MRP Props. Co. v. United States

• Decision Date: 09 December 2021
• Docket Number: Case No. 1:17-cv-11174
• Citation: 583 F.Supp.3d 981
• Parties: MRP PROPERTIES CO., LLC, et al., Plaintiffs, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

583 F.Supp.3d 981

MRP PROPERTIES CO., LLC, et al., Plaintiffs,
v.
UNITED STATES of America, Defendant.

Case No. 1:17-cv-11174

United States District Court, E.D. Michigan, Northern Division.

Signed December 9, 2021

Jill M. Wheaton, Dykema Gossett, Ann Arbor, MI, Mark Vincent Donatiello, William James Jackson, William Creeger Petit, Kelley Drye & Warren, LLP, Houston, TX, for Plaintiffs.

Brandon Adkins, United States Department of Justice, Environment and Natural Resources Division, Washington, DC, C. Scott Spear, Sydney A. Menees, U.S. Department of Justice Environmental Defense Section, Washington, DC, Peter A. Caplan, Susan K. DeClercq, United States Attorney's Office, Detroit, MI, for Defendant.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT, GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, AND OVERRULING DEFENDANT'S OBJECTION AS MOOT

THOMAS L. LUDINGTON, United States District Judge

This matter is before this Court upon cross-motions for summary judgment from Plaintiffs MRP Properties, et al. , ECF No. 68, and the United States ("the Government"), ECF No. 81, as well as the Government's objection to two of Plaintiffs’ expert reports, ECF No. 80. Plaintiffs claim they "have incurred and will continue to incur response costs consistent with the National Contingency Plan (‘NCP’)" related to "wartime contamination." ECF No. 43 at PageID.709. After failed negotiations with the Government, Plaintiffs brought this action seeking "payment of the Government's fair share." Id. at PageID.699, 778–79. For the reasons stated hereafter, Plaintiffs’ Motion will be granted in part and denied in part, the Government's Motion will be granted in part and

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denied in part, and the Government's objection will be overruled as moot.

I.

This case is rooted in the complex history of the United States's efforts to coordinate the domestic processing of petroleum oil to win World War II (WWII).

A.

In December 1941, Congress declared war on Japan and Germany following the Imperial Japanese Navy's attack on Pearl Harbor. Compania Maritima v. United States , 145 F. Supp. 935, 937 (Ct. Cl. 1956) ; id. at 944 (Littleton & Madden, JJ., dissenting). Later that month, Congress enacted the First War Powers Act, empowering President Roosevelt to puppeteer executive agencies for the war effort. See generally Fleming v. Mohawk Wrecking & Lumber Co. , 331 U.S. 111, 67 S.Ct. 1129, 91 L.Ed. 1375 (1947). In March 1942, Congress enacted the Second War Powers Act, granting the President license to jigger the war economy, which included the production of petroleum. Louisville Flying Serv. v. United States , 64 F. Supp. 938, 941 (W.D. Ky. 1945).

Petroleum was critical to the United States during WWII, yielding everything from tires to bombs to heat for hospitals and kitchens. ECF No. 74-1 at PageID.4487.¹ Indeed, the armed services regularly used over 500 different petroleum products, without which "the warrior could neither fight nor live." ECF No. 68-2 at PageID.1115 (quoting J. A. KRUG , HAROLD L. ICKES & RALPH K. DAVIS , U.S. PETROL. ADMIN. FOR WAR , A HISTORY OF THE PETROLEUM ADMINISTRATION FOR WAR , 1941–1945, at 1 (John W. Frey & H. Chandler Ide eds., 1946)). But "business as usual would not work," as crude was in short supply nationwide, and the Allies² required nearly seven billion barrels of petroleum—six billion of which came from the United States alone. ECF Nos. 74-1 at PageID.4477; 74-2 at PageID.4499; 81-2 at PageID.7793.

To ensure victory, the United States created an oil agency called the Petroleum Administration for War ("PAW").³ ECF No. 81-2 at PageID.7789. PAW "exercised significant control over," among other things, the prices, profits, and allocation of petroleum products and the raw materials needed to create them. See United States v. Shell Oil Co. , 294 F.3d 1045, 1049–50 (9th Cir. 2002). But overseeing the nation's petroleum refineries proved daunting.

