U.S. v. Occidental Chemical Corp.

Citation200 F.3d 143
Decision Date28 December 1999
Docket NumberNo. 99-3084,No. 98-,98-,99-3084
Parties(3rd Cir. 1999) UNITED STATES OF AMERICA APPELLANT, V. OCCIDENTAL CHEMICAL CORPORATION (D.C. Civil Actioncv-00686)
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

On Appeal From the United States District Court For the Middle District of Pennsylvania District Judge: Honorable Malcolm Muir

[Copyrighted Material Omitted]

Before: Scirica and Stapleton, Circuit Judges, and Shapiro, District Judge*

OPINION FOR THE COURT

Stapleton, Circuit Judge

After settling with Ruetgers-Nease Chemical Company ("Ruetgers"), the EPA issued a "unilateral administrative order," pursuant to § 106 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9606, requiring Occidental Chemical Corporation ("Occidental") to assist in the financing and implementation of remedial response actions at the Centre County Kepone Superfund site. The District Court granted Occidental's motion to dismiss, concluding that Ruetgers' commitment to clean up the site and reimburse the Superfund for past response costs precluded the EPA from obtaining any relief from Occidental. We will reverse the judgment of the District Court and remand the case for further proceedings.

I.

This case arises from the EPA's efforts to compel potentially responsible parties ("PRPs") under CERCLA to conduct a cleanup at the Centre County Kepone Superfund Site in State College, Pennsylvania. Two PRPs are relevant to this appeal: Ruetgers, the site owner, whom EPA alleges is liable under § 107(a)(1) of CERCLA, and Occidental, whom EPA alleges is liable under § 107(a)(3) for "arranging for the disposal" of hazardous substances at the site. 42 U.S.C. § 9607(a)(1) and (3).1 Since 1958, Ruetgers and its predecessor, Nease Chemical Company ("Nease"), have owned the Centre County Kepone site and have manufactured a variety of chemicals there. During a period in 1973 and 1974, Occidental's predecessor, Hooker Chemical Company ("Hooker"), contracted with Nease for the manufacture of a pesticide. Under their agreement, Hooker provided Nease with the raw materials and the formula for manufacturing the pesticide and paid Nease to manufacture the product, which involved the generation and disposal of hazardous substances on the site.

In 1983, the Centre County Kepone site was listed on the National Priorities List, and in 1988, EPA entered into an administrative order with Ruetgers, who agreed to perform a remedial investigation/feasibility study, which was completed in 1992. In 1995, after dividing the remediation into two "operable units," EPA signed a "record of decision," announcing the selected remedial action for the first operable unit ("OU-1").2

Pursuant to § 122(e), 42 U.S.C. § 9622(e), EPA served both Ruetgers and Occidental with "special notice letters," which set forth EPA's basis for their liability and invited a good faith offer of settlement. Following receipt of the letter, Ruetgers began negotiating with EPA regarding the remedial work for OU-1. In 1996, EPA entered into a Consent Decree with Ruetgers in which Ruetgers agreed to perform the remedial work for OU-1 and to pay $293,895 in past response costs in settlement of its liability with respect to OU-1.

EPA's efforts to negotiate with Occidental, however, were unsuccessful. When negotiations with Occidental failed, EPA, finding that the Centre County Kepone Site presented an imminent and substantial endangerment, issued a unilateral administrative order ("UAO"), pursuant to § 106 of CERCLA, 42 U.S.C. § 9606, requiring that Occidental jointly implement the OU-1 remedy with Ruetgers. Specifically, the Order stated that Occidental is subject "to the same terms and conditions set forth in the Ruetgers Consent Decree with respect to financing and implementing the response actions" at the Centre County Kepone site. App. 136. It further provided:

[Occidental's] obligations under this Order may be fulfilled by jointly fulfilling with [Ruetgers] the obligations under the... proposed Consent Decree, Civil Action No. 4: CV-96-2128. To the extent that any portion of the Work is undertaken by [Ruetgers], [Occidental] is not excused from performing under the present Order and is severally liable for all obligations set forth herein and for ensuring that the Work be completed in a manner consistent with the NCP, CERCLA and all applicable federal, state and local laws.

App. 151.

