the new language which was added, the words “enforcement activities”.

That’s the language we rely on in order to establish that Congress intended both the Government and private parties to recover fees.

William H. Rehnquist:

So that “respond” and “response” and “remove” now mean… now include enforcement activities relating to removal or remedies.

Mark David Schneider:

That is correct, Mr. Chief Justice, and in this case an action to reallocate cost among liable parties is related to a removal action.

It’s related in the sense–

William H. Rehnquist:

Well, that’s rather attenuated, isn’t it?

Mark David Schneider:

–Well, Congress used the word Mr. Chief Justice.

William H. Rehnquist:

Well, it… it’s a word that could have a broad meaning or it could have a narrow meaning, depending on how one defines it.

Certainly it doesn’t just spring to one’s thoughts immediately that there’s that connection that you say.

Mark David Schneider:

Mr. Chief Justice, Congress used the word “related” in the common, ordinary use of the term “related”, meaning does it pertain to, does it relate to an action to reallocate cost of cleanup, does it relate to the cleanup.

Mark David Schneider:

But there’s a second argument that we raise, and that is, actions to reallocate costs among liable parties will directly lead to cleanup, and the reason it will lead to cleanup, Mr. Chief Justice, is because if private parties know that they can undertake cleanup, spend the money, spend far more than their fair share of the cleanup costs, and then get a portion of those costs and attorneys’ fees back from other parties, they are far more likely in the first place to undertake cleanup.

And so the use of the word “related” we submit has a very broad meaning, but even if one used a very narrow meaning, Congress decided that the mechanism to get to cleanup was to allow private parties as well as the Government to enforce the statute.

If I could respond to the question of Justice Souter, the United States argues that enforcement activities is something that only the EPA can conduct, but nothing in the statute or the structure or the language of the statute supports that argument.

CERCLA expressly provides that any party, whether it’s a governmental party or a private party, may undertake response action, and as this Court noted in the Union Gas decision, EPA cannot address all of the sites across the country.

Here, as a result, Congress expressly provided for and it encouraged private parties to act.

Here, Key Tronic did precisely the same things that the EPA does when it does enforcement activities.

Key Tronic did an environmental investigation, it prepared the cleanup plan, it performed a search for potentially responsible parties, it sued the Air Force, which was ultimately held liable, and then the Air Force finally paid.

These are precisely the same steps that the EPA takes when it undertakes enforcement activities.

William H. Rehnquist:

Did Key Tronic itself arrange to have any of the cleanup done?

Mark David Schneider:

Yes.

Key… there were two phases of cleanup, Mr. Chief Justice.

In the early phases, before the EPA got involved, Key Tronic did the environmental investigation, it provided bottled water, it provided a new water main so that residents living near the landfill would not be exposed to that.

They also did, as I understand it, some excavation measures, but the real long-term cleanup occurred once the… after Key Tronic prepared the consent decree which set forth the remedy in the case, that as the long-term cleanup, and the long-term cleanup, and it’s going on today, is to pump the groundwater out of the water… pump the contamination out of the groundwater, and to treat it.

That long-term cleanup occurred, as the district court found, because Key Tronic acted to prepare the consent decree.

We hired the scientists who prepared the work plan.

Key Tronic hired the lawyers who wrote the consent decree which set forth the cleanup plan that EPA ultimately adopted, and which the Air Force belatedly contributed to.

John Paul Stevens:

May I ask you a question?

I’m just trying to piece this statute together as in your brief.

9607 is the liability provision, and it describes in subsection 4 any person, and so forth, shall be liable.

Now the “any person” we’re referring to in this case is the Air Force, right?

Mark David Schneider:

That’s correct, Justice–

John Paul Stevens:

(B),

“for any other necessary costs of response incurred by any other person. “

and that’s you.

Mark David Schneider:

–That’s correct.

John Paul Stevens:

But now, does the… where does the source of your action against the Air Force come from?

Is it in 9606?

Mark David Schneider:

No.

Unfortunately, Congress–

John Paul Stevens:

Because I… let me just get the whole thought out so you can explain what my problem… I read 9607 as describing the liability that may be incurred in actions authorized by 9606… it follows the next one… and I thought you said earlier that the private cause of action under 9659 wasn’t relevant here.

