Bethlehem Steel Corp. v. Bush, Civ. No. H88-296.

• Decision Date: 07 September 1989
• Docket Number: Civ. No. H88-296.
• Citation: 736 F. Supp. 945
• Parties: BETHLEHEM STEEL CORPORATION, Plaintiff, v. George BUSH, in his capacity as President of the United States of America; William Reilly, in his capacity as Administrator of the United States Environmental Protection Agency; and the United States Environmental Protection Agency, Defendants.
• Court: U.S. District Court — Northern District of Indiana

736 F. Supp. 945

BETHLEHEM STEEL CORPORATION, Plaintiff, v. George BUSH, in his capacity as President of the United States of America; William Reilly, in his capacity as Administrator of the United States Environmental Protection Agency; and the United States Environmental Protection Agency,^* Defendants.

Civ. No. H88-296.

United States District Court, N.D. Indiana, Hammond Division.

September 7, 1989.

Bryan G. Tabler, Joan M. Heinz and Barbara A. Fruehling, Barnes & Thornburg, Indianapolis, Ind., and Charles Sweeney, Barnes & Thornburg, South Bend, Ind., for plaintiff.

Andrew B. Baker, Jr., Asst. U.S. Atty., Hammond, Ind., and Robert Lefevre, U.S. Dept. of Justice, Land and Natural Resources Div., Washington, D.C., for defendants.

ORDER

LOZANO, District Judge.

The plaintiff, Bethlehem Steel Corporation ("Bethlehem"), brings this action pursuant to Section 106(b)(2) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. § 9606(b)(2). Bethlehem seeks reimbursement from the Hazardous Substance Response Fund (commonly called the "Superfund") for funds expended in complying with administrative orders issued by the United States Environmental Protection Agency ("EPA").

This action is before the Court on the EPA's Motion to Dismiss, which was filed September 8, 1988. While this is a case of first impression in this District, this Court has been guided in its decision by Gary Steel Supply Co. v. Reagan, 711 F.Supp. 471 (N.D.Ill.1989), decided April 24, 1989, which is factually almost indistinct. (EPA's denial of Petition for Reimbursement for funds expended complying with an order received prior to effective date of amendment upheld.) For the reasons set forth below, the EPA's Motion to Dismiss is GRANTED.¹

FACTS

For some time prior to September, 1985, Bethlehem sold spent pickle liquor² to the Conservation Chemical Company of Illinois, Inc. (CCCI). Between April 1, 1981 and September, 1985, these sales were conducted pursuant to an Agreement dated April 1, 1981. The Agreement specified a sale price of 0.035 cents to 0.04 cents per gallon for the spent pickle liquor, and provided that it would be loaded into CCCI's tank trucks at Bethlehem's Burns Harbor, Indiana plant, at which point the title and risk of loss passed to CCCI. CCCI transported the spent pickle liquor to its Gary, Indiana facility, where it was processed into ferric chloride. Bethlehem never delivered spent pickle liquor to CCCI at the Gary site, nor transported, nor arranged for the transportation of the spent pickle liquor it sold to CCCI, and the spent pickle liquor only changed hands at Bethlehem's Burns Harbor plant.

The EPA, along with CCCI and the Gary Airport Authority,³ investigated the conditions at CCCI's Gary facility, and found numerous tanks and drums, many of which were severely corroded and showed signs of past and present leakage. The hazardous substances at the facility included cyanide-bearing liquids; oils, tars, and sludge contaminated with polychlorinated biphenyl (PCB); silica tetrachloride; and water and soil contaminated or mixed with the above substances.

On September 27, 1985, the EPA issued an administrative order requiring CCCI, Bethlehem, and seventeen other companies known to have conducted business with CCCI, to undertake emergency measures to remove the hazardous substances from CCCI's Gary site. Bethlehem and the seventeen other parties were named in the Order because all of the hazardous materials had been co-mingled into an indivisible mixture. The EPA therefore held each of these parties potentially responsible for the presence of these substances at the site, for the past, present and threat of future release of these substances into the environment, and for the cleanup necessary to abate the hazard.

On October 9, 1985, the EPA met with CCCI, Bethlehem and the other companies named in the Order. As a result of this meeting, the EPA reissued the Order on November 25, 1985, with an amended course of action and an extended time schedule. The Order, as modified, was deemed by the EPA to be effective as of October 18, 1985.

After the meeting with the EPA, Bethlehem formed a group with thirteen of the other parties named in the Order (the "Group"). On October 17, 1985, in response to the Order, the Group sent a letter to the EPA in which the Group indicated that it intended to comply with the Order. The letter included a proposed plan for compliance and specified that this was not and was not to be deemed an admission of liability nor a waiver of any legal or equitable defense any of the Group may have had.

