Dravo Corp. v. Zuber

• Decision Date: 12 January 1994
• Docket Number: No. 92-3858,92-3858
• Citation: 13 F.3d 1222
• Parties: , 27 Fed.R.Serv.3d 1387, 24 Envtl. L. Rep. 20,489 DRAVO CORPORATION, Appellant, v. Morton ZUBER, Zuber Company, and Burlington Northern Railroad Company, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1222

13 F.3d 1222

62 USLW 2531, 27 Fed.R.Serv.3d 1387,

24 Envtl. L. Rep. 20,489

DRAVO CORPORATION, Appellant, v. Morton ZUBER, Zuber Company, and Burlington Northern Railroad Company, Appellees.

No. 92-3858.

United States Court of Appeals Eighth Circuit.

Submitted June 14, 1993.

Decided Jan. 12, 1994.

Joseph Klein, Pittsburgh, PA, argued (Lawrence Demase and Pamina Ewing, Pittsburgh, PA, Paul Elofson and Michael Mostek, Omaha, NE, on the brief), for appellant.

Susan Griesgraber, Minneapolis, MN, argued, for appellee Burlington Northern R. Co. Howard Kenison, Denver, CO, argued, for appellee Zuber (John P. Jones, Denver, CO, on the brief).

Before RICHARD S. ARNOLD, Chief Judge, and McMILLIAN and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

Dravo Corporation filed suit seeking contribution in the form of declaratory relief and damages from Morton Zuber, the Zuber Company, and the Burlington Northern Railroad Company (the defendants) after Dravo became liable to the Environmental Protection Agency (EPA) for the costs of cleaning up soil and groundwater contamination. The district court ¹ granted summary judgment to the defendants, concluding that Dravo's contribution claims were barred by a provision of a settlement agreement between the defendants and the EPA. Dravo appeals, and we affirm.

I.

From 1968 to 1982, Dravo operated a manufacturing plant at 108 South Colorado Avenue, Hastings, Nebraska. Dravo used liquid solutions containing trichloroethylene (TCE), 1,1,1-trichloroethane (TCA), and tetrachoroethene (PCE) in a part of its manufacturing process known as "vapor degreasing." Dravo disposed of these solutions through a floor drain on its property. The floor drain led to a sanitary sewer that ran in a northerly direction or to a storm sewer that ran in an easterly direction. The sewer lines apparently leaked, and the chemicals seeped into the surrounding soil. In 1983, Dravo sold the property on which its manufacturing plant was located.

Also in 1983, the city of Hastings reactivated Municipal Well # 18, which is located approximately one-half mile east of Dravo's former manufacturing plant. After receiving complaints about the smell and taste of water drawn from the well, the state of Nebraska tested it. The water samples contained TCE, TCA, and PCE. The EPA later tested soil samples from the immediate area surrounding Dravo's former plant, which the EPA now calls the Colorado Avenue Subsite of the Hastings Groundwater Contamination Site. The EPA detected TCE, TCA, and PCE within the subsite. It found the highest levels of contaminants near the sewer lines running from the plant. On September 28, 1990, the EPA filed a Unilateral Administrative Order directing Dravo to design and execute a plan to decontaminate the subsite.

Each of the defendants has owned or leased property near Dravo's manufacturing plant and within the Colorado Avenue Subsite. Since 1871, the Burlington Northern has owned a 200-foot-wide ribbon of land traversing the northern part of the subsite. Since 1984, Morton Zuber has owned property at 101 South Colorado Avenue, which lies northeast of Dravo's property, and has leased property from the Burlington Northern that abuts his own property. The Zuber Company operates a scrap metal business on Morton Zuber's properties. In 1991, the EPA negotiated a settlement agreement with the three defendants. The agreement stipulates that the Colorado Avenue Subsite is contaminated with TCE, TCA, and PCE; that the defendants have not possessed TCE, TCA, or PCE within the subsite; and that contamination of the subsite was caused by third parties with whom the defendants have not had contractual relationships. The agreement also permits the EPA to enter the defendants' properties upon notice, restricts other property rights of the defendants, and includes a covenant by EPA "not to sue or to take any other civil or administrative action against" the defendants. (Appellant's App. at A31, p 40.)

More important to this appeal, paragraph 47 of the agreement between the EPA and the defendants provides:

Subject to the reservations of rights in Article X of this Consent Order, EPA agrees that by entering into and carrying out the terms of this Consent Order, Respondents will have resolved their liability to the United States for those matters addressed in the settlement as provided by Section 122(g)(5) of CERCLA [the Comprehensive Environmental Response, Compensation, and Liability Act], 42 U.S.C. Sec. 9622(g)(5), and shall have satisfied their liability for those matters within the meaning of Section 107(a) of CERCLA, 42 U.S.C. Sec. 9607(a).

