U.S. v. Chromalloy American Corp.

• Citation: 158 F.3d 345
• Decision Date: 04 November 1998
• Docket Number: No. 97-50818,97-50818
• Parties: , 29 Envtl. L. Rep. 20,165 UNITED STATES of America, Plaintiff-Appellee, v. CHROMALLOY AMERICAN CORPORATION, formerly doing business as Woolley Tool & Manufacturing and Sequa Corporation, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 345

158 F.3d 345

47 ERC 1609, 29 Envtl. L. Rep. 20,165

UNITED STATES of America, Plaintiff-Appellee, v. CHROMALLOY AMERICAN CORPORATION, formerly doing business as Woolley Tool & Manufacturing and Sequa Corporation, Defendants-Appellants.

No. 97-50818.

United States Court of Appeals Fifth Circuit.

Nov. 4, 1998.

Marta Hoilman, John Thompson Stahr, U.S. Dept. of Justice, Environment & Natural Resources Div., Washington, DC, for Plaintiff-Appellee.

James B. Harris, Thompson & Knight, Scott D. Deatherage, Dallas, TX, for Defendants-Appellants.

Appeal from the United States District Court for the Western District of Texas.

Before DUHE, BENAVIDES and STEWART, Circuit Judges.

STEWART, Circuit Judge:

The Environmental Protection Agency ("EPA") brought this action under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") to secure reimbursement for all costs incurred in overseeing Chromalloy American Corporation and Sequa Corporation's (collectively, "Sequa") clean up of an environmental contamination. Sequa appeals the district court's grant of summary judgment and order requiring Sequa to compensate the EPA for its administrative expenses incurred pursuant to a Consent Decree between the parties. Our review of the law, briefs and record on appeal leads us to AFFIRM the judgment of the district court.

I. Factual Background

The facts underlying Sequa's strained relationship with the EPA are not new to this court. See Matter of Bell Petroleum Services, Inc., 3 F.3d 889, 892-894 (5th Cir.1993). The court will not revisit the entire history here; however, the court herein highlights those facts which are most pertinent to the case at bar.

After the EPA discovered chromium contamination at a Sequa manufacturing facility near Odessa, Texas in 1981, the EPA conducted a remedial investigation and feasibility study and invited public comment. In 1988, upon completion of its review, the EPA issued a Record of Decision ("ROD") selecting a remedy which included the extraction of chromium-contaminated groundwater, electrochemical treatment, and the return of the treated water to the aquifer that flows under the facility. Soon thereafter, Sequa and the EPA engaged in negotiations designed to produce a consent decree under which Sequa would treat the contaminated water.

In 1991, Sequa and the United States reached an agreement and entered into a Consent Decree. This Consent Decree required, inter alia, Sequa to design, construct and implement a system of pumping and treating impacted ground water to reduce chromium to appropriate levels. Sequa also agreed to reimburse the EPA for its oversight costs. These costs include expenses related to the EPA's review of reports, submittals, inspection of remedial work and verification of performance in accord with the Consent Decree. Pursuant to an interagency agreement ("IAG"), the Bureau of Reclamation ("BOR"), a division of the U.S. Department of the Interior, has assisted the EPA in overseeing Sequa's clean up efforts. For over five years, Sequa has complied with the terms and conditions of the Consent Decree.

II. Proceedings Below

In 1996, the EPA made demand on Sequa to reimburse it in the amount of $470,710.42 in oversight costs for the period of January 1, 1992 through December 31, 1994. Sequa contested the amount and negotiations ensued. After their discussions proved unsuccessful, Sequa filed a "Petition for Dispute Resolution" with the district court. Therein, Sequa contested its obligation to pay costs which were not recoverable under CERCLA and deemed the EPA's invoice of expenses outside the "costs of response" contemplated by CERCLA. Sequa challenged the validity of the IAG under the Economy Act, 31 U.S.C. § 1535. Sequa further propounded that it was under no obligation to pay indirect costs. In its proposed resolution, Sequa requested an opportunity to conduct limited discovery and have its accountant review all costs. Sequa further sought an opportunity to file pleadings on the interpretation and enforceability of the Consent Decree and permission to pay the disputed amount plus interest into the Registry of the Court.

By order entered July 24, 1997, the district court held that the EPA did not exceed its authority when it entered into the Consent Decree and required Sequa to pay for oversight costs associated with clean-up of the site. The district court rejected Sequa's reliance on the Economy Act of 1932 to argue that the EPA must show that Sequa is obligated to reimburse BOR for its oversight activities associated with Sequa's clean-up of the site. The district court further found that as an agency of the United States, BOR expenses are those of the United States. The district court directed Sequa to compensate the EPA in the amount of $470,710.42.