One year later, on October 17, 1986, SARA became effective. As of that date, 42 U.S.C. § 9606(b)(1) provided:

(1) Any person who, without sufficient cause, wilfully violates, or fails or refuses to comply with, any order of the President under Subsection (a) of this section may, in an action brought in the appropriate United States District Court to enforce such order, be fined not more than $25,000 for each day in which such violation occurs, or such failure to comply continues.

(2)(A) Any person who receives and complies with the terms of any order issued under Subsection (a) of this section may, within sixty (60) days after completion of the required action, petition the President for reimbursement from the Fund for the reasonable costs of such action, plus interest.

(B) If the President refuses to grant all or part of a petition made under this paragraph, the Petitioner may, within thirty (30) days of receipt of such refusal, file an action against the President in the appropriate United States District Court seeking reimbursement for the Fund.

(C) Except as provided in sub-paragraph (D), to obtain reimbursement, the petitioner shall establish by preponderance of the evidence that it is not liable for response costs under Section 9607(a) or this Title and that costs for which it seeks reimbursement are reasonable in light of the action required by the relevant order.

On March 16, 1987, the Group submitted to the EPA a proposed plan for cleanup procedures to be implemented at the Gary CCCI site. The EPA approved the plan on April 30, 1987. The Group began cleanup work in accordance with the plan on June 8, 1987, and this work was completed on February 24, 1988.

On March 4, 1988, Bethlehem petitioned defendants for reimbursement under Section 106(b)(2)(A) of CERCLA, 42 U.S.C. § 9606(b)(2)(A) for its compliance costs, which totalled $301,300.00. Bethlehem alleged that it was not liable because it had not made arrangements nor agreements for the storage, treatment, or disposal of materials at the Gary CCCI site, and Bethlehem further alleged that it was not liable as an owner of the facility or as a transporter. 42 U.S.C. § 9607. The EPA denied the petition in a letter received by Bethlehem dated May 10, 1988. In its letter, the EPA stated that the basis for the denial was that "Section 106(b) does not apply to parties who received Section 106(a) orders prior to the date of enactment of (SARA)" as "providing reimbursement would require the retroactive application of Section 106(b)." Bethlehem filed this action on June 16, 1988.

The EPA has moved for dismissal on the same ground upon which it based its denial of Bethlehem's petition. Bethlehem argues that the plain language of the Statute and its legislative history authorized the reimbursement of Bethlehem's expenses; that reimbursement would not constitute retroactive application of the Statute; and that even if it were retroactive application, Section 106(b) is procedural in nature and supports such an application. For the reasons set forth below, this Court finds the argument set forth by the EPA to be more persuasive, and GRANTS the Motion to Dismiss.

ANALYSIS

In ruling on a Rule 12(b)(6) Motion to Dismiss, this Court must follow

the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.

Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84 (1957)

This Court must accept "all allegations in the Complaint as true." Collins v. County of Kendall, Ill., 807 F.2d 95, 99 (7th Cir. 1986). See also: Hishon v. King and Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2233, 81 L.Ed.2d 59, 65 (1984); and Gomez v. Illinois State Board of Education, 811 F.2d 1030, 1039 (7th Cir.1987). In order to prevail, the defendants "must demonstrate that the plaintiff's claim, as set forth by the Complaint, is without legal consequence." Gomez, 811 F.2d at 1039.

Bethlehem brings this action under Section 106(b)(2) of CERCLA, 42 U.S.C. § 9606(b)(2), and the defendants have moved to dismiss this action, arguing lack of subject matter jurisdiction and, in the alternative, that there exists no set of facts on which Bethlehem can state a claim for which relief can be granted. In that Bethlehem's Petition for Reimbursement of Funds expended in cleaning up the Gary CCCI site was denied, and Gary, Indiana is within the geographical confines of this district, we note jurisdiction pursuant to 42 U.S.C. § 9606(b)(2)(B). In ruling on defendants' other argument, whether a set of facts exists on which Bethlehem could state a claim for which relief can be granted, this Court notes, as the District Court noted in Gary Steel, that the primary issue raised by the defendants' Motion is one of statutory interpretation. 711 F.Supp. at 473.

The focal point of this statutory interpretation is 42 U.S.C. § 9606(b)(2)(A), which provides in relevant part:

Any person who receives and complies with the terms of any order issued under Subsection (a) of this section may ... petition ... for reimbursement ... (emphasis added).

Clearly, a person who can establish nonliability can petition for...