Bancamerica Commercial Corp. v. Mosher Steel of Kansas Inc.

• Citation: 100 F.3d 792
• Decision Date: 13 November 1996
• Docket Number: Nos. 95-3385,s. 95-3385
• Parties: BANCAMERICA COMMERCIAL CORPORATION, a Pennsylvania corporation; ASARCO, INC., Plaintiffs-Appellees-Cross-Appellants, v. MOSHER STEEL OF KANSAS, INC., a Kansas corporation; TRINITY INDUSTRIES, INC., a Texas corporation, Defendants-Appellants-Cross-Appellees. & 95-3396
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 792

100 F.3d 792

BANCAMERICA COMMERCIAL CORPORATION, a Pennsylvania corporation; ASARCO, INC., Plaintiffs-Appellees-Cross-Appellants, v. MOSHER STEEL OF KANSAS, INC., a Kansas corporation; TRINITY INDUSTRIES, INC., a Texas corporation, Defendants-Appellants-Cross-Appellees.

Nos. 95-3385 & 95-3396

United States Court of Appeals Tenth Circuit

November 13, 1996

Appeal from the United States District Court for the District of Kansas, (D.C. No. 90-CV-2325-GTV) Elizabeth Drill Nay (Thomas M. Martin with her, on the briefs) fo Lewis, Rice & Fingersh, L.C., Kansas City, Missouri, for Bancamerica Commercial Corporation.

Earl K. Madsen of Bradley, Campbell, Carney & Madsen, Golden, Colorado, for Asarco, Incorporated.

Frederick W. Addison, III (Elizabeth E. Mack which him, on the briefs) of Locke Purnell Rain Harrell, Dallas, Texas, for Defendants-Appellants-Cross-Appellees.

Before PORFILIO, TACHA and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

After a series of settlements and party realignments, Plaintiffs Bancamerica Commercial Corp. ("Bancamerica") and ASARCO, Inc. ("ASARCO") sued Defendants Trinity Industries, Inc. and a subsidiary, Mosher Steel Co., (collectively "Trinity") under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 for contribution to costs the Plaintiffs incurred in an environmental cleanup of an industrial site. Additionally, Bancamerica asserted a pendant state law breach of contract claim. The district court held Trinity partially responsible for the site's environmental contamination, and ordered Trinity to reimburse Bancamerica and ASARCO for the $555,293.55 in expenses attributable to cleanup of Trinity's pollution. It also held Trinity liable to Bancamerica for $70,178.07 in unpaid taxes on Bancamerica's breach of contract claim. We reverse and remand the district court's refusal to grant Bancamerica and ASARCO prejudgment interest on the Comprehensive Environmental Response, Compensation, and Liability Act award, and affirm the remainder of the district court's opinion.

The district court's opinion, found at Bancamerica Commercial Corp. v. Trinity Indus., 900 F. Supp. 1427 (D. Kan. 1995), contains a detailed description of the facts; we provide only a synopsis. From 1899 to 1902 ASARCO operated what was at that time one of the world's largest lead smelters at the site. From 1907 to 1984 nonparties to this suit operated a steel fabrication facility on the site, using large amounts of lead-based paints and solvents. In 1984 Bancamerica obtained the site through a deed in lieu of forfeiture. Bancamerica immediately leased the site to Trinity, who occupied it until 1987. Trinity also used large amounts of lead-based paints and solvents on the site. ASARCO, the nonparties, and Trinity all contaminated the site to some extent. Id. at 1448-49.

Trinity and Bancamerica canceled the lease in 1987, at which time Trinity discontinued operations at the site. In conjunction with this cancellation, Bancamerica contracted to purchase certain cranes located on the site from Trinity for $200,000.00. Trinity claims Bancamerica has not yet paid this sum, and argues this alleged debt offsets the $70,178.07 it owes Bancamerica for unpaid taxes.

Upon entry on and investigation of the site, Bancamerica discovered a variety of contamination problems. Trinity left approximately 300 barrels on the site, some of which were leaking and/or contained hazardous substances. Trinity had buried approximately eighty of these barrels in a pit. Three underground storage tanks were leaking gasoline into the soil. Most seriously, the site was highly contaminated with lead. The lead originated from three sources: slag and smelter ash (for which ASARCO was solely responsible), and lead-based paint (for which the nonparties and Trinity were responsible). Id. at 1449.

In 1989, the Environmental Protection Agency notified Bancamerica, ASARCO, and Trinity of their potential liability under the Comprehensive Environmental Response, Compensation, and Liability Act. In 1990, the Environmental Protection Agency and Bancamerica entered into an Administrative Consent Order that required Bancamerica to engage in a cleanup of the site. Thereafter, in 1991, the Environmental Protection Agency issued a Unilateral Comprehensive Environmental Response, Compensation, and Liability Act Section(s) 106 Order to ASARCO, requiring it to assist in the completion of the cleanup. Bancamerica and ASARCO, without assistance from Trinity, completed the cleanup. They then brought this suit seeking contribution from Trinity.