Mark David Schneider:

–That is correct, Justice Stevens.

John Paul Stevens:

So if it relates to 9606, why does it authorize payments to you?

That’s what I–

Mark David Schneider:

Justice Stevens, it does not relate to section 106.

Section 106 allows the EPA to seek injunctive relief.

Section 107 is what gave the authority to Key Tronic to recover its cost, and it gives–

John Paul Stevens:

–But there’s no provision in 9607 authorizing the cause of action by Key Tronic against the Air Force, is there?

Mark David Schneider:

–Justice Stevens, the only answer I can get is, every court has considered this statute and says that the authority to bring a private action comes under section 107.

It’s a very in–

John Paul Stevens:

It’s an implied cause of action we’re talking about.

Mark David Schneider:

–Well, Congress… every court has held it’s an express cause of action.

John Paul Stevens:

Well, I’m not saying that makes it wrong.

I’m just trying to understand how it fits into the statutory–

Mark David Schneider:

Maybe I could take a step back.

The private… if a party seeks to recover the cost it has spent, the only mechanism it has, or the only mechanism at issue in this case, is section 107, which applies to both EPA and to private parties like Key Tronic.

Justice Stevens, you are correct, the words do not appear in section 107(a), which would expressly authorize that, but all of the lower courts have held that private parties, when they seek to recover their cost under section 107, that’s their authority, and that applies both to the Government, and it also applies to private parties.

Section 106, which, Justice Stevens, you have referred to, allows the EPA to seek injunctive relief, or to–

John Paul Stevens:

–Doesn’t it also authorize action by State agencies in some situations?

Mark David Schneider:

–In the event that the EPA has authorized the State agency to act, that’s correct.

John Paul Stevens:

Basically, they’re governmental enforcement actions.

Mark David Schneider:

That’s correct, Justice.

If there are no further questions, I would like to reserve the remainder of my time for rebuttal.

William H. Rehnquist:

Very well, Mr. Schneider.

Mr. Wallace, we’ll hear from you.

Lawrence G. Wallace:

Thank you, Mr. Chief Justice, and may it please the Court:

We do not contest that there is an implied cause of action under 9607 to recover contribution of costs.

And that was confirmed by Congress in adding a contribution provision in the 1986 amendments in 9613, but that does not itself provide the cause of action; it provides guidelines for the cause of action.

And Key Tronic has been paid its costs of the cleanup.

The issue here is its claim for attorneys’ fees, not for other costs.

And if I may just amend one other factual point in petitioner’s response to a question, we do refer to a consent decree that Key Tronic entered into at the bottom of page 3 and the top of page 4 in our brief.

Lawrence G. Wallace:

Now, they did not explicitly admit liability, but they entered the consent decree which recounted actions that would have made them liable under CERCLA and actions of depositing hazardous wastes at the site, and this is consistent also with a jury trial that was earlier reached on the complaint of some neighbors that we refer to in footnote 2 of our brief.

So there has been some adjudications with respect to liability.

Now, the… in our view, the issue in this case is controlled by the rule of this Court’s decisions in Alyeska and Runyon against McCrary, which hold that under the American rule there has to be explicit authorization for the recovery of attorneys’ fees.

And in Runyon against McCrary in particular, there was an effort by the plaintiffs to rely on what they argued was an implicit authorization and a broadly granted… a broadly worded grant of remedial authority, and the Court said, no, it has to be an explicit authorization for recovery of attorneys’ fees.

Petitioner’s claim here is… rests on a request that the Court build an inference upon an inference from the statutory language on which the petitioner relies, and that does not meet the standard.

Sandra Day O’Connor:

Well, Mr. Wallace, how is the Government’s desire to recover attorneys’ fees any easier to discern?

Lawrence G. Wallace:

There is an explicit reference to legal costs incurred by the Government.

Not… that is in section 104(b), and we quote it at the very bottom of page 13 and the top of page 14 of our brief.

And it’s the interplay of sections, including this one, which is the only one that the Government can rely on as explicitly referring to legal costs.

Sandra Day O’Connor:

Well, what about States and Indian tribes, how does that leave their ability to recover attorneys fields, in your view?

Lawrence G. Wallace:

Well, we think that they would enjoy that… the fees under the same provision because they act only by delegation from us with respect to a particular site.

