BR MacKay & Sons, Inc. v. United States, Civ. No. C85-0914G.

• Decision Date: 30 April 1986
• Docket Number: Civ. No. C85-0914G.
• Citation: 633 F. Supp. 1290
• Court: U.S. District Court — District of Utah
• Parties: B.R. MACKAY & SONS, INC., a Utah corporation, and Michael T. MacKay, an individual, Plaintiffs, v. UNITED STATES of America, Defendant.

633 F. Supp. 1290

B.R. MACKAY & SONS, INC., a Utah corporation, and Michael T. MacKay, an individual, Plaintiffs, v. UNITED STATES of America, Defendant.

Civ. No. C85-0914G.

United States District Court, D. Utah, C.D.

April 30, 1986.

Richard B. Ferrari, Louise T. Knauer, Salt Lake City, Utah, for plaintiffs.

John F. Cermak, Jr., Gregory C. Diamond, U.S. Atty's. Office, Salt Lake City, Utah, for defendant.

MEMORANDUM DECISION AND ORDER

J. THOMAS GREENE, District Judge.

This matter came on regularly for hearing on March 17, 1986, on defendant United States of America's Motion to Dismiss or to Transfer. John F. Cermak, Jr. and Gregory C. Diamond appeared on behalf of defendant United States of America and Richard B. Ferrari and Louise T. Knauer appeared on behalf of plaintiffs B.R. MacKay & Sons, Inc., and Michael T. MacKay. The issues were thoroughly briefed by plaintiffs and defendant and the parties had opportunity to present extensive oral argument, after which the Court took the matter under advisement. The Court now being fully advised in the premises, hereby renders its Memorandum Decision and Order.

FACTUAL BACKGROUND

Plaintiff Michael T. MacKay, President of B.R. MacKay & Sons, Inc., was an unsalaried vice-president and director of Film Recovery Systems Corporation ("FRS"), a Delaware corporation based in Elk Grove Village, Illinois. Plaintiff B.R. MacKay & Sons, Inc. ("BRM"), a Utah based corporation, was a 50% shareholder of FRS. FRS extracted silver from used x-ray and photographic film through chemical treatments which included a two percent inorganic cyanide solution and sodium hypoclorite. The waste product of this treatment process was film chips — postage stamp-sized pieces of film. Between October 1981 and February 1982, FRS stored a quantity of those film chips in truck trailers in truck yards in Cook and Lee Counties, Illinois.

On February 10, 1983, Stefan Golob, an FRS employee, died on the job as a result of cyanide inhalation. The Golob death prompted state authorities to begin proceedings against FRS because of the potential health hazard caused by the storage of cyanide treated film chips. Additionally, on November 17, 1983, the Environmental Protection Agency ("EPA") Regional Administrator authorized an immediate removal action of the chips pursuant to 42 U.S.C. §§ 9601 et seq. "to eliminate the release of cyanide bearing leachate to drainage ditches and to prevent release of chips to the environment by structural collapse of the trailers." The removal was begun immediately and was completed sometime prior to June 17, 1985. In addition, on October 19, 1983, a Cook County Grand Jury indicted five former FRS directors, officers and employees, including plaintiff MacKay, for the alleged murder of Stefan Golob. Illinois then requested Mr. MacKay's extradition to stand trial for murder. Utah's Governor twice refused the extradition request.¹

Following the cleanup, the United States Department of Justice mailed to each plaintiff herein a demand for reimbursement of response costs incurred by the EPA in connection with the cleanup of the hazardous or potentially hazardous storage sites.² By letter dated June 24, 1985, plaintiffs denied responsibility under applicable law. The United States responded by letter dated July 24, 1985, that the case could not be resolved without litigation. Counsel for plaintiffs then contacted the Department of Justice for the purpose of requesting documents from the EPA so that the matter might be resolved without litigation. On July 31, 1985, the Department of Justice hand delivered the pertinent documents to counsel for the MacKays. With the documents was a Department of Justice letter stating the government's clear intention to file a cost recovery action in the near future if settlement discussions failed to resolve the matter.

