Nurad, Inc. v. William E. Hooper & Sons Co.
| Citation | 966 F.2d 837 |
| Decision Date | 29 May 1992 |
| Docket Number | 91-1790,Nos. 91-1775,s. 91-1775 |
| Parties | , 122 A.L.R.Fed. 743, 60 USLW 2768, 22 Envtl. L. Rep. 20,936 NURAD, INCORPORATED, Plaintiff-Appellant, v. WILLIAM E. HOOPER & SONS COMPANY; James E. Hooper, Jr.; Kenneth B. Mumaw; All States Moving & Storage; Raymond McMillan; Lawrence L. Hooper; Universal Laboratory Installations, Incorporated; Monumental Millwork, Incorporated, Defendants-Appellees. Frank S. NICOLL, Jr.; Shareholders of Monumental Enterprises, Incorporated; Sudler Moving & Storage, Incorporated, Defendants, v. J. LANGRALL & SONS; Zemco Corporation; Chesapeake Envelope & Print Company; Les Care Laminates, Third Party Defendants. NURAD, INCORPORATED, Plaintiff-Appellee, v. WILLIAM E. HOOPER & SONS COMPANY, Defendant-Appellant, and James E. Hooper, Jr.; Frank S. Nicoll, Jr.; Sharholders of Monumental Enterprises, Incorporated; Kenneth B. Mumaw; all States Moving & Storage. Raymond McMILLAN; Lawrence L. Hooper; Universal Laboratory Installations, Incorporated; Monumental Millwork, Incorporated; Sudler Moving & Storage, Incorporated, Defendants, v. J. LANGRALL & SONS; Zemco Corporation; Chesapeake Envelope & Print Company; Les Care Laminates, Third Party Defendants. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
Gina Monath Zawitoski, Piper & Marbury, Baltimore, Md., argued (Deborah E Jennings and William W. Toole, on brief), for plaintiff-appellant.
Mark Herbert Kolman, Anderson, Kill, Olick & Oshinsky, Washington, D.C., Pamela Janice White, George Whitthorne Kelly, Ober, Kaler, Grimes & Shriver, Baltimore, Md., Samuel A. Bleicher, Miles & Stockbridge, Washington, D.C., Robert John Carson, Smith, Somerville & Case, Baltimore, Md., Howard Kenneth Kurman, Offit & Offit, P.A., Lutherville, Md., argued (Marian Hwang, Miles & Stockbridge, Baltimore, Md., Charles R. Taylor, Jr., Gordon, Feinblatt, Rothman, Hoffberger & Hollander, Baltimore, Md., on brief), for defendants-appellees.
Before WILKINSON, Circuit Judge, WILLIAMS, United States District Judge for the Eastern District of Virginia, sitting by designation, and MACKENZIE, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.
This is a suit brought by the current owner of a piece of property for reimbursement of costs it incurred in removing from the property some underground storage tanks and their hazardous contents. The current owner sought reimbursement from previous owners and tenants at the site, claiming that they were liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as "owners" or "operators" of the facility at the time of "disposal" of the hazardous substances. 42 U.S.C. § 9607(a)(2). The district court entered summary judgment against the original owner of the tanks and in favor of the other defendants.
We think the district court was correct both in holding that the original owner was liable under CERCLA and in holding that the tenant defendants were not liable as "operators" of the facility in question. We think it erred, however, in absolving certain of the previous owner defendants on the ground that they were not owners "at the time of disposal." By requiring proof of affirmative participation in hazardous waste disposal as a prerequisite to liability under § 9607(a)(2); the district court misconstrued both the statutory definition of "disposal" and a decision of this court interpreting that definition. We think the statute plainly imposes liability on a party who owns a facility at the time hazardous waste leaks from an underground storage tank on the premises. Any other result would substantially undermine CERCLA's goal of encouraging voluntary cleanup on the part of those in a position to do so.
Plaintiff Nurad, Inc., brought this lawsuit to recover the costs it incurred in removing several underground storage tanks (USTs) from a piece of property it owns in Baltimore, Maryland. From 1905 to 1963, Wm. E. Hooper & Sons, Co. (the Hooper Co. or the Company) owned the site and adjacent properties, collectively known as Hooperwood Mills. At some point before 1935, the Hooper Co. began to install tanks for the storage of mineral spirits which it used to coat fabrics in its textile finishing plant. The Company continued to use the tanks for that purpose until 1962, when it shut down its finishing operations. At that time, the Hooper Co. abandoned the USTs and did not remove the mineral spirits.