The district court rejected Sequa's subsequent "Motion and Brief for a New Trial, to Alter or Amend Order, or for Entry of Findings and Conclusions of Law." In its order addressing the same, the district court clarified that implicit in its previous order was a finding that the EPA and BOR's expenses were reasonable and necessary. The district court foreclosed further remedial review and directed the parties to address any further concerns to this court.

III. Statutory Background

CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986, facilitates prompt clean up of hazardous sites by establishing a response and financing mechanism to control problems endemic to hazardous waste disposal sites. See H.R.Rep. No. 1016(I), 96th Cong.2d Sess. 22 (1980) reprinted in 1980 Code Cong. & Admin. News 6119; Matter of Bell Petroleum, 3 F.3d at 894. CERCLA § 107, 42 U.S.C. § 9607 specifically provides for the recovery of costs from all persons responsible for the release of hazardous substances. Thus, those responsible for contamination bear the ultimate responsibility of paying for its cleanup. See United States v. R.W. Meyer, Inc., 889 F.2d 1497, 1500 (6th Cir.1989).

Different types of costs are associated with clean up. CERCLA expressly permits the government to recover "all costs of removal and remedial action" and "any other necessary costs of response incurred by any other persons." CERCLA § 107(a)(4), 42 U.S.C. § 9607(a)(4). The government's oversight costs in a responsible party clean-up are response costs under CERCLA. See U.S. v. Lowe, 118 F.3d 399, 404 (5th Cir.1997). However, CERCLA requires these "necessary costs of response" be consistent with the "national contingency plan." CERCLA § 107(a)(4), 42 U.S.C. § 9607(a)(4).

The National Contingency Plan ("NCP"), 40 C.F.R. Part 300, promulgated by the EPA as a regulation pursuant to CERCLA § 105, 42 U.S.C. § 9605, provides an "organizational structure and procedures for preparing for and responding to the discharge of hazardous substances, pollutants and contaminants." 40 C.F.R. § 300.1. The NCP articulates "methods for investigating the environmental and health problems resulting from a release or threatened release and criteria for determining the appropriate extent of response activities." Matter of Bell Petroleum, 3 F.3d at 894.

The Economy Act of 1932, 31 U.S.C. § 1535(a) provides:

[T]he head of an agency or major organizational unit within an agency may place an order with a major organizational unit within the same agency or another agency for goods or services if:

(1) amounts are available;

(2) the head of the ordering agency or unit decides the order is in the best interest of the United states government;

(3) the agency or unit to fill the order is able to provide or get by contract the ordered goods or services; and

(4) the head of the agency decides ordered goods or services cannot be provided by contact as conveniently or cheaply by a commercial enterprise.

31 U.S.C. § 1535(a). Under the Economy Act, government agencies should seek the most cost efficient means of production. In practice, government agencies should not call upon the private sector to perform services other government agencies can perform as expeditiously and for less money. See H.R.Rep. No. 1126, 72d Cong., 1st Sess. 1, 16 (1932). The Economy Act applies when more specific statutory authority does not exist. Cf. Techniarts Engineering v. United States, 51 F.3d 301 (D.C.Cir.1995)(declining to apply Economy Act where TV Marti Act offered specific and applicable requirements).

IV. Analysis

The primary issue in this case centers on whether the district court erred in requiring appellants to reimburse the EPA's oversight costs for cleaning up groundwater in a contaminated area. Within this primary issue, appellants argue its concerns that (1) the district court incorrectly interpreted the consent decree as requiring Sequa to reimburse the EPA for certain oversight costs; (2) the district court erred in finding the EPA's oversight costs were reasonable and necessary; (3) the absence of specific statutory authorization for oversight costs required the district court to invalidate or delete that portion of the consent decree requiring payment for such costs. ¹ The court considers the merits of each argument in turn.

A. Interpretation of Consent Decree

A consent decree is akin to a contract yet also functions as an enforceable judicial order. See generally, Baylor v. United States Dep't of Housing and Urban Development, 913 F.2d 223, 225 (5th Cir.1990)("A consent decree is a judicial order[.]") General principles of contract interpretation govern the interpretation of a consent decree. See Lelsz v. Kavanagh, 824 F.2d 372, 373 (5th Cir.1987); see also, Browning v. Navarro, 743 F.2d 1069, 1080 (5th Cir.1984). Thus, consent decrees are to be construed only by reference to the "four corners" of the order itself. Robinson v. Vollert, 602 F.2d 87, 92 (5th Cir.1979). Sequa challenges the district court's interpretation of the consent decree. The district court found that "by the very terms of the Consent Decree," Sequa is...