29 F.3d 833 (3rd Cir. 1994), 92-1945, FMC Corp. v. United States Dept. of Commerce

Docket Nº:92-1945.
Citation:29 F.3d 833
Party Name:FMC CORPORATION v. UNITED STATES DEPARTMENT OF COMMERCE; Ronald Brown, Secretary of Commerce, in his official capacity; United States of America, Appellants.
Case Date:July 05, 1994
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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29 F.3d 833 (3rd Cir. 1994)




Secretary of Commerce, in his official capacity;

United States of America, Appellants.

No. 92-1945.

United States Court of Appeals, Third Circuit

July 5, 1994

Argued Sept. 15, 1993.

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Vicki O'Meara, Acting Asst. Atty. Gen., Vicki L. Plaut (argued), Peter R. Steenland, Jr., Anne S. Almy, Dirk D. Snel, Ronald M. Spritzer, Glen Freyer, Attys., Dept. of Justice, Environment and Natural Resources Div., Washington, DC, for appellants.

Neil G. Epstein (argued), Steven J. Engelmyer, Carol L. Press, Joyce L. Brong, Hangley Connolly Epstein Chicco Foxman & Ewing, Philadelphia, PA, for appellee.

Argued Sept. 15, 1993.

Before: SLOVITER, Chief Judge, and MANSMANN and GREENBERG, Circuit Judges.

Reargued in banc April 26, 1994.



GREENBERG, Circuit Judge.


The United States and the United States Department of Commerce appeal from a final judgment entered on September 17, 1992, by the United States District Court for the Eastern District of Pennsylvania. The court held the United States jointly and severally liable, as an "owner," "operator" and "arranger," for response costs for which the plaintiff FMC Corporation is or will be responsible under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") to clean up hazardous waste created at an industrial facility during World War II. FMC acquired this facility many years after the war. The district court entered the final judgment in accordance with its opinion of February 19, 1992, reported as FMC Corp. v. United States Dep't of Commerce, 786 F.Supp. 471 (E.D.Pa.1992). FMC brought this action because the Environmental Protection Agency ("EPA") sought to recover the response costs from it. FMC seeks contribution, claiming that the United States also is liable because the War Production Board ("WPB"), which later was subsumed within the Department of Commerce, owned parts of the facility, operated the facility during World War II, and arranged for the disposal of the wastes created. FMC and the United States have settled the claim against the United States as an "owner," but the government contends that its conduct other than as an owner was regulatory activity from which the United States is protected from liability by its sovereign immunity. It further argues that, in any event, it was neither an "operator" nor an "arranger" within CERCLA. Accordingly, it contends that it cannot be liable other than as an owner. We reject the government's contentions and thus will affirm.

  1. Statutory Background

    Section 104 of CERCLA empowers the government to use money from the "Superfund" to clean up hazardous waste sites. 42 U.S.C. Sec. 9604(a). Section 107(a)(1)-(4) provides

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    that any "person" who: (1) is the "owner" or "operator" of a facility where there is a release or threat of release of a hazardous substance, (2) was the "owner" or "operator" of a facility at the time of the disposal of a hazardous substance, (3) "arranged" for such disposal, or (4) "accepted" a hazardous substance for transport to a facility, is liable for the response costs, i.e., the costs of removal and other remedial action incurred by the United States. 42 U.S.C. Sec. 9607(a)(1)-(4). Thus, an entity, such as FMC, which becomes an owner of a facility after the disposal of the hazardous waste is liable under CERCLA. Liability for the costs incurred is strict. United States v. Alcan Aluminum Corp., 964 F.2d 252, 259 (3d Cir.1992). Section 101(21) defines "person" to include the "United States Government." 42 U.S.C. Sec. 9601(21).

    From its inception, CERCLA has included a provision waiving the sovereign immunity of the United States and, as amended by the Superfund Amendments and Reauthorization Act of 1986, Pub.L. 99-499, Sec. 120, 100 Stat. 1613, 1666 (1986), CERCLA section 120(a)(1) includes the following waiver provision:

    Each department, agency, and instrumentality of the United States (including the executive, legislative and judicial branches of government) shall be subject to, and comply with this chapter in the same manner and to the same extent, both procedurally and substantively, as any nongovernmental entity, including liability under section 9607 [CERCLA section 107] of this title.