On August 2, 1985, the plaintiff filed this action seeking a declaratory judgment of nonliability to the United States for the costs incurred in the EPA cleanup. This action also seeks to enjoin the United States from taking any action to compel plaintiffs to pay the response costs at issue. On August 5, 1985, the following working day, the United States initiated a cost recovery action in the Northern District of Illinois against the plaintiffs herein and against Steven J. O'Neil, the President of FRS. That complaint alleges that O'Neil and MacKay, as officers and directors of FRS, managed, controlled and directed its operations which resulted in the storage of some 14 million pounds of waste material containing cyanide which was released or threatened release into the environment and necessitated the cleanup. The complaint also alleges that BRM exercised such dominant control over FRS as to render it the alter ego of FRS. The United States seeks some $235,000 for the cleanup.

Plaintiffs MacKay and BRM, defendants in the Illinois action, moved the District Court for the Northern District of Illinois to dismiss that complaint pursuant to Rule 13(a), Fed.R.Civ.P., to stay that action, or, in the alternative, to transfer the action pursuant to 28 U.S.C. § 1404(a) to the United States District Court for the District of Utah. The Illinois Court denied the motions on several grounds, including the fact that that action involves a party defendant that is not present in this action and thus this action cannot resolve the entire matter.

The United States now has moved this court to dismiss the present action for lack of jurisdiction and for failure to state a claim for which relief can be granted. Alternatively, the government asks this Court to exercise its discretion and dismiss the action because of the ongoing Illinois cost recovery action which arguably can resolve the entire matter whereas this action arguably cannot.³ Finally, the United States moves in the alternative that this Court transfer the case to the United States District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a). Before we can rule properly on defendant's Motions, this Court must review the applicable statutory framework which forms the basis of the response action and the government's demand for payment.

STATUTORY BACKGROUND

Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601 et seq., in response to increasing concern over the severe environmental and public health effects from improper disposal of hazardous waste and other hazardous substances. While the EPA had authority under other statutes to bring suit and compel cleanup, it lacked the authority and the funding to respond immediately to serious hazards presented by hazardous waste sites before legal determinations of liability were made. See United States v. Price, 577 F.Supp. 1103, 1108 (D.N.J.1983). CERCLA was designed to bridge gaps in pre-existing statutes by establishing the authority and the funding for the EPA to take immediate cleanup action, without the need to await administrative and judicial determinations of liability. See S.Rep. No. 848, 96th Cong., 2d Sess. 8, 11-12, 22, 56, 62 (1980). That goal is accomplished through certain provisions of CERCLA. Section 104(a) authorizes the EPA to clean up or otherwise respond⁴ to any release or threatened release into the environment of "hazardous substances" or other "pollutants or contaminants." 42 U.S.C. § 9604(a). Section 221(a) establishes the Hazardous Substance Response Trust Fund to finance cleanups pursuant to Section 104. Id. § 9631(a). Section 105(8) empowers the President to select at least 400 sites posing the greatest threat to human health and the environment as the top priority among response targets. Id. § 9605(8). Section 107 establishes liability rules to allow the government to recover its response costs under Section 104 from responsible parties.⁵ Id. § 9607.

Assuming one qualifies as a responsible party under the Act, certain affirmative statutory defenses exist that would, if proved, altogether preclude liability of the responsible party.⁶ Other defenses, it seems, exist against a government claim for reimbursement such as a showing that one is not a responsible party or a showing that the response action was not appropriate according to the terms of the Statute.⁷

SUBJECT MATTER JURISDICTION AND SOVEREIGN IMMUNITY

The government's primary contentions on its Motion to Dismiss are that this Court lacks subject matter jurisdiction to hear plaintiffs' declaratory judgment action and that the government has not waived sovereign immunity. Defendant urges that plaintiffs' claims can be raised only in defense to a cost recovery action initiated by the government pursuant to establishing liability under section 107 of CERCLA. Preenforcement review of EPA action, the government argues, would thwart the purpose of the Act causing delay in cleanups, increased response costs and discouragement of settlements and voluntary cleanups.

It appears that with the dangers or potential dangers caused by hazardous substances, shooting first and asking questions later was the intent of Congress, making it clear that under CERCLA the EPA should have and has full reign to conduct or mandate uninterrupted cleanups for the benefit of the environment and the populous. S.Rep. No. 848, 96th Cong., 2d Sess 56 (1980), reprinted in A Legislative History of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, at 363 ("delay will often exacerbate an already serious situation"; "it is preferable to err on the side of protecting public health, welfare and the environment in administering the response authority of the fund"). In Lone Pine Steering Committee v. United States Environmental Protection Agency, 777 F.2d 882 (3rd Cir. 1985) the Court said: "To delay remedial action until the liability situation is unscrambled would be inconsistent with the statutory plan to promptly eliminate the sources of danger to health...