The parties raise seven issues on appeal. The first four, raised by Trinity, are: (1) whether the Environmental Protection Agency orders required Bancamerica and ASARCO to meet the public comment requirements of the national contingency plan; (2) if the district court should have decided whether the cleanup was a "remedial" or a "removal" action; (3) whether Bancamerica was entitled to recover costs incurred in 1988 and 1989, prior to the Administrative Consent Order; and (4) whether Trinity was entitled to an offset against Bancamerica's claim for unpaid taxes. The issues raised by Bancamerica and ASARCO are: (5) whether Bancamerica and ASARCO were entitled to pre-judgment interest; (6) whether the district court erred in considering only toxicity and volume in allocating responsibility (and liability) for cleanup of the lead contamination; and (7) whether Trinity breached its lease with Bancamerica through improper maintenance or operation of the underground storage tanks. We reverse the district court's refusal to award Bancamerica and ASARCO pre-judgment interest, and affirm the district court on all other issues. We address these issues in the order presented to us.

I.

Did the Environmental Protection Agency orders require Bancamerica and ASARCO to comply with the public comment requirements of the national contingency plan?

In order for Bancamerica and ASARCO to obtain contribution from Trinity, their response actions¹ must have been "consistent with the national contingency plan." 42 U.S.C. Section(s) 9607(a)(4)(B) (1994).² Importantly, a regulation in the national contingency plan provides that "[a]ny response action carried out in compliance with the terms of an order issued by [the Environmental Protection Agency] pursuant to section 106 of [the Comprehensive Environmental Response, Compensation, and Liability Act] ... will be considered 'consistent with the [national contingency plan].'" 40 C.F.R. Section(s) 300.700(c)(3)(ii) (1995). Both of the orders under which Bancamerica and ASARCO acted were issued by the Environmental Protection Agency pursuant to Section(s) 106, and the district court found that Bancamerica and ASARCO complied with the terms of these orders. Bancamerica, 900 F. Supp. at 1451 n.2, 1452-53. Accordingly, the court held their response actions were consistent with the national contingency plan. Id. at 1453.

On appeal, Trinity contends Bancamerica and ASARCO failed to comply with all of the terms of their orders, and, therefore, the regulation's presumption of consistency with the national contingency plan is inapplicable. In particular, Trinity claims that language in the orders required Bancamerica and ASARCO to satisfy the national contingency plan's public comment requirements,³ and that Bancamerica and ASARCO failed to do so. We review this issue de novo, ⁴ and finding Trinity's argument unconvincing, affirm the district court's holding.

Trinity relies on a provision in the Environmental Protection Agency order to Bancamerica that states "all actions required to be taken pursuant to the terms of this Order shall be undertaken in accordance with the requirements of all applicable local, state, and Federal laws and regulations," and an analogous provision in the Environmental Protection Agency's order to ASARCO. Trinity contends these provisions required Bancamerica and ASARCO to comply with all the regulations of the national contingency plan (including the public comment requirements) to comply with the Environmental Protection Agency orders. That is, only by satisfying all the requirements of the national contingency plan could Bancamerica and ASARCO comply with the terms of their orders so as to obtain the regulation's presumption of acting "consistent with the national contingency plan."

We decline to accept this argument because, as the district court correctly noted, such an interpretation of the Environmental Protection Agency orders "would in effect render meaningless the regulation that deems actions taken in compliance with such orders to be consistent with the [national contingency plan]." Id. The fallacy of Trinity's argument is obvious. To obtain the regulation's presumption of consistency with the national contingency plan, Bancamerica and ASARCO would actually need to satisfy every requirement of the plan, thus eliminating any need for the presumption. Furthermore, in the order to Bancamerica, the Environmental Protection Agency expressly stated the work to be performed pursuant to the order, if properly performed, would be "consistent with the provisions of the National Contingency Plan." Thus, Trinity's interpretation of the "applicable law" provisions similarly would render meaningless this provision of the Environmental Protection Agency order.

Contrary to Trinity's allegations, our holding does not make meaningless the "applicable law" provisions. Such provisions protect the Environmental Protection Agency from foreclosing additional enforcement options and ensure private persons engaged in a cleanup comply with applicable state and local laws and regulations. Our holding does not impair the accomplishment of these goals.

The Environmental Protection Agency's comments on its regulations, which are entitled to substantial deference, Martin v. Occupational Safety & Health Review Comm'n, 499 U.S. 144, 150-51 (1991),...