US v. Skipper, 89-102-CIV-7-F.

• Decision Date: 10 December 1991
• Docket Number: No. 89-102-CIV-7-F.,89-102-CIV-7-F.
• Citation: 781 F. Supp. 1106
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: UNITED STATES of America, Plaintiff, v. Otto SKIPPER; Wilbur and Barbara McLamb; Jimmy F. and Peggy Cain; Hubert J. and Ada Anderson; and Investors Management Corporation, Defendants. Wilbur and Barbara McLAMB; Jimmy F. and Peggy Cain; Hubert J. and Ada Anderson; and Investors Management Corporation, Counter-Claimants, v. UNITED STATES of America, Defendant on the Counterclaim. Wilbur and Barbara McLAMB; Jimmy F. and Peggy Cain; Hubert J. and Ada Anderson; and Investors Management Corporation, Third-Party Plaintiffs, v. WACHOVIA BANK AND TRUST, N.A., Third-Party Defendant.

781 F. Supp. 1106

UNITED STATES of America, Plaintiff, v. Otto SKIPPER; Wilbur and Barbara McLamb; Jimmy F. and Peggy Cain; Hubert J. and Ada Anderson; and Investors Management Corporation, Defendants.

Wilbur and Barbara McLAMB; Jimmy F. and Peggy Cain; Hubert J. and Ada Anderson; and Investors Management Corporation, Counter-Claimants, v. UNITED STATES of America, Defendant on the Counterclaim.

Wilbur and Barbara McLAMB; Jimmy F. and Peggy Cain; Hubert J. and Ada Anderson; and Investors Management Corporation, Third-Party Plaintiffs, v. WACHOVIA BANK AND TRUST, N.A., Third-Party Defendant.

No. 89-102-CIV-7-F.

United States District Court, E.D. North Carolina, Wilmington Division.

December 10, 1991.

COPYRIGHT MATERIAL OMITTED

Stephen A. West, U.S. Atty., E.D.N.C., Raleigh, N.C., Dianne M. Shawley, Environmental Enforcement Section, Michael T. McCaul, Torts Branch — Civil Div., Washington, D.C., for U.S.

Glen Freyer, Dept. of Justice, Environment & Natural Resources Division, Washington, D.C., on brief for the E.P.A.

William D. Dannelly, Kelley Dixon Moye, J. Kevin Milliken, Moore & Van Allen, Raleigh, N.C., H. Clifton Hester, Hester, Grady, Hester & Greene, Elizabethtown, N.C., for Skipper, Wilbur and Barbara McLamb, Jimmy F. and Peggy Cain, Hubert J. and Ada Anderson, and Investors Mgmt. Corp.

J. Robert Elster, J. Stephen Shi, Petree, Stockton & Robinson, Winston-Salem, N.C., for Wachovia Bank and Trust, N.A.

ORDER

JAMES C. FOX, Chief Judge.

This matter is before the court on Plaintiff's Motion for Judgment on the Pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure or in the alternative a Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, on Defendants' Counterclaim. Plaintiff asserts that (i) the court lacks subject matter jurisdiction and (ii) the counterclaim fails to state a claim. This case raises an issue of first impression: whether the United States can be held liable, under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq. (Supp. I 1991), for response action, taken under Section 311 of the Clean Water Act, 33 U.S.C. § 1321 (Law.Co-Op.Supp. 1990), which was allegedly inconsistent with the National Contingency Plan (NCP), 40 C.F.R. § 300 (1990).

STATEMENT OF THE CASE

On October 12, 1989, the United States filed a civil action for cost recovery pursuant to Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") as amended, 42 U.S.C. §§ 9601, et seq., against the Counter-Claimants and Otto Skipper.¹ In its action the United States seeks to recover approximately three hundred and twenty-one thousand dollars ($321,000.00) in costs incurred by the United States Environmental Protection Agency ("EPA"). The costs were purportedly incurred in 1983 in response to a threatened release of hazardous substances on Lots 85 and 86 at a residential subdivision in Brunswick County, North Carolina, now known as Sandy Creek Acres, North Carolina. Today, Sandy Creek Acres consists of approximately 150 lots on approximately 217 acres of land two miles west of Leland, North Carolina, off of U.S. Highway 76/74. Prior to 1980, the Sandy Creek Acres site apparently had been used as a farm and woodland.

The United States alleges that Otto Skipper engaged in the disposal of hazardous substances on a small portion of this property in the 1960's and 1970's, when the land was undeveloped. In 1976, the United States Coast Guard (hereafter "Coast Guard") initiated the first response action on this property pursuant to Section 311 of the Clean Water Act. As part of its response activity, the Coast Guard entered into a contract with O.E. Durant Company to begin the cleanup. By August 6, 1976, O.E. Durant Company was in the process of cleaning up the site and finished the cleanup on or about August 27, 1976. Sometime prior to September 2, 1976, sludge remaining on the property was allegedly mixed with sand and buried on the site. Apparently the buried sludge was ignored, and the area of the burial became overgrown with pine trees, dog fennels, and other vegetation indigenous to the area.