When EPA, which has delegated authority from the President, turns over the lead responsibility at a particular site to the local or–

Sandra Day O’Connor:

It doesn’t sound very explicit to me, as you describe it, does it, for States and Indian tribes?

Lawrence G. Wallace:

–It’s not as ideal as we would wish it but, of course, that is not the question at issue in the case.

William H. Rehnquist:

One might say it was building inference upon inference.

[Laughter]

Lawrence G. Wallace:

But at least… at least there is a reference to costs of attorneys explicit in the statute.

David H. Souter:

Well, but that’s… excuse me, but that’s not specifically what it says.

It refers to costs of legal and other studies.

Lawrence G. Wallace:

Yes.

David H. Souter:

I mean, to speak of a cost of a legal study as being the way to recover attorneys’ fees is a very odd use of language.

I mean, it’s not only a question of inference; it’s a question of sort of wrenching, isn’t it?

Lawrence G. Wallace:

Well, I understand that this language is not ideal as a starting point for our own purposes.

It was construed by the lower courts to authorize EPA to recover attorneys’ fees, and that was really reconfirmed, in our view, in the SARA amendments which added the words “enforcement activities”.

But the question in the case is not EPA’s right to recover; the question is petitioner’s right to recover.

David H. Souter:

Well, no, but if EPA is resting on a thin reed and you knock out the other block you might rest on, the next case might be an expensive one.

Lawrence G. Wallace:

Well, we have been sensitive to that problem in the way we have briefed this case, I can assure you, Mr. Justice.

It has been the subject of much discussion.

[Laughter]

Nonetheless, we can’t responsibly ask the Court to resolve that issue in this case, which doesn’t involve that question.

Lawrence G. Wallace:

The–

Ruth Bader Ginsburg:

But may I ask you if the word “legal studies”, maybe that fits in more with the Tenth Circuit kind of inbetween decision of this case; no litigation fees, but other legal fees.

Lawrence G. Wallace:

–Well, it certainly fits in well with that, but we don’t think it’s limited to that because it… the statutory phrase doesn’t end there.

It says as it may deem necessary, appropriate to… and/or appropriate to plan and direct response actions.

And that includes enforcement activities in our view, that could include litigation as… but it is not ideally drafted, from our standpoint.

Nonetheless, there has been a course of judicial decision upholding EPA’s and the Environment Division’s ability to recover these fees as part of its enforcement activities, and we think Congress built upon that in the SARA amendments, in adding that reference to “enforcement activities”.

But to get back to this case, petitioner has to… in order for its view to prevail, it has to have two inferences… not just one of the two, but both of them drawn in petitioner’s favor.

And the first inference is that enforcement activities standing alone, without the support, such as it is, of this reference, at least, to legal activities, would be a reference to attorneys’ fees explicit enough to meet the standard of Alyeska and Runyon.

John Paul Stevens:

Well, if they don’t include attorneys’ fees, what do they include when private parties are… just investigators and stenographers?

Lawrence G. Wallace:

Well, of course, our view is that they don’t include anything for a private party; that’s the second inference.

But if there isn’t agreement on that, then we would think that it would perhaps be–

John Paul Stevens:

Yeah, but you can’t… you can’t really plausibly argue that costs of response do not include enforcement activity.

That’s the only thing that’s clear in the text of the statute, in section 25.

Lawrence G. Wallace:

–Of course.

Of course.

John Paul Stevens:

It says response includes enforcement activity.

Lawrence G. Wallace:

Well–

John Paul Stevens:

But you’re disputing that.

Lawrence G. Wallace:

–We don’t dispute that.

We think that enforcement–

John Paul Stevens:

Well, then, if you don’t dispute that, what is it that enforcement activities includes, other than attorneys’ fees, when you’re talking about private litigation?

Lawrence G. Wallace:

–The most direct things involved are the studies and nonlitigation attorney time that would have to be involved in arranging for the cleanup.

You’re entering into contracts with the landfill companies and others who–

John Paul Stevens:

You acknowledge that is covered in a private action.

Lawrence G. Wallace:

–Well, we don’t think that “enforcement activities” refers to that.

We think “enforcement activities” refers only to the Government.

But we do think that those are appropriate response costs by a–

John Paul Stevens:

Private party.

