Employers Ins. of Wausau a Mut. Co. v. Bush

• Citation: 791 F. Supp. 1314
• Decision Date: 16 April 1992
• Docket Number: No. 91 C 4254.,91 C 4254.
• Parties: EMPLOYERS INSURANCE OF WAUSAU A MUTUAL COMPANY, a mutual insurance corporation, Plaintiff, v. George BUSH, in his official capacity as President of the United States; William K. Reilly, individually and as Administrator of the United States Environmental Protection Agency; Valdas V. Adamkus, individually and as Regional Administrator of Region V of the United States Environmental Protection Agency; Basil G. Constantelos, individually and as Director of the Waste Management Division of the United States Environmental Protection Agency for Region V; Certain Unknown Employees of the United States Environmental Protection Agency; the United States Environmental Protection Agency; and the United States of America, Defendants.
• Court: U.S. District Court — Northern District of Illinois

791 F. Supp. 1314

EMPLOYERS INSURANCE OF WAUSAU A MUTUAL COMPANY, a mutual insurance corporation, Plaintiff, v. George BUSH, in his official capacity as President of the United States; William K. Reilly, individually and as Administrator of the United States Environmental Protection Agency; Valdas V. Adamkus, individually and as Regional Administrator of Region V of the United States Environmental Protection Agency; Basil G. Constantelos, individually and as Director of the Waste Management Division of the United States Environmental Protection Agency for Region V; Certain Unknown Employees of the United States Environmental Protection Agency; the United States Environmental Protection Agency; and the United States of America, Defendants.

No. 91 C 4254.

United States District Court, N.D. Illinois, E.D.

April 16, 1992.

COPYRIGHT MATERIAL OMITTED

Daniel Charles Murray, Daniel A. Dupre, Joseph Gerard Lyons, Frederick S. Mueller, Johnson & Bell, Ltd., Chicago, Ill., Linda Anne Stark, Robert M. Wattson, Rolf E. Gilbertson, Zelle & Larson, Minneapolis, Minn., for plaintiff.

Jonathan C. Haile, James Michael Kuhn, Asst. U.S. Attys., Chicago, Ill., Alan D. Greenberg, U.S. Dept. of Justice, ENR Div., Elizabeth A. Strange, U.S. Dept. of Justice, Nancy Gaines, U.S. Dept. of Justice, Civ. Div., Washington, D.C., for defendants.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Plaintiff Employers Insurance of Wausau A Mutual Company ("Wausau") brings this multi-count action against the United States of America, the United States Environmental Protection Agency ("EPA"), George Bush, in his official capacity as President of the United States, William K. Reilly, individually and as Administrator of the EPA, Valdas V. Adamkus, individually and as Regional Administrator of Region V of the EPA, Basil G. Constantelos, individually and as Director of the Waste Management Division of the EPA for Region V and certain unknown employees of the EPA. Presently pending before the court are (1) the federal defendants' motion to dismiss Wausau's second-amended complaint for lack of subject matter jurisdiction, and (2) the individual defendants' motion to dismiss for failure to state a claim and for lack of personal jurisdiction.¹ For the reasons stated below, the federal defendants' motion is granted in part and denied in part. The individual defendants' motion is granted.

I. FACTUAL BACKGROUND²

Effective August 3, 1987, Wausau issued an insurance policy to Group Eight Technology, Inc. ("Group Eight"), covering certain losses to property located at 2246 Third Street in Wyandotte, Michigan (the "Wyandotte Property"). Under this policy, Wausau agreed to reimburse Group Eight for specific losses or perils, including fire, and the expense of debris removal resulting from such losses or perils. On August 24, 1987, fire struck a building occupied by Group Eight at the Wyandotte Property, prompting Group Eight to submit a claim to Wausau under the policy.

Without waiving its right to contest coverage, Wausau initiated discussions with Group Eight regarding the removal of debris, including certain electrical transformers located on the Wyandotte Property. Samples of the fluids contained in three of the six operational electrical transformers were taken by Marine Pollution Control, Inc. ("MPC") to test for the presence of polychlorinated biphenyls ("PCBs"). On September 9, 1987, MPC reported that the highest concentration level of PCBs in any of the transformers was 2.7 parts per million, well below that considered unacceptable by the EPA.

Without the participation of Wausau, in November of 1987, Group Eight selected Sclafani Trucking, Inc. ("Sclafani") to perform demolition and removal work at the Wyandotte Property. Upon inspection of the premises, Sclafani discovered a seventh transformer which, unlike the other six, had not been in service at the time of the fire. By letter dated December 1, 1987, Group Eight informed Sclafani that no PCBs were present in the transformers, and that Sclafani could make arrangements to dispose of them.