    42 U.S.C. Sec. 9620(a)(1) (emphasis added). Persons assessed by the United States with response costs under CERCLA may "seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title [CERCLA section 107(a) ], during or following any civil action under section 9606 of this title or under section 9607(a) of this title." 42 U.S.C. Sec. 9613(f)(1). Therefore, we are concerned on this appeal with the related but nevertheless distinct questions of whether the sovereign immunity of the United States bars this action against it, except as an owner, and whether the United States, if not immune, is liable either as an operator or an arranger, or both.

  2. Factual Background

    The facility at issue in this case is located in Front Royal, Virginia, and was owned by American Viscose Corporation from 1937 until 1963, when FMC purchased it. In 1940, American Viscose constructed a plant on the Front Royal site and began manufacturing textile rayon. Before World War II, the machines at the facility were not set up to produce high tenacity rayon. However, after Pearl Harbor, the government determined that the country needed increased production of high tenacity rayon for the manufacturing of war-related products, including airplane and truck tires. Inasmuch as the demand anticipated for high tenacity rayon greatly exceeded the projected supply, the WPB commissioned American Viscose to convert its plant to make high tenacity rayon and American Viscose did so.

    Unquestionably, at least by current standards, environmental controls were lax at the facility. Thus, it is not surprising that inspections in 1982 revealed carbon bisulfide, a chemical used in manufacturing high tenacity rayon, in the ground water in the vicinity of the plant. Consequently, the EPA began cleanup operations and notified FMC of its potential liability under CERCLA. In 1990, FMC filed this suit against the Department of Commerce under section 113(f) of CERCLA, 42 U.S.C. Sec. 9613(f), and the Declaratory Judgment Act, 28 U.S.C. Secs. 2201-02. FMC alleged that, as a result of the government's activities during World War II, the United States was jointly liable with FMC as an "owner" and "operator" of the facility, and as an "arranger for disposal" of hazardous wastes there. In particular, FMC claimed that the government became involved so pervasively in the facility that it effectively operated the plant along with American Viscose and, accordingly, should share in the response costs.

    The government filed a motion to dismiss, arguing that the United States could not be shown to have been an operator or an arranger for disposal within the meaning of CERCLA, as its activities affecting the facility

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    were regulatory. The district court rejected the government's position, holding that the United States is liable, regardless of the nature of its activities, whenever the government's "involvement or control become[s] so pervasive or significant as to warrant the imposition of CERCLA liability."

    In a subsequent motion for partial summary judgment, the government argued that it had not waived sovereign immunity under CERCLA for purely regulatory activities and that, in any event, its activities at the site did not rise to the level of ownership or operation necessary for the imposition of liability under the statute. The district court denied the motion, holding that there were disputes of material fact relating to the owner and operator issues concerning the extent of the government's activities at the plant. In March 1991, the district court held a four-day non-jury trial on the liability issues.

    Subsequently, in an opinion issued February 20, 1992, the district court held the government liable on all three theories articulated by FMC: as an owner, operator, and arranger. See FMC Corp. v. United States Dep't of Commerce, 786 F.Supp. 471. The liability period for these categories varied, and no period was identified specifically for "arranger" liability, but all fell between January 1942 and March 1948.

    The trial consisted largely of the introduction of documents as most persons with knowledge of the activities at the facility during the war had died. But the parties also introduced depositions, and there was some in-court testimony. Based on this evidence, the district court made extensive findings of fact, many if not most of which are not in dispute, and which we only need summarize.

    The facility is a 440-acre site and includes a manufacturing plant and 23 waste disposal basins and landfill areas. The plant was owned and operated by American Viscose from 1940 to 1963, FMC from 1963 to 1976, and Avtex Fibers-Front Royal, Inc. from 1976 to 1989. American Viscose is now out of business, and Avtex is in bankruptcy reorganization. Id.

    In January 1942, an executive order established the WPB. The WPB was empowered to issue directives to industry regarding war procurement and production, including directives concerning purchasing, contracting, specifications, construction, requisitioning, plant expansion, conversion, and financing. Moreover, in 1942, the WPB's powers were expanded to include the seizure and operation of non-complying industries. Id. at 474-75.

    At the outset of the war, the United States lost 90% of its crude rubber supply because the Japanese occupied parts of Asia from which this...

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