Lawrence G. Wallace:

–Private person undertaking the cleanup activities.

The line that we think is drawn–

Ruth Bader Ginsburg:

Well, what about the argument that enforcement activities would be redundant because the EPA was already getting its… those costs?

Lawrence G. Wallace:

–But that was being contested in litigation and this was a way of reconfirming that EPA would have that authority.

Anthony M. Kennedy:

And so, Mr. Wallace, you can’t give us an example of an enforcement activity applicable to a private party that is not also covered as… in the term “response”.

Lawrence G. Wallace:

Well, I can’t, because we don’t think enforcement activities applies to activities by private parties.

Anthony M. Kennedy:

But, if it did, what… you say it’s just an empty set.

Lawrence G. Wallace:

No.

The… I think it would be redundant of what they could already recover as responses.

And it was put in, as the House report indicated… we’ve quoted it right in the middle of page 23 of our brief… that this refers…

“This section also modifies the definition of response action to include related enforcement activities. “

“The change will confirm the EPA’s authority to recover costs for enforcement actions taken against responsible parties. “

It was Government enforcement that Congress had in mind in making this change–

John Paul Stevens:

May I ask, Mr. Wallace… I didn’t mean to interrupt… but the enforcement action, that’s you recovering Government counsel’s attorneys’ fees, is that right?

Lawrence G. Wallace:

–That is correct.

John Paul Stevens:

How do they compute those?

How do they compute Government counsel’s attorneys’ fees?

Lawrence G. Wallace:

Well–

John Paul Stevens:

Is that on an hourly basis as if market value, like we do?

Lawrence G. Wallace:

–The… it’s… there’s a complicated accounting method that’s used that attributes time spent by the hourly wages and fringe benefits that the attorneys get–

John Paul Stevens:

I see.

Lawrence G. Wallace:

–On particular sites, plus what would be regarded as an overhead factor, according to proper accounting methods.

William H. Rehnquist:

Is it unusual for the Government to be authorized by statute to recover its attorneys’ fees against someone it’s litigating with?

Lawrence G. Wallace:

Well, I can’t think of any other example in particular.

William H. Rehnquist:

I can’t either.

Lawrence G. Wallace:

But I do think that it is not correct to think of this as a disparity between the Government and private parties.

What were–

William H. Rehnquist:

It may not be if none of them can recover their attorneys’ fees.

[Laughter]

Lawrence G. Wallace:

–Well, that’s true, Mr. Chief Justice.

But there… there… the litigation in this area typically proceeds in stages.

There is an initial stage to accomplish the cleanup, and that is typically brought not against all of the potentially responsible parties; there can be scores or even hundreds of those, many of which are relatively small factors.

Lawrence G. Wallace:

It’s brought against somebody who’s a major factor, who can be depended upon… or maybe two or three who can be depended upon to get the cleanup done, and there are certain time bars that prevent other litigation from going forward until cleanups are accomplished.

And then the second stage of litigation, which is what we are talking about in these contribution actions, is litigation in which these people who were jointly and severally liable and who tend to be relatively strong litigants and relatively well-to-do, can seek contribution from a large number of other potentially responsible parties who may be much smaller contributors to the site.

And there tends to be a considerable disparity of bargaining power between the litigants in these contribution actions to begin with, because the ones who are going to become the plaintiffs were selected because of their ability clean up the site in the first place.

And that disparity in bargaining power can be considerably exacerbated in some cases if there is also the potential liability for attorneys’ fees.

I’m not saying that Congress had this in mind and made a conscious decision to bar recovery of attorneys’ fees in the contribution litigation, but I’m pointing out that Congress was aware of these underlying problems.

And one of the less admired aspects of the implementation of CERCLA, that the so-called transaction costs… which is a word that has become part of the lexicon of environmental law, the costs of litigation and of studies, the costs that are not directly involved in the cleanup itself… have been soaring.

And–

John Paul Stevens:

Mr. Wallace, can you help me out?

I reveal my ignorance about the whole program, but is it the fact… you mentioned the deep-pocket person who’s given responsibility.

Is it true that if you have… say three companies contributed to pollution of a particular site and the very large company was only 75 percent responsible for the pollution, can that large company be made to pay 100 percent of the costs and then seek contribution from the others?

Lawrence G. Wallace:

–So long as the pollution has become mixed.

