U.S. v. Gurley

• Decision Date: 28 December 1994
• Docket Number: Nos. 93-2699,93-2702,s. 93-2699
• Citation: 43 F.3d 1188
• Parties: , 63 USLW 2405, 25 Envtl. L. Rep. 20,486 UNITED STATES of America, Plaintiff/Appellee, v. Larry GURLEY, Defendant/Appellant, Betty Gurley; R.A. Caldwell; Gurley Refining Company; Gurley Refining Company, Inc.; William Martin Gurley, Defendants. UNITED STATES of America, Plaintiff/Appellee, v. GURLEY REFINING COMPANY, INC.; William Martin Gurley, Defendants/Appellants, Larry Gurley; Betty Gurley; R.A. Caldwell; Gurley Refining Company, Defendants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1188

43 F.3d 1188

39 ERC 1929, 63 USLW 2405, 25 Envtl.

L. Rep. 20,486

UNITED STATES of America, Plaintiff/Appellee, v. Larry GURLEY, Defendant/Appellant, Betty Gurley; R.A. Caldwell; Gurley Refining Company;

Gurley Refining Company, Inc.; William Martin

Gurley, Defendants.

UNITED STATES of America, Plaintiff/Appellee, v. GURLEY REFINING COMPANY, INC.; William Martin Gurley,

Defendants/Appellants,

Larry Gurley; Betty Gurley; R.A. Caldwell; Gurley

Refining Company, Defendants.

Nos. 93-2699, 93-2702.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 12, 1994.

Decided Dec. 28, 1994.

Rehearing and Suggestion for Rehearing En Banc Denied in No.

93-2702 March 9, 1995.

David Allan Gates, Little Rock, AR, argued (Marsha T. Foster, on the brief), for Larry Gurley.

James W. Gentry, Jr., Chattanooga, TN, argued (Elton A. Rieves, IV, on the brief), for Gurley Refining Co. and William Martin Gurley.

Jeffrey P. Kehne, Washington, DC, argued (Louis J. Schiffer, Richard Gladstein, Edward J. Shawaker and John Dugdale, on the brief), for appellee.

Before HANSEN, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and KOPF, District Judge. ^*

HANSEN, Circuit Judge.

The Environmental Protection Agency (EPA), on behalf of the United States, brought this action to recover the costs of cleaning up a hazardous waste site near Edmondson, Arkansas. The district court entered judgment for the EPA, imposing liability for past costs ($1,786,502.92) and future costs (estimated at $6,000,000) on defendants Gurley Refining Company, Inc.; its principal shareholder and president, William Gurley; and an employee, Larry Gurley. These defendants appeal, raising several issues, the most significant of which are the argument that the present action is precluded by a prior action brought against the Gurley Refining Company, Inc., in 1983 and the argument that Larry Gurley's role in the company's disposal of hazardous waste was too tenuous to make him liable as an "operator" of a hazardous waste facility. We affirm in part and reverse in part.

I.

The facts of this case are well stated in the district court's memorandum order, see United States v. Gurley Refining Co., 788 F.Supp. 1473, 1476-78 (E.D.Ark.1992), and we will merely summarize them here. From 1970 to 1975, the Gurley Refining Company (GRC) rerefined used motor oil. GRC treated the used motor oil with sulfuric acid, mixed it with clay to absorb impurities, filtered out the clay, and sold the resulting rerefined oil. GRC then disposed of an acidic sludge and the spent clay in a borrow pit ¹ it had leased from R.A. Caldwell pursuant to a permit issued for that purpose by the Arkansas Department of Pollution Control and Ecology (ADPCE). Id. The wastes of the rerefining process contained hazardous materials such as barium, lead, zinc, PCBs, and sulfuric acid. (Appellee's Br. at 4.)

In October 1975, GRC discontinued its rerefining processes and stopped disposing of wastes at the pit. In 1978, the United States Fish and Wildlife Service discovered that contaminated water from the pit had spilled over and damaged nearby fish and waterfowl habitats. The Service reported this to the EPA, which performed some work on the pit to prevent future spillovers.

But in the spring of 1979, after heavy rains, the pit overflowed again, releasing about a half million gallons of oily water into the surrounding area. The EPA could not persuade Caldwell or GRC to clean up the pit, so later that year it again performed work on the site to contain and treat wastes. In 1983, the EPA brought an action against Caldwell and GRC under the Federal Water Pollution Control Act, also known as the Clean Water Act (CWA), 33 U.S.C. Secs. 1251-1376, to recover the costs it had incurred in 1979. In 1985, the district court entered judgment in favor of the EPA and against Caldwell and GRC in the amount of $76,758.60. See United States v. Caldwell, J-C-83-399, slip op. at 9 (E.D.Ark. Oct. 30, 1985), reprinted in Appellant GRC's & William Gurley's Br. at A37-A45. GRC did not appeal.