To alleviate congestion at its centralized office in Washington, D.C., PAW divided the United States into five Districts⁴ : District I (East Coast), District II (Midwest), District III (Gulf Coast), District IV

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(Rocky Mountain), and District V (West Coast). ECF No. 74-1 at PageID.4479. The five Districts were more "familiar with local situations" and "provided necessary supervision over" the petroleum refineries. Id. Each District's director "had over-all responsibility for activities in the district." Id. Each District entailed "successive delegations of authority" to administer PAW's orders and directives to petroleum refineries. Id. And each District included subdivisions that supervised, among other things, the production, refining, supply, transportation, distribution, and marketing of petroleum products. Id.

In December 1942, President Roosevelt issued Executive Order 9276, providing PAW with practically unfettered control over the petroleum industry. See MRP Props., LLC v. United States , 308 F. Supp. 3d 916, 920 (E.D. Mich. 2018). Thus empowered, PAW went to great lengths to plan the allocation of crude oil to petroleum refineries for up to a year in advance. ECF No. 74-1 at PageID.4479. There was no room for "failure in meeting the war requirements for oil," so PAW issued directives as necessary to acquire the "materials that it needed to fulfill the petroleum industry's responsibility." Id. ; ECF No. 43 at PageID.705. But "there was never a time when crude supply was not a problem somewhere in the country." ECF No. 74-1 at PageID.4482.

To mitigate the effects of the crude-oil shortage, PAW tracked each refinery's "crude stocks, runs, yields, and other pertinent information." Id. at PageID.4483. Armed with that data, PAW diverted supplies to "refineries that were in the greatest need" from those "in [a] relatively comfortable position." Id. To ensure maximum output of wartime products and to "keep all refineries operating," PAW allocated "specific volumes of crude to specific refiners" every month and then divided all remaining crude equitably. Id. The refiners did "the greatest share of the work," but PAW was always responsible for final approval. Id.

Among the most intrusive conditions of PAW's supervision over petroleum refineries was its frequent directives for them to change yields. Id. at PageID.4487. For example, PAW would telegram refineries to increase gasoline yields and decrease fuel-oil yields but then telegram the opposite soon after—often requiring refineries to change operations and equipment "virtually overnight." Id. Unfortunately, as PAW's Assistant Director of Refining put it, cleaning hazardous waste was a "necessary" part of the refineries’ operations. See ECF No. 78-28.

To the extent PAW supervised refineries’ operations, it "told the refiners what to make, how much of it to make, and what quality" to make it. ECF No. 74-1 at PageID.4483. According to another high-ranking PAW official, the petroleum industry had "no choice." ECF No. 74-30 at PageID.5274. The refineries "either produced the ... products in accordance with the instructions and directives of PAW .... or they wouldn't have any business to operate." Id. Although "nobody wanted it to be that way," it was "the only way to do it in wartime." ECF No. 74-1 at PageID.4487.

B.

Plaintiffs are six wholly owned subsidiaries or affiliates of the Valero Energy Corporation.⁵ In April 2017, Plaintiffs filed a complaint against the Government under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability

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Act of 1980 (CERCLA), seeking response costs arising from the investigation and cleanup of pollution created by processing petroleum. ECF No. 43. To that end, Plaintiffs seek declaratory relief under § 113(g)(2) of CERCLA regarding the government's liability.⁶ Id. at PageID.777–78. Plaintiffs contend that the Government "operated" 12 of their refineries before and during WWII and also "owned" one of them. This case is divided into two phases: liability and damages. ECF Nos. 47; 48; 49. Factual discovery closed in August 2019. ECF No. 52. Discovery for the liability phase ended on May 4, 2020. Id.

In September 2020, Plaintiffs filed a motion for summary judgment. ECF No. 68. In October 2020, the Government filed a combined cross-motion for summary judgment and response to Plaintiffs’ Motion. ECF Nos. 81; 86. On November 9, 2020, Plaintiffs filed a combined reply and response to Defendant's Motion. ECF No. 91. On November 23, 2020, Defendant filed a combined sur-reply to Plaintiff's Motion and reply to Plaintiff's Response to its Motion. ECF No. 96. On December 7, 2020, Plaintiffs filed a sur-reply to Defendant's Motion. ECF No. 99.

C.

A motion for summary judgment should be granted if the movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). The movant has the initial burden of "identifying those portions of [the record that], which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court must view the evidence and draw all reasonable inferences in favor of the nonmovant and determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 251–52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; see Lossia v. Flagstar Bancorp, Inc. , 895 F.3d 423, 428 (6th Cir. 2018).

The burden then shifts to the nonmovant, who must set out specific facts showing "a genuine issue for trial." Anderson , 477 U.S. at 250, 106 S.Ct. 2505 (citation omitted). The nonmovant must show more than "some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538...