John Paul Stevens:

I see.

Lawrence G. Wallace:

And has not… is not severable within the site, and that they’re jointly and severally liable.

John Paul Stevens:

So then the costs that it has to recover because it had to pay in the first place include not only the physical costs of the actual engineering and so forth, but also the costs that it had to pay to the Government for its enforcement activities.

That’s part of what it then seeks contribution for.

Lawrence G. Wallace:

It can get contribution for its cleanup, but we’re of the view that it cannot get contribution for its attorney costs for either trying to resist its liability to EPA or for trying to find out who else were the contributors–

John Paul Stevens:

For bringing contribution actions.

Lawrence G. Wallace:

–And getting the contribution.

Because those costs can soar a good deal, and can–

John Paul Stevens:

Maybe the total amount in dispute would be significantly reduced if we followed the American rule across the board?

Lawrence G. Wallace:

–Perhaps so, but considerable budgetary adjustments would have to be made in order for Federal enforcement to be able to proceed.

Antonin Scalia:

Mr. Wallace, you acknowledged a bit earlier that it’s unusual, if not, indeed, unique, for the Federal Government to be awarded its attorneys’ fees.

Is it not also unusual and perhaps unique for the Government to be able to recover its enforcement costs, apart from attorneys’ fees?

Do you know of any other statute that lets the Government get its–

Lawrence G. Wallace:

Well, there are fee statutes in some agencies that require applicants for licenses to bear what amounts to the Government’s costs.

Antonin Scalia:

–Enforcement costs?

I mean–

Lawrence G. Wallace:

Well, they’re not really enforcement costs.

John Paul Stevens:

–Enforcing violations of the law, I’m talking about.

Well, your civil penalty statutes often do this, yeah.

Lawrence G. Wallace:

I guess that would be true.

We haven’t really given thought to analogies of that kind because the case before the Court is not about the Government’s ability to recover.

Antonin Scalia:

No, but I’m trying to help you, Mr. Wallace.

Lawrence G. Wallace:

Yes–

Antonin Scalia:

I will say, you know, just as well… you may it is unusual to get attorneys’ fees, but it’s also unusual to get enforcement costs.

In for a penny, in for a pound.

Lawrence G. Wallace:

–It certainly is an unusual–

Ruth Bader Ginsburg:

But you were referring to statutes that have user fees.

Lawrence G. Wallace:

–Yes, user fees.

It certainly is unusual, to get a little closer to home here… and I appreciate all of these thoughts, but to get a little closer to home–

Antonin Scalia:

I don’t often help you, Mr. Wallace.

[Laughter]

Lawrence G. Wallace:

–I should welcome it when it occurs.

It certainly is unusual for attorneys’ fees to be available in contribution actions.

This is not the common law rule, and as a matter of fact, the contribution provision itself says that it will be governed… that contribution will be governed by Federal law, and the Federal common law rule is the rule of Alyeska and of Runyon against McCrary, that in the absence of explicit authorization there should be no recovery of attorneys’ fees.

Now, I don’t think that it is for the Court in this case to resolve whether it would be more desirable or less desirable for attorneys’ fees recoveries to be available in contribution actions, and I don’t think that Congress decided to bar the recovery of attorneys’ fees.

What I do think is that the line that we see between actions that are taken to remedy the pollution and assure that a polluter… rather than the public… who is jointly and severally liable will bear the cost… the line between that and reallocating costs among polluters is a very rational line.

And it is rational in terms of considerations the Congress was aware of in the course of considering this legislation, and I want to just refer very briefly to a couple of indications of that.

Not because I say that Congress explicitly resolved it, because… but because I think it shows the wisdom of applying the Alyeska rule here, that Congress could have rationally not wanted to proceed that far.

And one is in the Senate committee report which accompanied the 1986 amendments, and the committee says that responsible sites often involve dozens or even hundreds of potentially responsible parties with differing types and degrees of involvement with the release.

While the Government may sue all potentially responsibilities, it need not sue all these parties; it may instead sue a limited number of parties to secure a complete cleanup or all costs of cleanup under the principle of joint and several liability.

Generally the Government seeks to obtain complete cleanup.

In some instances where the Government has sued major contributors of hazardous substances to a site but not lessor contributors, the parties named by the United States have, in turn, sued other potentially responsible parties in the same judicial action.