Meanwhile, in 1983, the pit was listed on the EPA's National Priorities List. In 1985, an investigation conducted on behalf of the EPA revealed that the site was still contaminated. In 1986, a feasibility study proposed four alternative courses of remedial action. The EPA chose the third alternative, which called for stabilization of the soil and contaminates, disposal of the soil and contaminates in an on-site landfill, backfilling of the excavated area, construction of flood protection, on-site treatment of contaminated water, and annual groundwater monitoring. Gurley Refining Co., 788 F.Supp. at 1477.

Then in 1987, the EPA brought this action to recover the costs, both past and future, of the remedial action it had adopted after the 1986 study. Before trial, defendant Betty Gurley was dismissed from the case, and defendant R.A. Caldwell settled with the EPA. Id. at 1476 n. 2. The matter was tried to the court for eight days in June and September of 1990. The district court entered judgment for the EPA on March 27, 1992, concluding that GRC, William Gurley, and Larry Gurley should be jointly and severally liable for cleanup costs, with prejudgment interest from September 10, 1990. The district court also entered a declaratory judgment that those three defendants shall be liable for the costs of all remedial action taken by the EPA in the future. The three defendants appeal.

II.

In 1980, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. Secs. 9601-9675. Under the Act, persons who are responsible for the release of hazardous substances 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); see also Dravo Corp. v. Zuber, 13 F.3d 1222, 1225 (8th Cir.1994). The EPA may initiate a civil action to recover these costs. See 42 U.S.C. Secs. 9607(a), 9613(h).

A.

Larry Gurley argues that he should not be held liable because, in short, he was merely an employee of GRC. He argues in the alternative that imposing liability on him for conduct that preceded CERCLA's enactment would violate the Due Process Clause.

1.

Liability for the release of hazardous substances may be imposed on "any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of." 42 U.S.C. Sec. 9607(a)(2) (emphasis added). The EPA does not contend that Larry Gurley had an ownership interest in either GRC or the site of the facility. Thus, he can be held liable only if he is an "operator." Larry Gurley argues specifically that the term "operator" should be limited to those individuals who had the "authority, responsibility, and capacity to control the corporate conduct in question." (Appellant Larry Gurley's Br. at 11.) He contends that he did not have the authority to determine whether or how to dispose of hazardous wastes because he was not an officer, director, or shareholder in GRC and because his father, William Gurley, possessed nearly exclusive authority over GRC's operations.

CERCLA defines "owner or operator" simply as, "in the case of an onshore facility or an offshore facility, any person owning or operating such facility." Id. Sec. 9601(20)(A)(ii). It is clear that the term "person" may include individuals, see id. Sec. 9601(21), but it is not clear when an individual should be deemed to have "operated" a hazardous waste disposal facility. In United States v. Northeastern Pharm. & Chem. Co., 810 F.2d 726 (8th Cir.1986) (NEPACCO ), cert. denied, 484 U.S. 848, 108 S.Ct. 146, 98 L.Ed.2d 102 (1987), we held that an individual could be held liable for the release of hazardous substances under a different subsection, which imposes liability on a person who "arranged for disposal or treatment ... of hazardous substances owned or possessed by such person," see 42 U.S.C. Sec. 9607(a)(3). We found that the individual defendant "possessed" the hazardous substances because he "had actual 'control' over the NEPACCO plant's hazardous substances." NEPACCO, 810 F.2d at 743. We also stated, "It is the authority to control the handling and disposal of hazardous substances that is critical under the statutory scheme." Id. Thus, we affirmed a finding that the individual had "possessed" hazardous substances on two closely related but distinct grounds: that the individual had "actual control" of the hazardous substances and that he had "authority to control" their disposal.

Federal courts have struggled with these two concepts when addressing the question of whether an individual may be found liable as an "operator" under Sec. 9607(a)(2). In some circuits, a plaintiff must prove that an individual defendant had actual responsibility for, involvement in, or control over the disposal of hazardous waste at a facility. See Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d 417, 421 (7th Cir.1994) (holding that plaintiff must allege that individual defendant "directly and personally engaged in conduct that led to the specific environmental damage at issue"); Riverside Market Devel. Corp. v. International Bldg. Prods., Inc., 931 F.2d 327, 330 (5th Cir.) (holding that proper focus is "the extent of [individual] defendant's personal participation in the alleged wrongful conduct"), cert. denied, --- U.S. ----, 112 S.Ct. 636, 116 L.Ed.2d 654 (1991); New York v. Shore Realty Corp., 759 F.2d 1032, 1052 (2nd Cir.1985) (holding that individual defendant was "operator" because he was "in charge of the operation of the facility"); see also Levin Metals Corp. v. Parr-Richmond Terminal Co., 781 F.Supp. 1454, 1457 (N.D.Cal.1991) ("an individual cannot be liable as an 'operator' under CERCLA Section 107(a)(2) [42 U.S.C. Sec. 9607(a)(2) ] unless that individual actually participates in the operation of the facility...