(Id. at A33, p 47.)

After the settlement agreement between the EPA and the defendants had been proposed but before it was entered into, Dravo filed this action. Dravo seeks a declaration that the defendants are legally responsible for contamination of the Colorado Avenue Subsite, a declaration that the defendants are liable for a portion of the remedial costs, and money damages for a portion of the expenditures Dravo has incurred for remedial costs. The defendants filed motions for summary judgment, relying primarily on their agreement with the EPA. The district court granted the motions, see Dravo Corp. v. Zuber, 804 F.Supp. 1182, 1189 (D.Neb.1992), and Dravo now appeals.

II.

Dravo presents two claims on appeal. First, it contends that the district court erred by entering summary judgment. Second, it contends that the district court erred by denying Dravo an opportunity to conduct discovery prior to ruling on the summary judgment motions.

A.

Dravo contends that the district court should not have entered summary judgment because material facts are in dispute. The key dispute is whether the defendants are protected from third-party contribution actions because of the agreement they made with the EPA. Dravo acknowledges that the defendants and the EPA have an agreement but disputes the legal effect of the agreement. Specifically, Dravo contends that the defendants are not protected from contribution claims until after they fulfill the obligations they assumed when they entered into the agreement.

1.

Persons who are responsible for the release or threatened release of hazardous substances may be subject to administrative orders directing them to abate the release and may be fined for violating such orders. See 42 U.S.C.A. Sec. 9606(a), (b) (West 1983 & Supp.1993). Persons responsible for the release of hazardous substances also may be liable for the costs of removing or remedying the contamination, the costs associated with damage to natural resources, and the costs to human health. See id. Sec. 9607(a). The EPA may initiate a civil action to enforce an administrative order or to recover the costs of cleanup. See id. Sec. 9613(h).

The EPA, however, need not litigate every instance of potential liability. "The President, in his discretion, may enter into an agreement with" potentially responsible parties (PRPs) to resolve their potential liability for the costs of cleaning up hazardous substances. Id. Sec. 9622(a). "Whenever practicable and in the public interest, as determined by the President, the President shall as promptly as possible reach a final settlement with a PRP in an administrative or civil action under section 9606 or 9607 of this title if" the PRP's responsibility for the release of hazardous substances is either de minimis, see id. Sec. 9622(g)(1)(A), or nonexistent, see id. Sec. 9622(g)(1)(B). This type of agreement, which is at issue here, is commonly referred to as a "de minimis agreement."

De minimis agreements provide benefits to both the government and the PRPs that enter into them. The government benefits because it may then focus on nonsettling parties who presumably are more responsible for the costs associated with the release of hazardous substances. Settling parties benefit too. For example, "The President may provide a covenant not to sue with respect to the facility concerned to any party who has entered into a settlement under this subsection...." Id. Sec. 9622(g)(2). Furthermore, "A party who has resolved its liability to the United States under this subsection shall not be liable for claims for contribution regarding matters addressed in the settlement." Id. Sec. 9622(g)(5). Together, the covenant not to sue (the granting of which is within the President's discretion) and the protection from contribution claims (which must accompany a covenant not to sue) provide powerful incentives for PRPs to resolve their potential liability. See In re Acushnet River & New Bedford Harbor, 712 F.Supp. 1019, 1026-27 (D.Mass.1989).

2.

On appeal, as in the district court, the defendants rely on paragraph 47 of the de minimis agreement to defend against Dravo's action. Paragraph 47 incorporates Sec. 9622(g)(5), which permits settlements to confer upon settling parties protection from any contribution actions brought by nonsettling parties. Dravo contends that the agreement does not confer protection from contribution claims upon the defendants until after they complete their performance of the agreement. The defendants contend that they received protection from contribution liability the moment they entered into the de minimis agreement. The EPA, as amicus curiae, agrees with the defendants and urges us to affirm.

After reviewing CERCLA's settlement provisions, we agree with the defendants that the de minimis agreement conferred protection from contribution actions upon the defendants at the time the settling parties entered into the agreement. CERCLA directs the President "to facilitate agreements under this section that are in the public interest and consistent with the National Contingency Plan in order to expedite effective remedial actions and minimize litigation." 42 U.S.C.A. Sec. 9622(a) (West Supp.1993) (emphasis added). The statute states that "the President shall as promptly as possible reach a final settlement with...