In January 1988, Wausau and Group Eight reached a settlement respecting fire loss coverage at the Wyandotte Property in the amount of $1,250,000. Additionally, Wausau agreed to pay for the cost of demolition and removal of the transformer fluids and certain other hazardous wastes at the Wyandotte Property once Group Eight's contractor completed the job. To effectuate demolition and removal, Group Eight and Sclafani recruited K & D Industries Services, Inc. ("K & D") to assist in transporting the fluids from the Wyandotte Property. Wausau first learned of K & D's involvement on February 7, 1989, at which time Sclafani called a meeting and invited K & D and Howard Aidenbaum of Wausau. At this meeting, K & D informed Aidenbaum that K & D was being considered by Sclafani and Group Eight to facilitate the removal, transport and disposal or treatment of the transformer fluids. Aidenbaum requested from K & D a cost estimate of the work to be performed. Additionally, Sclafani provided K & D with the laboratory reports for the six transformers tested by MPC.

On February 21, 1989, K & D submitted a proposal to Group Eight and Sclafani regarding the draining, removal, transport and disposal or treatment of the transformer fluids at the Wyandotte Property. As stated in the proposal, K & D had arranged to take the fluids to a CIW Company ("CIW") facility in Romulus, Michigan. Prior to transportation, Group Eight learned from the EPA that the seventh transformer was a PCB transformer and the six others were mineral transformers, several of which were leaking and considered by the EPA to be PCB-contaminated. The EPA advised Group Eight that the storage, marking, recordkeeping and disposal of PCB's is federally regulated, and requested that Group Eight keep the EPA informed of all actions taken involving the transformers. In preparation for transportation to the CIW facility, on April 1, 1989, Group Eight applied for an EPA identification number for the Wyandotte Property. Four days later, Aidenbaum agreed to pay the cost of removal, transport, disposal or treatment of the fluids of the six mineral transformers, as estimated in the February 21, 1989 K & D proposal.

Despite the EPA warnings, and despite the fact that only four of the seven transformers had been tested for PCBs, on April 15, 1989, Group Eight and Sclafani allowed K & D to drain, mix and remove 700 gallons of fluids from all seven transformers. The fluid was transported to the CIW site, where CIW received and placed the transformer fluids in its process tanks for recycling. K & D prepared the Michigan Department of Natural Resources' ("MDNR") hazardous waste manifest for the transport of the transformer fluids, using Group Eight's EPA identification number and identifying Group Eight as the generator and K & D as the transporter. Al Sclafani of Sclafani Trucking, Inc. signed this document. After confirmation that the work had been performed, Wausau reimbursed Group Eight in accordance with the insurance policy.

On May 17, 1989, CIW learned through a customer that oil originating from its Romulus, Michigan facility contained PCB contamination. CIW immediately engaged DiHydro Analytical Services to test its tanks, and learned on May 24, 1989, that PCB contamination existed in several of the process tanks. On September 7, 1989, CIW informed the EPA and the MDNR of its intention to abandon the site. Shortly thereafter, CIW abandoned the Romulus facility.

By letter dated September 11, 1989, the EPA designated Wausau as a "Potentially Responsible Party" ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. § 9601 et seq., with regard to the CIW site, and demanded Wausau's participation in the cleanup. That letter required Wausau to notify the EPA within twenty-four hours of its decision to participate in the cleanup. Wausau did not respond, prompting the EPA (1) to begin the cleanup at the CIW site, and (2) to initiate an investigation to determine responsibility for the contamination. As part of its investigation, the EPA sought information from Group Eight, K & D, Sclafani and CIW in an effort to develop an administrative record.

On November 28, 1989, Wausau — along with CIW, K & D and Group Eight — was named as a respondent in an unilateral administrative order, issued by the EPA pursuant to § 9606 of CERCLA, directing Wausau to take emergency cleanup measures at the CIW site. Under the terms of the order, Wausau was required to take definitive action within five calendar days, facing substantial penalties under CERCLA for non-compliance. The § 9606 order, as amended, enumerated thirty-three findings of fact respecting the contamination of the CIW site. Wausau claims that these findings "seriously mischaracterized Wausau as having played a key role in the waste disposal decision leading to the contamination of the CIW site." Based on these "materially incorrect" findings, the § 9606 order made the "erroneous, arbitrary and wrongful" determination that Wausau, among others, had "arranged for the disposal or transport for the disposal" of hazardous substances from the Wyandotte Property to the CIW site and, as such, was liable as a "person" under § 9607(a)(3) of CERCLA. Further, given the containment of the contamination to the process tanks, the order wrongfully stated that "an imminent and substantial threat to the environment" existed at the abandoned CIW site, thereby undermining the EPA's conclusion regarding the necessity of emergency removal.

At a meeting with the EPA on December 21, 1989, Wausau attempted to establish that it had been improperly named in the order and requested a hearing to that effect. EPA officials, however, informed Wausau that the meeting was limited in scope to the mechanics...