Under § 106(a), if EPA finds an "imminent and substantial endangerment to the public health or welfare or the environment," it is authorized to "issue such orders as may be necessary to protect public health and welfare and the environment." 42 U.S.C. § 9606(a). If the ordered party fails to comply with the order "without sufficient cause," CERCLA provides for severe penalties -- i.e., up to $25,000 per day of noncompliance, see id. § 106(b)(1), plus treble damages, see id. § 9607(c)(3). CERCLA provides, however, that, if the ordered party is not liable, or demonstrates that the ordered action was arbitrary and capricious, it may obtain reimbursement of costs expended in compliance with the order, plus interest. See id. §§ 9606(b)(2)(A)-(E). In addition, under § 106(b)(1), an ordered party may avoid the imposition of fines or penalties if it has "sufficient cause" for its refusal to comply with the order.3

In this case, Occidental informed EPA it would not comply with the § 106 order, and EPA filed this action in District Court to enforce its order. EPA's Complaint seeks (1) an injunction ordering Occidental to comply with the order; (2) certain past costs not recovered from Ruetgers; (3) civil penalties; (4) punitive damages; and (5) a declaratory judgment of liability for future costs incurred at the site.

Occidental moved to dismiss the Complaint under Federal Rules of Civil Procedure 12(b)(6). Occidental argued that EPA has already obtained "complete relief" from the Ruetgers Consent Decree and, therefore, is precluded from pursuing Occidental for the same relief. To find otherwise, Occidental argues, would permit EPA to obtain a double recovery, which is impermissible both under CERCLA and common law. The District Court agreed and dismissed EPA's Complaint. The District Court then denied a subsequent motion for partial reconsideration. EPA now appeals. We exercise plenary review of a grant of a motion to dismiss, accepting all allegations in the Complaint as true and drawing all reasonable inferences in the light most favorable to the plaintiff. See Weiner v. Quaker Oats Co., 129 F.3d 310, 315 (3d Cir. 1997).

II.

CERCLA provides a complex statutory scheme for the cleanup of the nation's hazardous waste sites. Although EPA has several alternative strategies for achieving the statute's objective, each ultimately involves "forc[ing] polluters to pay for costs associated with remedying their pollution." United States v. Alcan Aluminum Corp., 964 F.2d 252, 257-58 (3d Cir. 1992). In FMC Corp. v. Dept. of Commerce, 29 F.3d 833, 843 (3d Cir. 1994), this Court noted "CERCLA's broad remedial purposes" and cited as "most important[ ]" CERCLA's "essential purpose of making those responsible for problems caused by the disposal of chemical poisons bear the costs and responsibility for remedying the harmful conditions they created."

To this end, CERCLA provides EPA with a variety of tools for achieving the efficient and cost-effective cleanup of the nation's hazardous waste sites. First, under § 104(a) EPA itself can conduct the remedial work at a site, using the Superfund, and then sue the potentially responsible parties under § 107 to recover its costs. EPA may sue one or all of the PRPs involved at a given site, as each PRP is jointly and severally liable for all response costs that are "not inconsistent with the national contingency plan." 42 U.S.C. § 9607(a)(4)(A). Second, under § 106(a), if EPA determines there is an "imminent and substantial endangerment to the public health or welfare," it may order PRPs to undertake the remedial work in the first instance, either by obtaining injunctive relief in a District Court or by issuing such administrative orders "as may be necessary to protect public health and welfare and the environment." 42 U.S.C. § 9606(a).

Finally, § 122 of CERCLA expressly provides that "whenever practicable and in the public interest... [EPA] shall act to facilitate agreements... in order to expedite effective remedial actions and minimize litigation." 42 U.S.C. § 9622(a). It is through § 122 that PRPs may agree, as opposed to being ordered under § 106(a), to do the remedial work at a site in the first instance. While EPA has the discretion to decide which PRPs to pursue for performance of the remedy or recovery of its past costs, and thus is authorized to pursue fewer than all PRPs at a given site, the statute expressly permits PRPs to sue other liable parties for contribution. See 42 U.S.C. § 9613(f)(1).

Some settlements between PRPs and EPA, like the Ruetgers Consent Decree, involve agreements to do work, while others are "cash out" settlements in which a party pays a portion of the past, or future, response costs in exchange for a release from liability. See id. §§ 9622(g), (h). In either case, settlements with the United States under CERCLA typically include a covenant not to sue and contribution protection for matters addressed in the settlement. See id. §§ 9622(f), (h)(4); 9613(f)...

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