In 1980 Wachovia Bank and Trust, N.A. (hereafter "Wachovia"), the Third-Party Defendant, foreclosed on the property as a result of the default on a loan from Wachovia to Skipper. In a series of transactions, each of the Counter-Claimants came to own the property after Wachovia purchased the Sandy Creek Acres site at foreclosure.² The development activity included only a survey to mark the lots and "pushing up" trees to grade a gravel road. Purchasers were expected to install their own septic tanks and wells for drinking water. While all lots were developed during the latter part of 1981 and 1982, the first phase of development was completed prior to an auction during May of 1981. This first phase included Lots 85 and 86, the sites at issue.

Lots 85 and 86 of the Sandy Creek Acres subdivision, consisting of less than 5 acres, were sold by Counter-Claimants McLamb and Anderson to William Howard Cook on August 6, 1981, through a land sale contract. Cook sold these two lots by deed from Investors Management Corporation to Mr. and Mrs. Earl Gurkin on July 29, 1982, and April 1, 1983. In July of 1983, while excavating his front yard with a backhoe, Earl Gurkin discovered the waste which had apparently been buried in 1976. At that time, it was determined that there was a health hazard associated with the buried waste. The EPA was contacted, and it proceeded with the removal action which generated the costs the United States seeks to recover in this litigation from Counter-Claimants and Otto Skipper.

On October 29, 1990, the Counter-Claimants filed a Counterclaim against the United States and Third-Party Complaints against the United States Coast Guard and the Department of Transportation. The Third-Party Complaints were dismissed pursuant to a Stipulation filed February 19, 1991, in which it was agreed the United States was the proper party Defendant on the Counterclaims. The Counter-Claimants assert that they are entitled to contribution or indemnification from the United States pursuant to Section 113(f) of CERCLA, 42 U.S.C. § 9613(f). Counter-Claimants also assert that they are entitled to contribution from the United States pursuant to the Uniform Contribution among Tort-Feasors Act, appearing in N.C.Gen. Stat. § 1B (1983).³ It is these claims which are the subject of the Motion for Judgment on the Pleadings or Summary Judgment on the Counterclaims by the Counter-Defendant United States (hereafter "Motion for Summary Judgment").

The Government has moved to dismiss the counterclaim, alleging that the claim is barred by the doctrine of sovereign immunity and that the court lacks subject matter jurisdiction to hear the claim. In the alternative, the Government seeks summary judgment on grounds that the undisputed facts in this case show that the U.S. Coast Guard had no involvement with the action taken in 1976 at certain inland pits which form the basis for the counterplaintiffs' claims.

STATUTORY BACKGROUND

CERCLA authorizes the EPA to take response actions to minimize and eliminate the dangers posed by threatened or actual releases of hazardous substances. 42 U.S.C. § 9604(a). The Act further authorizes the United States and individual states to bring a cost recovery action against parties responsible for the waste to recover "all cost of removal or remedial action incurred by the United States Government ... not inconsistent with the National Contingency Plan (NCP)." 42 U.S.C. § 9607(a)(4)(A).⁴ This provision operates by imposing strict liability for these costs on four categories of responsible parties, described in Section 107(a)(1-4).⁵ States and the United States are explicitly included within the statute's definition of persons subject to liability under Section 107. 42 U.S.C. § 9601(21). Under Section 113(f), any "person" may seek contribution from any other "person" who is liable or potentially liable under Section 107(a). 42 U.S.C. § 9613(f). An otherwise liable party under Section 107 may avoid liability only by establishing one of the three affirmative defenses enumerated in Section 107(b).⁶

Section 120(a)(1) addresses the federal government's potential liability under the statute and provides that "each department, agency and instrumentality of the United States ... shall be subject to, and comply with, this chapter in the same manner and to the same extent ..., as any nongovernmental entity, including liability under Section 107 of this title." 42 U.S.C. § 9620(a)(1). However, Section 107(d) provides an express exemption from liability under Section 107(a) for persons engaged in cleanup activities and for states and local governments responding to an emergency created by the release or threatened release of hazardous substances if such action was taken pursuant to the NCP or at the direction of an on-scene coordinator appointed under such plan. 42 U.S.C. § 9607(d).

Under Section 107(a)(4)(A), the EPA is not entitled to reimbursement for expenditures which a defendant shows to be inconsistent with the National Contingency Plan. 42 U.S.C. § 9607(a)(4). The NCP, as noted earlier, prescribes the course of action during cleanups of hazardous waste.⁷ The Government has set forth in lengthy though useful detail the similarities between the Clean Water Act and CERCLA; of particular relevance to the present issue is that Congress chose to implement the CERCLA cleanup program by utilizing the NCP originally developed for Section 311 of the Clean Water Act. The governmental agencies involved herein, the Coast Guard and the EPA, were bound by the NCP in their cleanup activities. Pursuant to the requirements of CERCLA, the NCP has been amended and updated since 1980; however, in its current form the NCP continues the division of responsibility between...