In several cases this has resulted in massive and potentially unmanageable litigation.

There is an amicus brief filed in our support in this case by a group called Sand Springs Superfund PRP Group, which claims to be put upon in this way, mostly because of claims for attorneys’ fees that are being made against it.

I can’t vouch for the accuracy of what they say, but it’s an example of the kinds of complaints that have been made.

Then on… in supporting the conference report on the floor of the Senate, Senator Simpson, who was a member of the conference committee, pointed out to his colleagues:

“There is not doubt that the immense transaction costs generated under Superfund, meaning lawyers’ fees and the many technical and scientific studies required in litigation, have come to symbolize the worst excesses of the American legal system. “

“Senator Domenici quoted Dickens’ Bleak House in describing it last year, and he was right. “

“We simply must work to have more societal resources spent on necessary and effective cleanup of Superfund sites and less on convoluted litigation which merely extends any public health threat that exists from these sites. “

Lawrence G. Wallace:

There are plausible reasons why Congress might have wanted to draw the line that we think emerges on the face of the statute, and reasons why there might have been concern that settlements that might be encouraged were attorneys’ fees available in the contribution phase of the litigation, might sometimes be in terrorem settlements rather than something that would move the litigation along in a fair and just manner.

In any event, when the provisions on which petitioner relies are contrasted with the explicit provisions made for the award of attorneys’ fees… and I realize that these create some difficulties for us as well, but not as much.

And we’ve set forth the citizens’ suit provision on page 13 of our brief… Justice Souter was asking about it earlier… where section 310(f) of CERCLA provides that a court, quote, may award costs of litigation, including reasonable attorney and expert witness fees, to the prevailing or the substantially prevailing party whenever the court deems such an award appropriate.

This is far different–

Ruth Bader Ginsburg:

But Mr. Schneider said that that’s all you get under citizens… it’s the only… there’s nothing… no other category that this can be placed under, as distinguished from the cleanup recovery.

Lawrence G. Wallace:

–It still is a rather striking difference in statutory drafting, and this provision was added at the same time in the 1986 amendments that the reference to enforcement activities was added, which certainly makes no explicitly reference to attorneys’ fees.

And then we refer later in the same paragraph to section 110(c) of CERCLA, which also is an explicit attorneys’ fees provision.

So we think that there simply is not a sufficiently clear… there’s too much ambiguity in resting on the double inferences that petitioner asks the Court to draw, to meet the standards of Alyeska and Runyon.

And as we’ve explained in the concluding pages of our brief, the request for nonlitigation attorneys’ fees really should be evaluated under the same standard; whether these were office costs devoted to securing a remedy and actually doing the cleanup or whether they were office costs devoted to reallocating the costs among consumers.

If the Court has no further questions.

William H. Rehnquist:

Thank you, Mr. Wallace.

Mr. Schneider, you have 5 minutes remaining.

Mark David Schneider:

Thank you, Mr. Chief Justice.

The Government contrasts the citizens’ suit provision, which uses the word “attorneys’ fees”, with the cost recovery provision, which uses the word “enforcement activities”.

The reason Congress chose the word 10125 is because it’s broader than attorneys’ fees, to encompass the costs of… incurred in enforcing the statute which are not incurred by attorneys; for example, private investigator costs.

The Government draws a distinction between the fees that might be awarded when a party is not liable versus the fees that might be awarded when a party is liable.

There’s no basis for that distinction in the statute.

Nothing in the language or the structure of the statute supports that distinction.

And as a practical matter, that distinction does not make sense in the Superfund context, because Superfund imposes liability on virtually any party which is even remotely associated with the contamination.

In fact, in many, if not most of the cases that EPA brings against… that the United States brings against one or two private parties, it’s the United States Department of Defense which is, in many cases, the largest polluter at that particular site.

With respect to the issue of 10125 includes attorneys’ fees.

We agree.

The Government has contended that the language in section 10125 confirmed EPA’s right to recover fees.

We agree, but Congress put that language of 10125, which was a section of general application, not one that applied only to the United States.

Thank you.

William H. Rehnquist:

Thank you, Mr. Schneider.

The case is submitted.

The honorable court is now adjourned until tomorrow at ten o’clock.