In 1963, the Hooper Co. sold Hooperwood Mills to Property Investors, Inc. Frank Nicoll, as president and principal shareholder of Property Investors and its successor, Monumental Enterprises, Inc., leased several of the buildings on Hooperwood Mills to various tenants, none of which ever used the USTs. Then in 1976, Monumental Enterprises sold Hooperwood Mills to Kenneth Mumaw, who subdivided the property and sold a portion of it to Nurad.
Nurad's operations at the site involve the manufacture of antennae. In all its years at the site, Nurad apparently never used the USTs. In 1987, however, the Maryland Department of the Environment informed Nurad that the tanks had not been properly abandoned and required that they be removed from the ground or filled with sand or concrete within 180 days. Nurad sought assistance with the cleanup from several of the previous owners and tenants of the site, but they all refused. Nurad then hired an environmental consultant and a tank removal contractor to analyze the contents of the tanks and dispose of several of the tanks and the surrounding soil.
In 1990, Nurad filed this CERCLA suit, seeking reimbursement for approximately $226,000 in cleanup costs from former owners of the site (the Hooper Co., Nicoll, Mumaw, and Monumental Enterprises); from former tenants at the site (Allstates Moving & Storage, Raymond B. McMillan, Universal Laboratory Installations, Inc., and Monumental Millwork); and from James Hooper, Jr., and Lawrence Hooper (the Hooper brothers), who were shareholders and directors of the Hooper Co. The district court decided the issues of liability on summary judgment. In its view, only the Hooper Co. was liable under CERCLA for costs incurred by Nurad in removing the tanks. The court found that the tenant defendants did not qualify as "operators" because they did not possess sufficient authority to control the hazardous waste at the facility. Further, the court ruled that certain of the previous owners were not liable because they were not owners "at the time of disposal." According to the district court, "disposal" necessarily contemplated some element of affirmative participation on the part of the defendant, and only the original owner actively dealt with hazardous substances at the site. Accordingly, the court granted summary judgment against the Hooper Co. and in favor of the other defendants. The court also granted Nurad's motion to bifurcate the issues of liability and damages, and entered final judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.
Both Nurad and the Hooper Co. appeal. 1
Congress enacted CERCLA to address the increasing environmental and health problems associated with inactive hazardous waste sites. The statute encourages private cleanup of such hazards by providing a cause of action for the recovery of costs incurred in responding to a "release" of hazardous substances at any "facility." 42 U.S.C. § 9607; H.Rep. No. 1016, 96th Cong., 2d Sess. 17, reprinted in 1980 U.S.C.C.A.N. 6119, 6120. Under CERCLA, a person who incurs such cleanup costs is entitled to recover from anyone who qualifies as a "responsible person" under the statute. 42 U.S.C. § 9607. Responsible persons include the current "owner" or "operator" of the facility, id. § 9607(a)(1), any person who "owned" or "operated" the facility at the time of "disposal" of a hazardous substance, id. § 9607(a)(2), any person who "arranged for disposal or treatment" of hazardous substances at the facility, id. § 9607(a)(3), and any person who accepts hazardous substances "for transport to disposal or treatment facilities, incineration vessels or sites," id. § 9607(a)(4). Any of these responsible persons is strictly liable for costs incurred in responding to the release of a hazardous substance at the facility. United States v. Monsanto Co., 858 F.2d 160, 167 (4th Cir.1988), "subject only to the defenses set forth in subsection (b)." 42 U.S.C. § 9607(a). The court has the authority to "allocate response costs among liable parties using such equitable factors as the court determines are appropriate." Id. § 9613(f)(1). 2
Here the district court found that Nurad's costs were in response to a release or threatened release of a hazardous substance under CERCLA. The issues on appeal concern the scope of the terms defining responsible persons under § 9607(a)(2)--specifically, the meaning of the terms "owned," "operated," "facility," and "disposal." We think it best to approach the meaning of those terms by considering Nurad's claims against the various parties who were prior owners or tenants at Hooperwood Mills.
We shall first address Nurad's claims against the former tenants at the site. The district court dismissed Nurad's claims against the tenant defendants on the grounds that they lacked the authority to control the USTs and therefore did not "operate[ ]" a "facility" under § 9607(a)(2). Nurad raises three objections to this aspect of the district court's ruling. First, Nurad contends that the district court applied the wrong legal standard in interpreting the word "operator." In Nurad's view, the court too narrowly defined that term to include only those persons who actually exercised control over the facility.
We do not agree with Nurad that the district court applied an improper standard. The district court applied the correct standard in holding that the tenant defendants need not have exercised actual...
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